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OPM400 Production and Operations Management Assignment Sample

Eastern Insurance Processing Centre - OPM400

Eastern Insurance Company has a main processing Centre in Calgary, Alberta that is responsible for all Canadian claims. On average they process over a thousand claims per month. Claims are for a range of services including dental, medical, and professional services. Recently it has been brought to the Managements attention that errors are becoming an increasing problem. The company does not have a Quality Control Department, but the Operations performance does fall under the responsibility of Marco Rossi, Operations Manager. Although he has no formal training in quality, he has taken a measure of implementing a Quality improvement project.

In a four week period in January 2022, each day, a group of claims were removed from the system and given a thorough evaluation. Results are recorded in the chart below.

In February, extra training took place for all employees. All associates in the Claims department attended either a six hour session, or two four-hour sessions depending on factors such as their position, length of service, and their area of responsibility. Eastern spent over $75,000 to complete this training, convinced that the reduction in number of errors would save the company money in the long run.
Approximately 20% of the employees in the Claims Department have been working for Eastern for less than one year, so this seemed like a good time to refresh the training that was given. Also, in the past year there have been two new major customers for Eastern which resulted in new forms/ documents and processes, as well as a much higher workload.

In March 2019, Marco Rossi felt it was important to determine whether the training that he implemented resulted in a reduction in the number of errors in customer claims. Once again, the same number of randomly selected claim forms was removed from the system. Each form was carefully evaluated to look for errors.

The information below is from the January (original data) and from March (after the training). As a new hire from the Business Program at Seneca College, you have been asked to do an evaluation of the data and to put together a report on the success of the training program at Canadian Insurance Company, and to recommend next steps.


Compile a report that includes the following

1. Cover page and Table of Contents. Ensure each section has a proper title and that each graph is properly labelled. Double space all pages. Compile the report in the order of the numbers given below. Ensure that your Table of Contents is compiled using the Microsoft WORD tool.

2. Executive Summary. You should write this part after you have covered all the issues of this assignment, but it should appear at the beginning of your report. In that way it will allow Marco Rossi to have immediate, short and clear understanding of the main findings and conclusions of the report. Give your specific results here, including the per cent improvement in errors. (1-2 paragraphs)

3. Summarize for Mr Rossi the four costs of quality, giving examples of each from Eastern Insurance. (Maximum two paragraphs)

4. a Fish-Bone (Cause and Effect) chart, which indicates some possible reasons for the defects listed in the case.

5. Use EXCEL and perform a Pareto Analysis for the original data. (Pre-training) Comment on the performance in the Claims Department. Include the Table with your data as well as the Pareto chart.

6. Using the original data, draw a Run Chart (Line Chart) for each of the top 2 errors indicated on your Pareto Chart. Can any conclusions be drawn from this line chart?

7. Perform a Pareto Analysis on the data obtained after the training took place (post training). Discuss the improvements and next steps. Was the training successful? ( 1 paragraph)

8. It has been discussed that there is some pressure in this industry to obtain ISO Certification. Is this something you would recommend, and why, or why not? ( 1 paragraph)

9. From the information you have discovered, suggest two recommendations for Eastern Insurance Processing Centre to improve their performance going forward. Use information learned in our unit on Quality. (Maximum 2 paragraphs)
The charts and graphs must be computer generated. Each Pareto Analysis must include the Pareto table and the Pareto chart. Ensure that you import your EXCEL document into WORD so that your formulas are visible. Use Paste Special.

You must ensure that your charts appear as you want them to be seen in your WORD document. If they cannot be seen in WORD, they cannot be marked.

No part of this report should be hand written or written in the first person. Do not use I, we, you, me, my etc. Ensure that the rubric is the final page of your assignment.

Please remember to identify your charts/graphs- Main Titles, X-Axis and Y-Axis Titles and Scale, other names of data. Be sure to cite any external references. All submissions must be submitted through Safe Assign in order to be graded. Submit only ONE WORD document.

January Data (Original Data)

March Data (After Improvement)

If the version you submit is different than the one given to you in Blackboard, it will not be graded. Be sure that you do not share your document with anyone.

Late Policy: Late assignments will be deducted 10% per day up to a maximum of three days late.
Name your Document: yourfirstname.lastnameAss2


1. Introduction

This report provides information on cost quality and develops a fishbone diagram to identify the cause and effect of claim department performance. Also prepared a Pareto chart before and after training to analyse the data error. A run chart is prepared to identify errors over time.

2. Cost of Quality

Four costs of quality include prevention cost, appraisal cost, internal failure and external failure. Prevention cost refers to inefficient quality management systems and documentation of quality planning which are found in the given case study. For example, Eastern Insurance company do not have any quality control department, and also management does not plan for the data entry operation. Employees do not become aware of the systems because of training lack. Appraisal cost includes tests and performance checks to determine whether the company achieve particular requirements (Guliani et al. 2021). This includes the purchase of equipment for the test and inspection. For example, the company incurred $75000 for training purposes.

