The load rate could go up by a factor of 10, but if productivity could be increased by a like amount, then the hours would go down by a like amount and the charges would be the same. In other words, 100 hours at $10.00 per hour is the equivalent of 10 hours at $100.00 per hour.
Aware of several efforts aimed at improving productivity, Frank asks his budget analyst to compare actual charges to the programs with the fixed budget prepared at the beginning of the year. The results are spotty. Most programs are at or under budget, with a few significantly under budget and a few significantly over. Consultation with his two managers reveals that the four programs over budget have had increases in volumes that, percentage-wise, far outstrip the increase in costs.
Several of Frank's customers have suggested that he reduce staff as a way of reducing expenses. However, Frank already knows that this won't work. During the first half of the fiscal year, several retirements and postings to other divisions enabled Frank to effect a 19 percent reduction in regular staff. He refused to let any of the vacant positions be filled and directed the managers and supervisors to make use of agency or temporary personnel. As a result, there is no "excess capacity," so to speak. Reducing staff would only have the very undesirable effect of making it impossible to perform the remaining work of the division.
Definition of Bounded and Unbounded Problems
Bounded problems can be defined A field of uncertain situations in the business organization. The uncertainty is of limited scope. The details of the problem can be solved progressively and can be reduced to a relative certainty. Usually the bounded problems are commonly found during hiring of the employees, the various legal agreements, operations of the business and engineering. It can be said that the problem is highly defined and the ideas of which are sketched. The bounded problem can be easily broken down and connections can be made. The bounded problem is comparatively simple and is not fundamental challenge for the organizational team to solve the particular problem (Baker 2017). On the contrary, According to Bardach and Patashnik (2015), unbounded problem are those problems are usually of a larger scale, the structure of the problem is not clearly defined. The certainty of the problem is difficult and feedback of which is comparatively expensive to gain. The optimization of the problem like the customers population of the industry and the demographic groups are highly of a complex nature. Moreover, obtaining feedback is difficult. Acquiring the data is highly complex. It can be said that the bounded and unbounded problems differ in the size and the degree of uncertainty that is involved in the problems (Boud and Feletti 2013).
From the case study it can be analyzed that frank faces has been facing unbounded problem in his business. Frank has a big rate problem; he states that the division charges are going to be 20% higher in the future years to come. The main problem that has been facing by Frank is the cost of space, in the short term, the cost of the space occupied by the business of Frank has been doubled (Deutsch and Baby 2013). The things are gummy, further frank’s division has been loosing work. He has already lost 20% of the division’s hours in the last years. From the case study it was understood that the business run by Frank have considerable increase in the fixed expenses in his division. In order to reduce the, frank has to distribute on a smaller base of productive hours (Deutsch and Dancause 2013). According to the case study, Frank has to reduce the expenditure of the business. Therefore, in order to reduce the expenditure, Frank took initiatives to reduce the staff’s in his division. The managers begin making greater use of less expensive and temporary staff in his division. As a consequence of this problem, the Frank’s division has to recover the expenses of the work performed, which has considerably increased and is likely to increase again. In the case of Frank, he can neither move back to work nor can he relocate to cheaper facility or quarters. According to Deutsch (2013), the loss of work and increased expenses of the space charges has increased the problem of Frank. From the case study analyzes it can be determined that Frank’s organization had some major issues suc as outdated processes, the process and work done by the staff in Frank’s division were outdated. Therefore, it might have increased the expenditure of the organization. It has been identified that the business faced increased expenses on the fixed cost. That is the division of Frank suffered from lack of visibility and accountability on the management of the inventory and scheduling. According to Ford (2015), the activities and the functioning of Frank’s division were inaccurate and inefficient which might be the reason for increased expenditure of the division. Along with the increase in the fixed cost, the division faced issues with the increased cost of the space, which eventually increased the problem of Frank. Frank has no option left to give up the present space and move to new facility. The facility he is using now is highly expensive, however, frank has many customers in the new facility therefore he is unable to leave them behind. Moving into a new facility will take a lot of lead time to obtain new business. According to Funke (2014),the business owned by frank is jot independent and is a cost center. From the case study it has been identified that the new customers are somewhat not satisfied with the new facility. Furthermore, Frank is not able to publicize that effect to moving to a new quarter, that the increased rate might pose a huge threat to the customers and the future of his division (Frensch and Funke 2014).
