Question Case Study Chase Manhattan Bank

Case Study
Chase Manhattan Bank
The workload in many areas of bank operations has the characteristicsof a nonuniform distribution with respect to time of day.
For example, at Chase Manhattan Bank in New York, the numberof domestic money transfer requests received from customers, ifplotted against time of day, would appear to have the shape of aninverted U curve with the peak around 1 P.M. For efficient use ofresources, the personnel available should, therefore, vary correspondingly.
Figure 8.2 shows a typical workload curve and correspondingpersonnel requirements at different hours of the day.
A variable capacity can be achieved effectively by employingpart-time personnel. Because part-timers are not entitled toall the fringe benefits, they are often more economical than fulltimeemployees. Other considerations, however, may limit theextent to which part-time people can be hired in a given department.
The problem is to find an optimum workforce schedulethat would meet personnel requirements at any given time andalso be economical.
Some of the factors affecting personnel assignment arelisted here:
1. By corporate policy, part-time personnel hours are limited toa maximum of 40% of the day’s total requirement.
2. Full-time employees work for 8 hours (1 hour for lunchincluded) per day. Thus, a full-timer’s productive time is 35hours per week.
3. Part-timers work for at least 4 hours per day but less than 8hours and are not allowed a lunch break.
4. Fifty percent of the full-timers go to lunch between 11 A.M.and noon, and the remaining 50% go between noon and 1 P.M.
5. The shift starts at 9 A.M. and ends at 7 P.M. (i.e., overtime islimited to 2 hours). Any work left over at 7 P.M. is consideredholdover for the next day.
6. A full-time employee is not allowed to work more than5 hours overtime per week. He or she is paid at the normalrate for overtime hours—not at one-and-a-half times the normalrate applicable to hours in excess of 40 per week. Fringebenefits are not applied to overtime hours.
In addition, the following costs are pertinent:
1. The average cost per full-time personnel hour (fringe benefitsincluded) is $10.11.
2. The average cost per overtime personnel hour for full-timers(straight rate excluding fringe benefits) is $8.08.
3. The average cost per part-time personnel hour is $7.82.
The personnel hours required, by hour of day, are given inTable 8.9.
The bank’s goal is to achieve the minimum possible personnelcost subject to meeting or exceeding the hourly workforcerequirements as well as the constraints on the workerslisted earlier.
Discussion Questions
1. What is the minimum-cost schedule for the bank?

Source: Adapted from Shyam L. Moondra. “An L. P. Model for Work Force
Scheduling for Banks,” Journal of Bank Research (Winter 1976): 299–301.
9_10 A.M. 4_5 P.M.
Hour Personnel Hours
Required
Workload
FIGURE 8.2
TABLE 8.9 Workforce Requirements
NUMBER OF PERSONNEL
TIME PERIOD REQUIRED
9–10 A.M. 14
10–11 25
11–12 26
12–1 P.M. 38
1–2 55
2–3 60
3–4 51
4–5 29
5–6 14
6–7 9