Rosemarie Basiar

Exercise 7.9 Calculate the cycle time, cycle time efficiency and cost of the university admission
process described in Exercise 1.1, assuming that:
• The process starts when an online application is submitted.
• It takes on average 2 weeks (after the online application is submitted) for the documents to
arrive to the students service by post.
• The check for completeness of documents takes about 10 minutes. In 20 % of cases, the
completeness check that some documents are missing. In this cases an e-mail is sent to the
student automatically by the University admission management system based on the input
provided by the international students officer during the completeness check.

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• A student services officer spends on average 10 minutes to put the degrees and transcripts in

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an envelope and send them to the academic recognition agency. The time it takes to send the

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degrees/ transcripts to the academic recognition agency and to receive back a response is 2

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weeks on average.
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• About 10 % of applications are rejected after the academic recognition assessment.
• The university pays a fee of € 5 each time it requests the academic recognition agency to
accept an application.
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• Checking the English language test results takes 1 day on average, but in reality the officer
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who performs the check only spends 10 minutes on average per check. This language test check
free.
• About 10 % of applications are rejected after the English language test.
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• It takes on average 2 weeks between the time students service sends the copy of an
application to the committee members and the moment the committee makes a decision
(accept or reject). On average, the committee spends 1 hour examining each application.
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• It takes on average 2 days (after the decision is made by the academic committee) for the
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students service to record the academic committee’s decision in the University admission
management system. Recording a decision takes on average 2 minutes. Once a decision is
recorded, a notification is automatically sent to the student.
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• The hourly cost of the officers at the international students office is € 50.
• The hourly cost of the academic committee (as a whole) is € 200.

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Activity Cycle Time Processing time

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Document received by post 2 weeks 336 hours

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Check documents for completeness
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Validate decision with agency 2 weeks 10 minutes
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Check English test results 1 day 0

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Assess application (academic committee) 2 weeks 1 hour

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Record decision 2 days 2 minutes

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0.00694 / 1 − 0.2
0.00694 / 0.8
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CT = 0.008675
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0.1667 / 1 − 0.2 = 0.1667 / 0.8

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PT = 0.208375

Cycle time = 14+0.008675+14+1+14+2

= 45.008675 or 45.01 days

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 Processing time = 336+0.208375+0.1667+1+0.0333
= 337.408375 or 337.41 hours

CTE = TCT/ CT
CTE = 337.41/ 45.01
CTE = 7.496334148 or 7.5%

Activity Resource cost

Hourly cost of the academic committee 336 × 200 = 67,200

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Hourly cost of the officers at the international
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students office

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Fee by university each time it requests the academic
5

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recognition agency to accept an application
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Cost-per execution = 67200/ (1 - 0.2) +50+5
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= 67200/ 0.8 +50+5

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= 84000 +50+5
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= 84,055
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Exercise 7.10 Let us consider the following process performed by an IT helpdesk that handles
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requests from clients. The clients are employees of a company. There are about 500 employees
in total. A request may be an IT-related problem that a client has, or an access request (e.g.
requesting rights to access a system). Requests need to be handled according to their type and
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their priority. There are three priority levels: “critical”, “urgent” or “normal”. The current process
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works as follows.
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A client calls the help desk or sends an e-mail in order to make a request. The help desk is
staffed with five “Level-1” support staff who, typically, are junior people with less than 12
months experience, but are capable of resolving known problems and simple requests. The
hourly cost of a Level-1 staff member is € 40. When the Level-1 employee does not know the
resolution to a request, the request is forwarded to a more experienced “Level-2” support staff.