Analysis of Frank's Division
According to Hicks (2013), the major objective of solving the problem faced is to reduce the uncertainty of the situation uncertainty can be reduced by information. From the case study analyzes it has been identified that to cover the base of the problem, adequate attention must be fixed on the 3 c’s of decision making that includes the choices, the criteria and the constrains of the problem (García Peñalvo 2015). In order to determine and sort things out he constructed a model of arithmetic operations, which determines the charges of the programs and provide him with relevant data of the past three years. By analyzing the data he determined the data and noted that the allocation category is the hardest hit. The analyzing the data Frank is able to determine the space charges ad the load dollars used by the division and determine the load rate. However, he realized that the load rate is of secondary concern (Hicks 2013). However, according to Funke (2014), the bottom line consists of the charges to the programs initiates and not the rates. Frank determined that somehow the productivity of the division has to be increased. He compared the actual charges of the program with the fixed budget that has been prepared at the beginning of the year. He identified that the some of the programs were significantly under budget and some were over budget. On consulting with the managers we identified that four programs have been over the budget and have considerably increased the cost percentage wise.
According to Van Aken and Berends (2018), Frank has been suggested by his customers, that in order to reduce the excessive expenditure of the organization, he has to reduce the staff. Since Frank had already reduced the regular staff, he advised his managers and the supervisions to utilize the temporary staff and agency. This solution resulted in no excess capacity. However, reducing the staff would decrease the productivity and would be difficult to perform the rest of the work in the division. Reducing the staff of the division has increased the productivity however, the charges of the programs are not sufficient to cope up with the problem and reduce the division’s expenses (McPhee 2014). The fixed expenses of the organization have to be reduced. It has been anticipated by Frank that the expenditure will increased about 10% over the future years. Therefore, Frank aimed to reduce the division’s expenditure and the fixed expenses by $225,000. Frank determined the most simplest and easy way to reduce the fixed expenses and the expenditure of the division that is by reducing the amount of space his division occupies. Frank decided to dump 5000 square feet that the programs and the supporting staff group in the other building. This would make a desirable effect on frank’s expenses and rates. However, Frank raised the issue of space consolidation and has two main objectives (McPhee 2014). He realized that 1500 square feet will not accommodate the division’s staff and the other objection is that some of the programs would be requiring extraordinary amount of tabletop space in order to temporality store the files of the trainees during the peak processing periods. With the emerging obstacles, Frank decided to get corporate commitment with the explanation. Frank had to sell his views in solving the problem (Deutsch and Dancause 2013). Therefore from the case study analyze it can be said that construction of the model and determining the data helped Frank to solve the problem. Trimmings, luck and knowledge played a huge role to solve the problem and brought success to Frank.
Problem-Solving Strategies for Business Organizations
In order to figure the problems of the organization, one should cover three things of decision making that is making choices, analyzing the criteria of the problem and the possible constraints (Bardach and Patashnik 2015). Depending on the scope, scale and complexity of the problem in the organization it is easy to figure out the solution of the problem faced by an organization. In the case of Frank, there are various simple solutions that can be present. One such solution is moving back to the old facility or inexpensive facility. However, according to Funke (2014), there are constraints on the solution and the things that can be done by Frank as stated in the case study. If Frank moves to a new facility or inexpensive facility, it will take a lot of lead time to build in and obtain new business. The division of Frank is costly and expensive and not very independent. Moreover, customers are in the new facility which he would be unable to leave behind, to add the problems the customers are not satisfied with Frank’s work (McPhee 2014). It is very important to solve the problem and choose a solution from the different option which overcomes the constraints. Implementing a solution in the business involves bringing in significant changes in the business. It is important to develop a strong commitment to the solutions to overcome the problems. In Frank’s case, he may be able to reassign work from the other divisions to his. This would help to expand the base of productive hours and would help to reduce the rates and thereby please the customers. However, according to Deutsch (2013), this would only shift the cost burden from one program to the new ones. Therefore, committing to this solution was not possible.
