ReviewQuestionsSession4

SpecialtyCoffeehouse
AspecialtycoffeehousesellsColombiancoffeeatafairlysteadyrateof280poundsannually.The
beansarepurchasedfromalocalsupplierfor$2.40perpound.Thecoffeehouseestimatesthatit
costs$45inpaperworkandlabortoplaceanorderforthecoffee,andholdingcostsarebasedona
20percentannualinterestrate.
a.DeterminetheoptimalorderquantityforColombiancoffee.
b.Whatisthetimebetweenplacementoforders?
c.Whatistheaverageannualcostofholdingandsetupduetothisitem?
d.Determinethereorderlevel(onhandinventoryattimeofreorder)ifthereplenishmentlead
timeisthreeweeks

DavidsDelicatessen
DavidsDelicatessenfliesinHebrewNationalsalamisregularlytosatisfyagrowingdemandforthe
salamisintheSiliconValley.Theowner,DavidGold,estimatesthatthedemandforthesalamisis
fairlysteadyat175permonth.ThesalamiscostGold$1.85each.Thefixedcostofcallinghis
brotherinNewYorkandhavingthesalamisflowninis$200.Ittakesthreeweekstoreceivean
order.Goldsaccountantrecommendsanannualcostofcapitalof22percent,acostofshelfspace
of3percentofthevalueoftheitem,andacostof2percentofthevaluefortaxesandinsurance.
a. HowmanysalamisshouldGoldhaveflowninandhowoftenshouldheorderthem?
b. HowmanysalamisshouldGoldhaveonhandwhenhephoneshisbrothertosendanother
shipment?
c. Supposethatthesalamissellfor$2.15each.ArethesesalamisaprofitableitemforGold?Ifso,
whatannualprofitcanheexpecttorealizefromthisitem?(Assumethatheoperatesthe
systemoptimally.)

UncleBob
UncleBob,amanufacturerofchocolatecookies,hasjuststartedtheproductionofanew
typeofdeliciouscookies.Managementwantstheboxfillinglinetobesetsothatpackets
weighbetween42and45grams.Whentheprocessisincontrol,theweightofpacketsis
approximatelynormal,withameanof43.2gramsandastandarddeviationof0.5grams.
Thatis,theprocesscapabilityindexisCpk=0.8
A. Istheprocessatthe(socalledGEorMotorola)SixSigmacapabilitylevel?
a)Yes
b)No
c)Theinformationprovidedisnotsufficienttoassesswhethertheprocessisat6sigma
B. IftheprocesswerenotatSixSigma,whichofthefollowingactionswouldbeeffectiveto
ensurethattheprocessperformancecharacteristicsforthisprocessreachSixSigma?
a)Centertheprocessmeanwithinthetolerancelimits
b)Reducestandarddeviation
c)Both

Forevon
YouhavebeenappointedasthenewqualitydirectorofForevon,aCaliforniabasedmanufacturerof
CCDsensorsfordigitalcameras.Forevonscustomerswhichincludesomeofthelargestcamera
manufacturersintheworldunderstandablyrequirehighqualitystandardsfromtheirsensor
supplier.Oneofthemostimportantparametersisthesensorsize,whichmustfitthedesign
specificationsprovidedbythecameramanufacturers.Toguaranteethehighqualitystandardsthat
theircustomersexpect,Forevonhasimplementedaqualitycontrolsystemthatmakesextensiveuse
ofSPCtechniquessuchascontrolcharts.

A) Youhavejustreceivedacontrolchartwiththeresultsofthelastconformanceanalysis
conductedontheproductionprocessofoneofForevonsflagshipproducts,the4megapixel
sensor.Theanalysissuggeststhattheprocessisstableandincontrol:themeanandthe
standarddeviationofboththesensorlengthandheighthavenotchangedsignificantlyover
thelast3weeks.Canyourelyonthisinformationtoconcludethatnoimprovementstothe
processareneededandthattheprocessiscapableofmeetingthecustomerrequirements?
Why?
B) Forevonhasrecentlylaunchedanewproduct,a6megapixelsensorwithanaboveaverage
colorrendition,offeredataparticularlycompetitiveprice.Duetothehighmarketdemand,
thesensorismanufacturedintwoparallelandidenticalproductionlines,AandB.Asa
qualitydirectoryouhavejustreceivedthecontrolchartforthetwoprocesses.Thecharts
suggestthatbothlineswentoutofcontrol.Althoughitmaintaineditsusuallevelof
variability,theproductionprocessonLineAhadasignificantshiftinitsmean,whichcaused
alargenumberofsensorstofalloutsidethespecifiedcustomertolerance.Conversely,the
productionprocessassociatedwithLineBdidntdisplayanysignificantshiftinitsmean.
Howeveritdidhaveanincreaseinvariability,whichalsocausedanequallylargenumberof
productstofalloutsidethespecifiedcustomertolerance.Youmustobviouslyreacttothis
situation.Whichofthetwolinesislikelytobeeasiertobringbackincontrol?Why?

InventoryManagementCosts
Doyouagreewiththefollowingstatement?Why?Whynot?
The increased inventory management costs caused by inexact demand forecasts are more
severeforapushproductionsystemthanforapullproductionsystem.
Solarex
Solarex is a Californiabased manufacturer of photovoltaic (PV) cells. The companys best selling
product(the256cm2 polycrystallinesiliconcell)ismanufacturedbysawingthinwafersfromingots
ofpurifiedcrystallinesilicon.Oneofthemostimportantparametersintheprocessiscellthickness:
thisisanindicatoroftheprocessyieldanditdirectlyimpactsthecellmanufacturingcost(typically
thethinnerthecell,thelargerthenumberofcellsthatcanbeobtainedfromaningotofgivensize
and, hence, the lower the manufacturing cost of a single cell). Not surprisingly, to monitor this
parameter Solarex has implemented a quality control system that makes extensive use of SPC
techniques.
Asaresultoftheincreaseddemandforalternativeenergysourcesthatfollowedtherecentenergy
crisis in California, the company has tripled its manufacturing capacity by adding two new
productionlinestotheonealreadyinplace.PeterSunshinethenewlyappointedqualitydirector
of Solarex has just received the control charts with the results of the last conformance analysis
conducted on the 3 manufacturing lines of the 256 cm2 polycrystalline cell. Each control chart
displays cell thickness for samples of 10 cells over a period of 30 days. The control charts for the
threelines(lineA,BandC)aredisplayedbelow.
WhatactionsshouldPeterrecommendineachofthethreecasesbasedonthecharts?Why?

LineA

UCL

X-bar

LCL
1

11

13

15

17

19

21

23

25

29 Day

27

LineB

UCL

X-bar

LCL
1

11

LineC

13

15

17

19

21

23

25

27

29 Day

UCL

X-bar

LCL
1

11

13

15

17

19

21

23

25

27

29 Day