You document time and time variation data for each processing step, as follows:
Customer Inquiry involves the creation of an initial rate quote following the first customer contact by phone, in-person visit, or the Internet. Historical data indicates this cycle time is lognormally distributed with a mean of one hour and a standard deviation of 0.25 hours.
Loan Application involves the completion of forms by customers, with or without staff assistance. This step takes from one to five eight-hour days, but usually takes three days.
Document Verification and processing occurs in the bank, where a loan specialist reviews credit data, presents loan alternatives to customers, and independently verifies information. This step usually takes between two and four eight-hour days. However, about two out of ten times, the loan is suspended and takes between four and six days for additional reviews and documentation.
Underwriting, or loan approval, usually takes from one hour to 8 hours. All lengths of time have the same likelihood of occurrence.
Loan Closing includes the preparation of the final documentation, locking in an interest rate, and arranging where to deposit funds. Historical data show that this step has a mean of two days, but you don’t yet know how the data are distributed.
Loan Disbursement, moving the funds to the customer’s bank, usually takes 16 hours, with some variation. Two-thirds of disbursement times fall within 12 and 20 hours.
After gathering this information, you decide to load it into Microsoft Excel and use Crystal Ball to analyze it.