Claims Data-Entry Unit: Standard Time and Ergonomic Investment
A data-entry unit of 18 operators processes medical claims. A time study of 40 cycles gives a mean observed time of 4.20 minutes per claim, a performance rating of 110%, and an allowance of 15%. Demand is 1,850 claims per 7.5-hour shift; current output averages 1,620. Operators use 15-inch monitors at about 60 cm, with document holders placed to the side; 9 of 18 report neck pain. A vendor offers adjustable monitor arms and document holders at $310 per workstation, claiming an 8% time reduction. The unit has a fixed labor budget, and overtime is paid at 1.5 times the base rate. Management wants a one-year payback analysis and a staffing number. No base wage was provided; the analyst must state assumptions.
1. Compute the standard time per claim and the number of operators required to meet demand. Compare with the current staffing and output, showing the gap.
Read the worked answer
Normal time = 4.20 × 1.10 = 4.62 minutes. Standard time = 4.62 × 1.15 = 5.313 minutes per claim. Available time = 7.5 × 60 = 450 minutes per shift. Output per operator = 450 / 5.313 = 84.7 claims. Required operators = 1,850 / 84.7 = 21.84, so 22 operators.
Current staffing of 18 at standard output would produce 18 × 84.7 = 1,525 claims, yet actual output is 1,620. That inconsistency matters: the crew may be working faster than the rating/allowance implies, may be using overtime, or the time study may be unrepresentative. Verify with a second study before adding staff. The calculated gap is 22 − 18 = 4 operators, or 1,850 − 1,620 = 230 claims per shift. Present both the standard-based requirement and the actual-output discrepancy rather than treating 22 as automatically correct.
2. Evaluate the ergonomic proposal using a one-year payback. What data is missing, and what non-financial factors should influence the decision?
Read the worked answer
Total cost = 18 × $310 = $5,580. An 8% time reduction lowers standard time to 5.313 × 0.92 = 4.888 minutes, so output per operator = 450 / 4.888 = 92.1 claims and required staffing = 1,850 / 92.1 = 20.1, or 21 operators - one fewer than the 22 required at current standard.
Payback = $5,580 / annual savings from one operator. Without a base wage, the calculation is incomplete. If the loaded annual cost is $45,000, payback is about 1.5 months; at $28,000, about 2.4 months. Because the labor budget is fixed, savings may appear as reduced overtime: the 230-claim gap equals 230 / 84.7 = 2.7 operator-shifts, paid at 1.5×. Missing data: base wage, benefits, overtime hours, turnover, and proof of the vendor's 8% claim. Non-financial factors: 9 of 18 operators report neck pain, plus absenteeism, quality, and musculoskeletal risk. Pilot four workstations and measure claims per hour and discomfort before full purchase.