Consider the insurance (auto, home, etc.) underwriting process for new customers at a large insurer. You may assume that the workers work 7.5 hours per day, 20 days a month. You may also assume steady state. The wage rate is $15 per hour per worker. The following table describes the four steps in underwriting a policy along with processing times. Note that that there are multiple workers and that the processing time provided is per worker. Consider the insurance (auto, home, etc.) underwriting process for new customers at a large insurer. You may assume that the workers work 7.5 hours per day, 20 days a month. You may also assume steady state. The wage rate is $15 per hour per worker.

The following table describes the four steps in underwriting a policy along with processing times. Note that there are multiple workers and that the processing time provided is per worker.

Step Average processing time per step (minutes) No. of Workers

1. Info Collection 68.5 4

2. Underwriting 43.6 3

3. Rating 75.5 7

4. Final Policy Writing 71 5

1) Now suppose that all of the current workers are retained and that the workers are organized into work cells where one worker performs all tasks relating to one request (or one job). You may assume that processing times do not vary for the workers. What is the capacity of the process in policies per month now?

a) 119.2 b)131.4 c) 525.55 d) 700.67 e) 661.25

2) What is the cost of direct labor in terms of dollars per new insurance policy now (You may assume that processing times do not vary for the workers)?

a) $1.10 b) $16.64 c) $81.34 d) $64.65