Otter Payments: Orders Are Piling Up
Operations
easy35 min0 submissionsMcKinsey
Scenario
Otter Payments is a fintech operation in Southeast Asia. Demand is 1,304 units per day and rising, but the site is not shipping it. Work-in-progress is accumulating and the plant manager is asking for capital.
The line has four stages, each with its own maximum rate:
| Stage | Capacity |
|---|---|
| Intake | 2,287 units/day |
| Processing | 838 units/day |
| Quality check | 1,635 units/day |
| Dispatch | 2,170 units/day |
Other facts:
- The plant manager has requested $5 M to upgrade the Dispatch stage, because that is where the visible backlog sits
- Each additional unit shipped contributes $285
- Overtime is available at any stage, at a premium
The site director wants to know whether to approve the request.
Supporting data
proposal
- cost
- 5
- stage
- Dispatch
economics
- contribution per unit
- 285
derived hints
- bottleneck stage
- Processing
- system throughput
- 838
- unmet demand per day
- 466
demand units per day1304
stage capacity units per day
- intake
- 2287
- dispatch
- 2170
- processing
- 838
- quality check
- 1635
Your task
Advise the site director. Your answer should provide:
- Analysis — what the site's actual throughput is and where the constraint sits, computed.
- Risks — what your answer depends on.
- Recommendation — where to spend, and the throughput it should buy.
State any assumptions you make.
Ready to move forward? Up next: Solstice Travel: Orders Are Piling UpNext question
How you'll be graded
100 points, 60% to pass.
- root cause25
- recommendation20
- problem structuring25
- quantitative analysis30
Hint
Reveal suggested structure
Stage capacities; theory of constraints; value of relieving the bottleneck; re-check the next constraint