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* * Mortgage Service Game Capacity Planning in a Serial Service Supply Chain Copyright ? 2014 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Block Diagram Four independent serial stages: credit check, appraisal, survey, title check. Backlog (queues of work-in-process) and basis for setting Target Capacity that lags actual capacity). “Bow-tie” is valve controlling flow of applications between stages. Information is either “decentralized” based on backlog or “global” based on knowledge of new application rate. Inventory at Each Stage where B(i,t), C(i,t), and r(i,t) refer respectively to the backlog, capacity, and completion rate at stage i on day t. Capacity Adjustment The capacity adjustment time, τ, is set to one month or 20 business days. In essence, each day capacity will close one twentieth of the remaining gap from its current value to its target in an exponentially decreasing manner. Target Capacity Made by Computer(decentralized) if (t modulo 5) = 0 otherwise Thus, each week the target capacity for each stage will be set directly proportional to the stage’s current backlog Bi,t and inversely proportional to the nominal service delay time λ. Target Capacity Made by Computer(new application information known) if (t modulo 5) = 0 otherwise where 0α1 Now, the concept of exponential smoothing with parameter α is used to revise the capacity gradually. Mortgage Game Parameters Entire supply chain begins with backlog and capacity at each stage equal to 100. $2000 to hire or lay-off an employee. $500 per week salary. Backlogged application costs $100/week. Game played for 50 weeks. Objective: minimize the total cost for the entire supply chain resulting from salaries and service delays. * * * *
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