Frank determined the heart of the problem to be losing of work and productivity, increase in the rates, space charges. In order to sort out the problems and the situation, Frank had his budget analyst to construct a model of the arithmetic operations (Van Aken and Berends 2018). This model enables Frank to determine the charges and provided him with data for the past three years. By analyzing the model made by his budget analyst, he realized that the allocation theory had a hardest hit. He analyzed the space charges and determined the load rate. However, the load rate is of secondary concern (Hicks 2013). The bottom line consists of the changes of the programs. Frank realized that there is a high possibility of the load rates to go up but if the productivity of the division is not of the same amount, the hours would go down and would result in the same charges. From this analyzes he determined that the main aim should be on increasing the productivity of the organization. He compared the budget and the actual charges of the program with that of the fixed budget program which had been prepared at the beginning of the year. He realized that most of the projects were under budget and many of the programs were over budget. Consulting the managers and the supervisors, Fran realized that four of the programs were over budget. This has majorly increased the costs of the organization (McPhee 2014).
In order to mitigate the problem, he had been suggested to reduce the staff of his division to reduce the expenditure. He reduced the regular staff to 19%. He directed the managers and the supervisors to make use of the temporary staff and agency to fill and strongly advised not to fill up the vacant position (Baker 2017). However, according to Van Aken and Berends (2018), this solution too had constraints, reducing the staff would help to cut off the expenditure of the organization but would reduce the productivity of the division and would be impossible to perform the remaining work of the division. However, on analyzing the model of arithmetic charges, he came into conclusion the actual problem and issues faced by the organization; he developed various solutions and analyzed the constraints of it. Frank realized that reducing the staff from the divisions reduced expenditure, but the fixed expenses of the organization were not reduced. Frank realized that even if the production of the organization and the charges of the programs were able to cope up with the budget line, the charges of the programs were not sufficient enough to recover the expenses of the division. As a result of which rates would be raised at the end of the year (McPhee 2014).
Frank determined that the fixed expenses of the organization have to be reduced else the rates of the division will be raised of about 10% in the next year. This has been shaping up to be a problem. Hence to overcome this problem, Frank realized that to recover the cost and expenses, he has to reduce the fixed cost at about $225,000. He made a goal to reduce the fixed expenses, which could be done to reduce the amount of space occupied by his division (McPhee 2014). He determined that presently the division occupies 20,000sqare feet; 15000 in a building and the other 5000 square feet for the adjoining one. He decided to dump the 5000 square feet occupied by the other building. By doing this, there would be an effective and desirable effect on the expenses and rates of Frank (Deutsch 2013). However, according to Funke (2014), he encountered further objections. One was that 15000 square feet would not be sufficient to accommodate all the staffs of the decisions and the other objection was that the adjoining building would be requiring tabletop space in order to temporarily store thousand amounts of history files during the peak processing time (Hicks 2013).
Frank tried to look at the things differently, he thought of a solution to effect the space consolidation that is vertical filing system, this would not take up a lot of space on the floor and would enable the file to be readily accessible without any waste of time or undue stooping. On researching it was found that vertical filing system will work and would be cost effective. They would occupy one-fourth the space of the table top system (McPhee 2014). However, according to Van Aken and Berends (2018), Frank faced another obstacle that is to convince his boss that spending few amount could have a tremendous payoff in terms of saving space in the division. There were added obstacles that have to convince the corporate to make a lump sum amount, a capital expenditure that is not budgeted and the other obstacle faced is to make the move as quickly as possible. Frank decided that getting the commitment of the corporate were easier. Frank would have to give more explanation and justification in order to get agreements to alter the priorities (Hicks 2013). Therefore it can be said from the case study analysis that consensus, commitment and cooperation are highly important and crucial to solve the organizational problems. It can be said from analyzing the case study that Frank had to sell his ideas and views to solve the problems.
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