nDate: February 11/12, 2015
TO: Vice President of Finance
CC: CEO, CFO
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Subject: Business Process Modeling Recommendations
Dear President: I’m the manager of the Spartan Billing Department and I’ve been asked to improve the process efficiency and reduce the cycle time so that bills go out on time. Before I show the result, I would like to introduce the Arena to you and also talk about something called “business process model” to you. The Arena is a preeminent solution for better business decision with simulation. It’s really easy to use, and very strong tool that allows you to create and run experiments on models of your systems. After testing out the ideas in Arena, you can be more confidence for the new business decision. The business process model is graphic description of a process, showing the sequence of process tasks, which is developed for a specific. Those two thing is very important for make a simulation and improve the process efficiency. The IT business analysis group provided a completed Arena model of current billing process in Spartan Billing Department to me and based on my evaluation, I will improve the working duration in order to shorter the wait time and I will also adjust the labor cost and arrival rate in the rest of the Memo. In the case 1, the wait time of Registering AR and Financial and verifying bills are 13.30 minutes and 4.99 minutes respectively. The total cost on “Average per Normal Bills” and “Average per Contract Bills” are 2.42 and 2.32. Then, the total cost for the whole system is 22110 and number out is 6910, along with Arrival Rate is 6 min/20 min. Based on my experience, the wait time of the Register AR and Verify bills was too high, so I decided to reduce this two number to become lower. In the case 2, I changes the working duration for both of register AR and financial and verify bills, which become 2-3-4 and 2-3-5. Then I found the wait time for both of these two are processes dropped a lot from 13.30 to 2.51 and 4.99 to 0.07. The total cost for Average per normal bill and average per contract bill also decrease slightly to 1.34 and 184. For the system part, total cost increases from 22110 to 22137 and number out for case 2 is increased to 7179. For case 2, good thing is the wait time for two main processes are slightly decrease a lot because of the shortening the working duration and people become more efficiency than before. Other date just fluctuate above and below the case such as the number out are increase a little bit which because of the people are more efficiency. In the case 3, we changed busy and idles hours for Senior Biller and Account Biller in order to change the labor cost associated with the better skilled workers. We adjust the busy and idle cost to 20/hour for senior and 14/hour for account biller. At the result, the wait time of those two processes and number out stay at the same with case 2. By contrast, system total cost increases to 27537 which is because we spend more recourse on the skilled worker. The interest thing is the wait time of the two main processes are stay at the same, which is because the skilled workers are already efficiency enough on the work and it’s not about the salary low or high. In the case 4, I assume that our business will expand few more region and we’re now having an increase in demand of both normal and contract bills because our business expansion duo to consolidation of the billing departments from two regions. Therefore, we decrease new arrival rate and the new arrival rate is 5 minutes and 13 minutes for arrive in department and contract bills arrive. After we use Arena stimulating case 4, the wait time of Register AR and Financial is 7.4, which is the longest among these 4 cases. By contrast, wait time of verify bills in case 4 is much shorter than that in Case 1, is 0.17. In the other hand, total cost on both of Average per Normal Bill and Average per Contract Bill keep nearly same as Case 3. However, system total cost for Case 4 is the biggest among 4 cases, is 27679, along with the largest number out 9077. The problem for case 4 is we don’t know the demand of new region will increase or decrease. According all four cases, my suggestion includes keep shorting the working duration of Register AR and Financial and Verify Bills, change the arrival rate of both department bills and contract bills in order to increase demand of both normal and contrail bills. Those two advice will slightly improve the work efficiency and high number out. Overall, my suggestion is case 3 and increase the total number out and decrease the wait time of verify bills. Although the total cost and wait time of the register AR and financial will become bigger than before. The total cost on Average per Normal Bill and Average per Contract Bill not change a lot. The reason why I don’t chose case 2 is because it’s impossible in the real life, and the reason for case 4 is I don’t even know the demand of customer will increase or decrease, so the case 3 is the best choice.
ITM 309 – Assignment One: Spring 2015
Spartan Billing Department Model – Alternative Cases Simulation Output | Cases | Wait Time (Register AR and Financial) | Wait Time (Verify Bills) | Total Cost (Average per Normal Bill) | Total Cost (Average per Contract Bill) | (System) Total Cost | (System) Number Out(Arrival Rate: Normal/Contract) | 1: Base Case – Current Process | 13.30 | 4.99 | 2.42 | 2.32 | 22110 | 6910 (6 min/20 min) | 2: Change Process – Register AR and Financial, Verify Bills | 2.51 | 0.07 | 1.34 | 1.84 | 22137 | 7179(6 min/20 min) | 3: Change Resource – Adjusting resource costs associated with process improvements | 2.51 | 0.07 | 1.61 | 2.35 | 27537 | 7179(6 min/20 min) | 4: Change Entity Arrival Rate – simulate increased customer demand | 7.4 | 0.17 | 1.62 | 2.34 | 27679 | 9077(5 min/13 min) | (Time Unit: Minutes)
RUIYI LIU
Spartan Billing Department Manager 