Internal failure cost refers to the rectification of error before transformation to the final recipient. Internal failure costs include failure analysis costs. For example, Eastern Insurance company spends on training to reduce the number of errors in the claim department (Almomani et al. 2019). External failure cost refers to the rectification of error after transformation to the final recipient. This cost includes servicing costs and repair costs for assignment help. For example, Eastern Insurance company reduce customer claim errors after providing service.

3. Fish Bone Diagram

This diagram is prepared to represent the cause of customers' claim errors found in the Eastern Insurance company. The two main causes are employee training lack and inefficient quality control management. Therefore two causes are the effect of the customer claim.


Diagram 1: Fish Bone

4. Pareto Analysis


Diagram 2: Pareto chart

The Pareto chart is prepared on the basis of the data given in the case study. In this chart, X-axis represents the cause of the data error and Y axis represents the cumulative percentage of causes. In this chart, four cause contributes 91% of data error. The company need to provide more focus on the four causes and take appropriate action to mitigate this error. The four causes are the vital view of this chart where the company need to work appropriately to reduce customer claim error. By analysing the above chart, it is concluded that the performance of the claim department is very poor because the department collects 85 incomplete customer information.


Table 1: Performance of the Claim department

5. Run Chart Analysis


Diagram 3: Run Chart

In the run, the chart X-axis represents the date of the present data and Y axis represents the data error of two segments. Rung charts are prepared to spot data over the time period. In other words, the performance of the claim department represents, and medians are calculated for every data error to set a benchmark for the data error. The chart provides a great view rather than only summarising data. This run chart is also called a time series chart which represents the top two data errors over time. Information incomplete data errors reduce on the 4th of January and take a peak on the 11th of January. The company can reduce these errors through a proper testing process.

6. Pareto chart after training


Diagram 4: Pareto chart after training

After providing training, data errors reduce in every segment. Incomplete information error reduces to 27, and authorisation reduces to 9 from 28. Before training, four segments contribute 91% of data error, but after training, these four segments contribute 85%. But the company have to improve that data error. The company have to focus more on the first data error; if the company finds that 20 of the effort resulting 80 per cent data error improvement, then the company do not need to focus more on the remaining data error. It is because the reaming data error will improve automatically if the company develops proper quality management. The company can improve charts using the six sigma framework after analysing the data represented in the chart. The training is successful because incomplete information data errors are decreased by 11 per cent.

7. ISO certification

The Eastern insurance company should be required to obtain ISO certificates because it ensures the creditability and quality of the company. Different types of ISO certificates are available depending on the types of services and products the company is providing to their customers. Every small and big company is required to obtain ISO certificates because it is an asset of the company. ISO certificates help the company to improve service quality by maintaining standard quality protocols (Demir et al. 2021). Iso certificates indicate all key processes of the company. Customer satisfaction is the ultimate objective of all organisations. Some customers establish business relationships with only ISO-certified companies. Easter Insurance company can satisfy their customers through ISO certification because it establishes a professional approach and trustworthiness (Ikram et al. 2021).

One of the key operational management includes decision-making. Organisations make decisions by analysing their past and present information. ISO certification ensures the right decision-making by providing a structural quality management framework. ISO certification helps the Insurance company to establish creditability (Demir et al. 2021). If the company wants to gain a competitive advantage, then the company is required to be credible. ISO certificates are the renowned and well-known credible marks of the company. ISO certificate help to build customer trust and add credibility to advertisement and marketing strategies (Ikram et al. 2021).

Therefore it is concluded that if the Estate insurance company wants to get benefits, gain a competitive advantage in the market and develop as credible, then ISo certificates are important for the company.

8. Recommendation

The company can improve data errors by double check the work and process standardisation. Double check is considered the standard operating procedure. In this process, the quality control department will check the work done by an employee. This process will reduce data entry errors, and organisations can mitigate data entry errors during the process. Data entry is a time-consuming process which increases human error. If the company wants to maintain accuracy in the data entry process, then the company have to standardise their data collection and data entry process. The standardised process helps the claim department to follow a protocol during data collection and data entry.

9. Conclusion

This report discusses four costs of quality, including prevention cost, appraisal cost, internal failure and external failure, and also provides cast study examples of the related costs of quality. A fishbone diagram is created to identify the different causes of data entry errors. Also, a Pareto chart is prepared to identify the cumulative percentage of data error. After training data Pareto chart is prepared to determine how much training provides effect with the data error. The run chart is prepared by taking 2 top data entry errors and calculating the median of each section to identify the up and down of data error over time. And also provide recommendations to improve data quality.  



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