You are in charge of developing a system to perform high-volume, repetitive processing of HMO group health insurance claims. Each claim must undergo 4 separate processing steps. Step 1 takes on average 85 seconds to complete. Step 2 takes on average 70 seconds, step 3 takes 65 seconds, and step 4 takes 80 seconds. (Each claim requires a total of 300 seconds processing time.) You have decided to implement a four-person “production line”, with each employee responsible for performing one of the four steps on every application. For the purpose of this exercise, we will call this as sequential processing system. What will be a nominal hourly production rate in terms of claims per hour for this system?
Suppose you instead took the same four people, and had each person process entire claims from start to finish. (Each employee completes all four steps of any claims he or she processes.) This will be called the parallel processing system. What will be a nominal hourly production rate in terms of claims per hour for this system?
Using the same number of people in each case (four), which of the two systems has the higher nominal hourly production rate? Why? Will this always be the case in the comparison of the two systems as we have structured it?