Prepare a worksheet of operations activities that Harrison should inquire about this summer. 2. If you were Harrison, what would you do? Why?

The Bronson Insurance Group was originally founded in 1900 in Auxvasse, Missouri, by James Bronson.

The Bronson Group owns a variety of companies that underwrite personal and commercial insurance

Policies. Annual sales of the Bronson Group are $100 million. In recent years, the company has suffered

operating losses. In 1990, the company was heavily invested in computer hardware and software. One of

the problems the Bronson Group faced (as well as many insurance companies) was a conflict between

established manual procedures and the relatively recent (within the past 20 years) introduction of

computer equipment. This conflict was illustrated by the fact that much information was captured on

computer but paper files were still kept for practical and legal reasons.

FILE CLERKS

The file department employed 20 file clerks who pulled files from stacks, refilled used files, and delivered

files to various departments including commercial lines, personal lines, and claims. Once a file clerk

received the file. Clerks delivered files to underwriters on an hourly basis throughout the day. The

average file clerk was paid $8,300 per year. One special file clerk was used full time to search for

requested files that another file clerk had not been able to find in the expected place. It was estimated that

40 percent of the requested files were these “no hit” files requiring a search. Often these “no hit” files

were eventually found stacked in the requester’s office. The primary “customers” of the file clerks were

underwriters and claims attorneys.

UNDERWRITING

Company management and operations analysts were consistently told that the greatest problem in the

company was the inability of file clerks to supply files in a speedy fashion. The entire company from top

to bottom viewed the productivity and effectiveness of the department as unacceptable. An underwriter

used 20-50 files per day. Because of their distrust of the files department, underwriters tended to hoard

often used files. A count by operations analysts found that each underwriter kept from 100-200 files in his

or her office at any one time. An underwriter would request a file by computer and work on other

business until the file was received. Benson employed 25 underwriters.

MANAGEMENT INFORMATION SYSTEM

Upper management was deeply concerned about this problem. The MIS department had suggested using

video disks as a possible solution. A video disk system was found that would be sufficient for the

companies needs at a cost of about $12 million. It was estimated that the system would take two years to

install and make compatible with existing information systems. Another, less attractive was using

microfilm. A microfilm system would require underwriters to go to a single keyboard to request paper

copies of files. The cost of a microfilm system was $5 million.

Questions:

1. What do you recommend? Should the company implement one of the new technologies? Why or

why not?

2. An operations analyst suggested that company employees shared a “dump on the clerks”

mentality. Explain.

Case let 4

Harrison T. Wenk III is 43, married, and has two children, ages 10 and 14. He has a master’s degree

in education and teachers junior high school music in a small town in Ohio. Harrison’s father passed

away two months ago, leaving his only child an unusual business opportunity. According to his

father’s will, Harrison has 12 months to become active in the family food-catering business, Kare-

Full Katering, Inc., or it will be sold to two key employees for a reasonable and fair price. If

Harrison becomes involved, the two employees have the option to purchase a significant, but less

than majority, interest in the firm. Harrison’s only involvement with this business, which his

grandfather established, was as an hourly employee during high school and college summers. He is

confident that he could learn and perhaps enjoy the marketing side of the business, and that he could

retain the long-time head of accounting/finance. But he would never really enjoy day-to-day

operations. In fact, he doesn’t understand what operations management really involves. In 1991

Kare-Full Katering, Inc. had $3.75 million in sales in central Ohio. Net profit after taxes was $

105,000, the eleventh consecutive year of profitable operations and the seventeenth in the last 20

years. There are 210 employees in this labor-intense business. Institutional contracts account for

over 70 percent of sales and include partial food services for three colleges, six commercial

establishments) primarily manufacturing plants and banks), two long -term care facilities, and five

grade schools. Some customer location employs a permanent operations manager; others are served

from the main kitchens of Kare-Full Katering. Harrison believes that if he becomes active in the

business, one of the two key employees, the vice president of operations, will leave the firm.

Harrison has decided to complete the final two months of this school year and then spend the

summer around Kare-Full Katering – as well as institutions with their own food services – to assess

whether he wants to become involved in the business. He is particularly interested in finding out as

much as possible about operations. Harrison believes he owes it to his wife and children to fairly

evaluate this opportunity.

Questions:

1. Prepare a worksheet of operations activities that Harrison should inquire about this summer.

2. If you were Harrison, what would you do? Why?

Case let 5

National Competitive Advantage of IKEA Group, a Swedish company founded in 1943 with its

headquarters in Denmark, is a multinational operator of a chain of stores for home furnishing and

furniture. It is the world’s largest retailer, which specializes, in stylish but inexpensive Scandinavian

designed furniture. At the end of 2005 the IKEA Group of Companies had a total of 175 stores in 31

countries. In addition there are 19 IKEA stores owned and run by franchisees, outside the IKEA store

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