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 There are three Level-2 staff members and their hourly cost is € 60. When a Level-2 employee
receives a new request, they evaluate it in order to assign a priority level. The job tracking
system will later assign the request to the same or to another Level-2 staff depending on the
assigned priority level and the backlog of requests. Once the request is assigned to a Level-2
staff member, the request is researched by the Level-2 employee and a resolution is developed
and sent back to the Level-1 employee. Eventually, the Level-1 employee forwards the
resolution to the client who tests the resolution. The client notifies the outcome of the test to
the Level-1 employee via e-mail. If the client states that the request is fixed, it is marked as
complete and the process ends. If the request is not fixed, it is resent to Level-2 support for
further action and goes through the process again. Requests are registered in a job tracking
system. The job tracking system allows help desk employees to record the details of the request,
the priority level and the name of the client who generated the request. When a request is
registered, it is marked as “open”. When it is moved to level 2, it is marked as “forwarded to
level 2” and when the resolution is sent back to “Level 1” the request is marked as “returned to

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level 1”. Finally, when a request is resolved, it is marked as “closed”. Every request has a unique

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identifier. When a request is registered, the job tracking system sends an e-mail to the client.

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The e-mail includes a “request reference number” that the client needs to quote when asking

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questions about the request.
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Calculate the cycle time efficiency and the cost-per-execution of the as-is process assuming that:
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• Submitting and registering a new request takes 5 minutes on average. Requests spend on
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average 1 hour waiting for a Level-1 staff to check them. This applies both to new requests and
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to re-submitted requests.
• Checking if a new request is “known” takes on average 10 minutes. In 20 % of cases the
request is known. In this case, it takes between 2 and 10 minutes (average 5 minutes) for the
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Level-1 staff to communicate the resolution to the client. Once this is done, the request is
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marked as “closed”. On the other hand, if the request is not “known”, the request is
automatically forwarded to Level 2.
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• New requests spend on average 2 hours waiting for a Level-2 staff to evaluate them. Level-2
staff take on average 20 minutes to evaluate a new request.
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• Level-2 staff take 5 minutes to prioritize a request.

• The time between the moment a request has been prioritized, and the moment the request is
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picked up by a Level-2 staff member is 20 hours.

• The time required to research and resolve a request is on average 2 hours.
• The time to write the resolution to a request is on average 20 minutes.

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 • Once a Level-2 staff has written the resolution of a request, it takes on average 20 hours
before a the request is fetched from the job tracking system by a Level-1 staff.
• It takes on average 20 minutes for a Level-1 staff to send to the client a problem resolution
previously written by a Level-2 staff.
• It takes on average 20 hours between the moment a resolution is sent by the Level-1 staff, and
the moment the resolution is tested by the client.
• It takes the client around 10 minutes to e-mail the test results to the Level-1 staff.
• In 20 % of cases the request is not resolved, and it needs to be forwarded to Level-2 again. In
this latter case, it takes about 2 minutes for the Level-1 to forward the request to the Level-2
staff. Unresolved requests that are forwarded in this way are automatically marked as
prioritized, since they have already been prioritized in the previous iteration.

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• There are no other costs besides the resource costs.

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Hint To calculate theoretical cycle time and cost, only take into consideration time spent doing

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actual work, excluding waiting times and handovers.
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Acknowledgement This exercise is inspired by an example developed by Sue Conger [8].
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Resource cost Total cost

Level-1 staff 40× 1.033 41.32

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 Level-2 staf 60× 2.417 145.02

Cost-per execution = 145.02 / (1 - 0.2) + 41.32

= 145.02 / 0.8 + 41.32
= 181.275 + 41.32
= 222.593

Exercise 7.11 Consider the scenario described in Exercise 7.6. The company in question is being
pressed by several of its customers to fulfill their orders faster. The company’s management
estimates that the company stands to lose € 250,000 in revenue if they do not reduce their

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order fulfillment time below 40 working days. Adding one engineer to the existing team would

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reduce the time to design a hardware down to 14 working days (from 16 days). An additional

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engineer would cost the company € 50,000. On the other hand, hiring a second engineering

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team would cost € 250,000. Analyze these two scenarios and recommend an option to the
company
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 Every company should give first priority to the customers because without customers,
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sales will not be carried out and company will be closed.

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 It is possible to add an engineer to the existing team because it will also reduce the time
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and days of designing the hardware but it is not possible to have two because the total
cost here is the total loss to the company if they do not reduce theeir order fulfillment
time.
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