Mathematics · Operations Management
A regional private sector bank, Flexi-Bank, is restructuring its loan processing department using Lean principles to reduce customer waiting time (Waiting Muda). Before restructuring, the process required 10 days for loan approval. Testbook The initial process flow was: 1. Customer Application: 1 day2. Documentation Verification: 4 days3. Credit Appraisal: 3 days4. Final Sanction: 2 days Total Lead Time = 10 days. The bank implements the following Lean initiatives: - JIT principle on documentation: Digital workflow reduces documentation waiting time to 0.5 days. - Kaizen on verification: Junior staff training and standardized checks reduce verification time by 50 percent. - Process Redesign: Final Sanction and Credit Appraisal are combined into a single, specialized unit, reducing their combined time by 40 percent. What is the new total loan processing Lead Time, and what is the total percentage reduction in the Lead Time?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1New Lead Time: 5.7 days; Total Reduction: 43 percent
- 2New Lead Time: 5.5 days; Total Reduction: 45 percent
- 3New Lead Time: 6.5 days; Total Reduction: 35 percent✓
- 4New Lead Time: 4.9 days; Total Reduction: 51 percent
Correct answer
New Lead Time: 6.5 days; Total Reduction: 35 percent
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