Activity Management The Paris Bank specializes in loans for automobiles. The automobile loan process is organized as follows. The bank has arrangements with more than 500 automobile dealers to be the preferred supplier of loans. The referring dealership receives a fee of 0.5% of every loan that is written by the Paris Bank.

The business manager of the dealership completes a form with the customer that is required by the bank. The form is then mailed to the bank's main office, where the information on the form is entered into a computer file. Cursory credit checks are then run to identify whether the customer is a potential credit risk. If nothing is found, an interview is scheduled with the customer at a branch that is convenient for the customer. During the interview, a bank representative verifies the information and obtains a signature. The completed form is then forwarded to the bank's main credit office for approval. This process usually takes three to five working days.

The Paris Bank is concerned that it is losing customers to other financial institutions.

Evidence suggests that the fastest time for loan approval is two days. Estimates by bank personnel suggest that the cost of the delay in approving a loan beyond two days is

Automobile dealers are also complaining that 10% of the customers balk; that is, they withdraw their offer of purchase during the time that they are waiting for approval. The present value of the lost profits from a lost customer amounts to about $3 ,000 to both the bank and the dealership.
What would you suggest in this case? Make any assumptions concerning the cost of making improvements, the number of customers, or any other relevant matter that you feel are necessary to answer this question.

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Cost $30,000,000days delay - 2)