Randolph Smithfield is a cost analyst with Franklin Insurance Company. Franklin is applying standards to its claims payment operation. Claims payment is a repetitive operation that could be evaluated with standards. Randolph used time and motion studies to identify an ideal standard of 36 claims processed per hour. The Claims Processing Department manager, Fred Jones, has rejected this standard and has argued that the standard should be 30 claims processed per hour. Fred and Randolph were unable to agree, so they decided to discuss this matter openly at a joint meeting with the vice president of operations, who would arbitrate a final decision. Prior to the meeting, Randolph wrote the following memo to the VP.
To: Linda Greene, Vice President of Operations
From: Randolph Smithfield
Re: Standards in the Claims Processing Department