Care-co In Los Angeles Harvard Case Solution & Analysis

Care-co In Los Angeles Case Solution

Question 1

Care-co was facing many issues, among which first and most important was loss incurrence. The profit of Care-co was declining throughout the years, i.e. the profit of 2020 from quarter 3 to quarter 4 was decreasing and Care-co also incurred loss in year 2021 through quarter 1 and quarter 2, i.e. -174 &-121, respectively. The management’s concerns were unjustifiable because the management thought that the company’s resources were sufficient and they were looking for solutions to make this work. Competition in the industry was intense and the competitor:Rapido, was performing well as compared to Care-co, i.e. the turnaround time of Rapido was 2-days and there was less renewal loss as compare to Care-co. The work load was not properly managed, the teams were having a workload at one time and were idle the next moment. So, there was an imbalance of workload management. The agents were moving to competitors’ firm in order to save their image and market reputation. The renewals were delayed in Care-Co and the turnaround time was 6-days and the turnaround time was 8.2 Days. Renewal (RERUN) backlog was high in Care-Co Company, because the previous renewals were ignored due to the new renewal requests.

The possible causes behind the performance of CareCo was higher turnaround time as compared to Rapido, and agents also moved to competitors to save their image and market reputation. The capital of the company was underutilized and it had workload imbalance. Due to FIFO method; the backlog of RERUNs and RAINs had increased, because priority was given to the new policies.

Question 2

CareCo is overestimating its TAT and is using 95% standard completion time. If we see the current capacity;it is stated that the current processing application number is 39 per day and WIP of 82 policies. The turnaround time was wrongly estimated and it was indicating towards misleading information which was hurting the business. 95% Standard Completion time was not a good option to be used to calculate TAT, because there were high variations in the processing of RAPs and RUNs. To calculate capacity, Maria only calculated the hours that are available for the employees, which did not state the capacity available per day and the capacity utilization.

    Distribution Underwriting Rating Policy Writing
Number of request/day 40 40 40 40
Weighted processing time   40 30 70 55
Total time required (in hours) 26.7 20.0 46.7 36.7
Number of clerks 4 3 8 5
Capacity per day (in hours) 30 22.5 60 37.5
Hours Available 7.5 7.5 7.5 7.5
Capacity available per day (hours/day) 30 22.5 60 37.5
Capacity available per day (mins/day) 1800 1350 3600 2250
Capacity utilization 89% 89% 78% 98%

Question 3

As I already mentioned that Maria used 95% of standard completion time, and TAT was 8.2 days in table 2, which indicates that the company was not able to finish its work even in one week, i.e. % working days in a week and remaining work in next week was creating backlogs. So I think Maria should calculate the turnaround time through mean time rater than 95% SCT. SCT considers that 955 of policies were completed by taking maximum time, which does not consider lesser time, so it will consider both the longer and lesser time policies. So, the mean time calculations stated that the company will complete its activities on 5th day of the week and no backlog will occur. And this would allow the teams to focus on new policies without having any backlog............................

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