Business Information Systems

Purpose: To evaluate your ability to: 1) analyze alternative cases of business process simulations using Arena; 2) reengineer processes based on your evaluation of the simulations; and 3) explain your results to upper management.

Submit: An “email” (in the form of a three-page word document) describing the context of your analysis, the results of your business process simulations, your interpretation and evaluation of the results, and your corresponding conclusions and recommendations based on your evaluation. Submit the document to your TA’s dropbox on D2L.
Use the required template shown on page 8 of this document. “Email” should use Times New Roman Font, 12 pt, 1 inch margins, double spacing.

Points will be deducted for poor writing, so write well!

Scenario:
Invoices arrive in the Spartan billing department to be processed and then billed to the customer. Please refer to figure on page 4 for a graphic representation of the Spartan Billing Department.

At random (with a probability of 10%), some of the billing accounts are audited by a supervisor. The other accounts are billed normally. Some of the invoices are for commercial accounts, which have special contracts as to how they should be billed, and are called contract bills. These accounts are handled with a different procedure than the normal bills. Normal bills do not require the special procedure.

Once bills are ready to be printed, both contract and normal bills print on the same printer, and are stuffed and mailed in the same way. After the bills go out, the revenue and sales figures are reported to the accounting department. The accounts receivable department also gets a copy of the bill for future credit or AR follow-up.

Your Role:
You’re in charge of the Spartan Billing Department and you have been asked to improve the process efficiency and reduce cycle time so that bills go out on time. You realize that there are queues building up in several places, which results in inefficiencies in the process.

Management wants a detailed plan for the modification of the process to improve efficiency and wants hard numbers to back up any proposal you submit. Remembering your time in ITM 309, you recall that Arena allowed you to simulate processes and quantify differences in results between alternative business processes. You decide to investigate the current process and model the potential financial and cycle time impacts of several changes you have in mind. Based upon your findings, you will make a recommendation to management about your specific business process reengineering plan.

Furthermore, you’ve heard of the possible future consolidation between billing departments of two regions. This implies that your billing department is going to take over the total business of two regions resulting in increased demand. It’s important for you to plan ahead for the increased work load, and include the analysis for increased demand in your email as well.

The IT business analysis group has provided you with a completed Arena model of the current billing process in the Spartan_Billing_Department.doe file (on D2L) as a starting point. You will evaluate the current billing process (Case 1) with Arena, then simulate and evaluate changes to the process for the other cases. The analysis requires you to simulate processes using Arena and summarize the results of your simulation evaluations and the impact of a number of proposed changes. You will provide your conclusions from your analyst of simulation cases and your direction for implementing any process changes (if applicable) based on your evaluation of the results. Your analysis, recommendations, and conclusion will be documented in a three-page memo sent to the Chief Executive Officer in the form of an email.

Set-Up Instructions for Arena (You may wish to refer to the Instructions Section of In-Class Practice Activities II):
1) Download this file (Spartan_Billing_Department.doe) from D2L (Content ? Assignments & Dropboxes??Assignment instructions & Data Files? Assignment #1) and save it on your P drive.
2) Launch Arena by clicking Start ? Programs? Course Software ? Rockwell Software ?Arena.
3) Click “File ? Open”, browse to your P drive to select the Spartan_Billing_Department.doe file. You should see the diagram on the next page.

Simulation Cases for Assignment #1:
(You may wish to refer to the Modifying Simulation Results and Running Other Cases section of In-Class Practice Activities II)
NOTE: Each time you modify the process, SAVE the process BEFORE simulating it.
Case 1 – Base Case: No changes to current Arena model (i.e., simulate the current process as the base case). Note that all outputs of the Base Model (Case1) are already recorded in the table on page 9.
For this scenario, the simulation results are recorded using the following output measures: (System) Total Cost, (System) Number Out, Total Cost (Each Normal Bill), Total Cost (Each Contract Bill), Wait Time Per Entity (Wait Time – Register AR and Financial, Wait Time – Verify Bills), which are found in the Arena Output Report (Results)

Case 2 – Change Process: There are lines building up in several locations of the Spartan Billing Department process. Note that Register AR and Financials and Verify Bills processes always have plenty of orders waiting in a queue to be processed. Let’s look into shortening the working duration of the above two processes. Modify the working duration of Register AR and Financials and Verify Bills as shown in the following table.
Process Name Improved Working Duration
Minimum Value Maximum
Register AR and Financials 1 2 5
Verify Bills 2 3 5

