Reference no: EM132954651

The claims processing unit of an auto insurance company receives 40 claims per hour. The claims go through 4 possible stages, see figure below. In each stage, a claim is handled by only one worker.

• All claims first go through a Review stage, staffed by 4 workers. A worker at the Review stage takes 6 minutes to process a claim. After the Review stage, all claims go through an Evaluation and Verification stage, staffed by 6 workers. A worker in this stage takes 10 minutes per claim. After the Evaluation and Verification stage, on average only 25% claims turn out to be 'clean' that can be directly authorized for payment. The remaining 75% of claims require a further Management Review for handling exceptions. There are 6 workers at the Management Review stage, and it takes 15 minutes for a worker to perform a management review per claim. After the Management Review, only 60% of the claims are approved and authorized for payment. The remaining 40% of the claims are rejected and exit the system. There are two workers at the Authorization for Payment stage who issue payment for approved claims, and it takes a worker 5 minutes per claim.

Problem 1: Suppose a worker at the 'Authorization for Payment' stage takes 4 mins for a claim that is received directly from the 'Evaluation and Verification' stage, but takes 10 mins per claim that is received from the 'Management Review' stage. What is the implied utilization at 'Authorization for Payment' stage? Assume as before that there are 2 workers at this stage and that the system receives 40 claims per hour.