Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Great Valley Income TaxAdvice

 

GV is a small accounting firm supporting wealthy individuals in their preparation of annual income tax statements. Every December, GV sends out a short survey to their customers,asking for the information required for preparing the tax statements. Based on 50 years ofexperience, GV categorizes their cases into the followinggroups:

 

• Group 1 (new customers, easy): 15 percent ofcases

• Group 2 (new customers, complex): 5 percent of cases

• Group 3 (repeat customers, easy): 50 percent ofcases

• Group 4 (repeat customers, complex): 30 percent ofcases

 

Here, “easy” versus “complex” refers to the complexity of the customer’s earning situation.

In order to prepare the income tax statement, GV needs to complete the followingset

of activities. Processing times (and even which activities need to be carried out) depend on which group a tax statement falls into. All of the following processing times areexpressed in minutes per income tax statement.

 

Group

Filing

Initial meeting

Preparation

Reviewby Senior accountant

Writing

1

20

30

120

20

50

2

40

90

300

60

80

3

20

Nomeeting

80

5

30

4

40

Nomeeting

200

30

60

 

 

The activities are carried out by the following threepeople:

 

• Administrative support person: filing and writing.

• Senior accountant (who is also the owner): initial meeting, review by senior accountant.

• Junior accountant: preparation.

 

Assume that all three people work eight hours per day and 20 days a month. Forthe following questions, assume the product mix as described above. Assume that there are 50

 

income tax statements arriving each month.

 

GV1.Which of the three persons is the bottleneck?

a. Administrator

b. Senior accountant

c. Junior accountant

 

GV2.What is the (implied) utilization of the senioraccountant? GV3.What is the (implied) utilization of the junioraccountant?

GV4.What is the (implied) utilization of the administrative supportperson?

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