Run the updated model. Did you notice any shorter lines? Are there any other issues with the business process? Record the simulation results of Case 2 for the Spartan Billing Department in the table shown on page 9.
Case 3 – Change Resources: The improvements from more efficient processes imply that we will need to adjust labor costs associated wtih the better skilled workers, who will be deployed to improve the processes. Find out what resources are deployed by Register AR and Financial, and Verify Bills, then modify their costs as shown in the following table.
Resource Name Adjusted Labor Costs
Busy/Hour Idle/Hour
Senior Biller 20 20
Account Biller 14 14

Run the updated model. What’s the most significant change in the result? Is that what you expected to see? Record the results of Case 3 simulation for the Spartan Billing Department in the table shown on page 9.
Case 4 – Increased Arrival Rate: Because of our business expansion due to consolidation of the billing departments from two regions, we’re now having an increase in demand of both normal and contract bills. Modify the arrival rate for both the normal bills and the contract bills as shown in the following table.
Create New Arrival Rate
Value Units
Bills Arrive in Department 4 Minutes
Contract Bills Arrive 15 Minutes

Run the updated model. Record the simulation results of Case 4 for the Spartan Billing Department in the table shown on page 9.
With your experience from modeling cases 1, 2, 3, 4 using Arena, what are your insights for business process reengineering? What is your recommendation to the management? What changes would you suggest, given the increase in demand for both the normal bills and the contract bills?

Instructions for Email Creation:
1) Run all simulations as described above and record results in the Spartan Billing Department table. Include the (completed) table in your email, and be sure to describe the results of each case with a brief analysis in your memo.
2) Complete your “email” (in the form of a three-page word document; two page memo with the one page table) using the required template shown below. “Email” should use Times New Roman Font, 12 pt, 1 inch margins, double spacing.
3) Be sure to explain what the alternative business process Arena model case means, and also think about the following questions when you’re working on the memo
• How should you help explain the process and your analysis to the CEO?
• How would you describe the context of your analysis, the results of your business process simulations, your interpretation and evaluation of the results, and your corresponding conclusions and recommendations based on your evaluation?
• What’s your reasoning for conclusion?
EMAIL TEMPLATE
(This is a required template for your memo)

Date: Feb 10/11, 2016
TO: Chief Executive Officer
CC: Chief Data Officer
Subject: Business Process Modeling Recommendations for Spartan Billing Department

<<ADD YOUR CONTENT HERE>>
(Be sure to include your table of case 1-4 results.)
Your Name
Spartan Billing Business Analytics Director
Submitting Your Assignment:
Complete the “email” as described in the instructions above. Submit your “email”, using the required template, as a three page word document (two pages memo and one page for your table) to your TA’s dropbox.

Grading for Assignment #1 will be based on:
1) Successful completion of ALL cases.
2) Quality of writing and grammar.
3) Discussion and rationale for recommendations.
4) Reasoning behind conclusion.

Points breakdown Grading Requirements
10 points Correct values for case 2 in table
10 points Correct values for case 3 in table
15 points Correct values for case 4 in table
30 points Reasoning (what to do with demand increase)
30 points Memo quality (analysis and writing quality)
ITM 309 – Assignment One: Spring 2016
Spartan Billing Department Model – Alternative Cases
(Time Unit: Minutes)
Simulation Output
Cases Wait Time
(Register AR and Financial) Wait Time
(Verify Bills) Total Cost (Average per Normal Bill) Total Cost
(Average per Contract Bill) (System)
Total Cost (System)
Number Out
(Arrival Rate: Normal/Contract)
1: Base Case –
Current Process 13.30 4.99 2.42 2.32 22,110 6,910
(6 min/20 min)
2: Change Process – Register AR and Financial, Verify Bills 1.73 0.05 1.30 1.82 22,124 7026
(6 min/20 min)
3: Change Resource – Adjusting resource costs associated with process improvements 1.73 0,05 1.56 2.31 27,523 7026
(6 min/20 min)
4: Change Entity Arrival Rate – simulate increased customer demand 7.29 0.16 1.55 2.31 27,755 10117
(4 min/15 min)

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