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CaseThe MotoTech Manufacturing Company: Process


Control and Improvement
Prakash Mirchandani,

To cite this article:


Prakash Mirchandani, (2010) CaseThe MotoTech Manufacturing Company: Process Control and Improvement. INFORMS
Transactions on Education 10(2):79-84. http://dx.doi.org/10.1287/ited.1090.0041cs-a
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Vol. 10, No. 2, January 2010, pp. 7984


issn 1532-0545  10  1002  0079

informs

doi 10.1287/ited.1090.0041cs-a
2010 INFORMS

I N F O R M S
Transactions on Education

Case

The MotoTech Manufacturing Company:


Process Control and Improvement
Prakash Mirchandani

Katz Graduate School of Business, University of Pittsburgh, 358 Mervis Hall, Pittsburgh, Pennsylvania 15260,
pmirchan@katz.pitt.edu

Introduction

The Situation

You and four of your ex-classmates run a small, but


rapidly growing, management consulting rm that
provides advice to high-technology companies. What
had started off as a half-baked idea late one night
when you were busy working on an MBA project six
years ago has resulted in a highly successful consulting rm today. Indeed, who would have dreamed that
all of the ghts and the arguments your group had
had when doing school projects could possibly result
in such a closely-knit team just a few years later? You
still challenge each other, still debate the pros and
cons of each issue, and are often frustrated with each
other, but the end-product is always much better as a
consequence.
Today is special. You are visiting a company called
MotoTech Manufacturing (MM) that was founded by
another former batch mate. You were a bit surprised
to get a phone call from the old friend requesting that
one of you go over for a plant visit. That is how it
typically works in your business: Just one of the ve
visits the client along with some junior members of
the consulting staff. In this case though, because all of
you know the founder, and all ve of you had wanted
to go.
You discuss the potential assignment during your
car ride to MM and conclude that you probably
would be required to make recommendations about
MMs manufacturing process. Almost all domestic
manufacturing rms have been under pressure to
improve their processes, and you speculate that you
would probably be investigating how to improve
manufacturing both in the short term and the long
term. In doing so, you anticipate having to rst determine whether MMs process is capable of producing
products that meet the customer requirements and, if
not, to recommend ways of doing so.

MotoTech Manufacturing (MM) is a medium-sized


rm that produces integrated circuits for the
electronicsparticularly, the consumer electronics
industry. Integrated circuits are used in computers, automobiles, airplanes, appliances, toys, watches,
cell phones, cameras, televisions, stereo components,
medical diagnostic equipment, etc. Integrated circuits
allow electronic products to be smaller in size, have
greater functionality, and faster speed, yet they are
lower in cost. The electronics and computer industry
has grown steadily over the past several years and
now employs more people in the United States than
the steel, automobile, and pharmaceutical manufacturing industries put together.1
The demand for integrated circuits has also grown
sharply during the past decade, with newer applications being identied every day, and this trend is
expected to continue into the future. This increase in
demand for integrated circuits has, in turn, resulted
in several highly protable years for MM. MM is
proud to be a part of this growth in the United
States: Roughly 45% of the worldwide integrated circuit demand of $256 billion is met from domestic
production.2
More recently, though, John Tagole, MMs founder
and CEO, has been troubled by MMs lower yield
1

http://www.bls.gov/oco/cg/indchar.htm. Checked on June 6,


2009. Latest available data on this Bureau of Labor Statistics website
are for 2006before the 20082009 reorganization of the domestic
automotive industry.
2
http://www.sia-online.org/cs/industry_resources/industry_fact_
sheet. The United States continues to be a market leader in this
industry. One reason is that the rate of innovation in the technology
for this industry is high, with annual research and development
expenses touching 16% of sales.

79

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80

Mirchandani: Case: The MotoTech Manufacturing Company: Process Control and Improvement

(higher rejection rate) values, compared to those of its


competitors. Moreover, overseas competitors, particularly from Taiwan, Japan, Singapore, Korea, Thailand,
and now China, have started to encroach upon MMs
traditional customer base. It has been six years since
John Tagole started MM after getting his MBA from
the Great Western Pennsylvania Graduate School of
Business (GWPGSB), but the competitive pressures
attributable to global competition have never been
higher. While John Tagole knows that this type of
competition is good for the consumer in the long
run because it forces companies to continuously make
productivity improvements, he also realizes that his
dreams of growing MM into a global chip supplier for
the consumer electronics industry might evaporate in
thin air if he makes a bad decision now in what is
clearly a critical juncture in MMs short history.
On this cool November morning, John Tagole
has a premonition of receiving some adverse news.
Sure enough, he gets a call from Danika Katz,
VP of Procurement, Semicon International, one of
MMs largest customers. Semicon Transcontinental is
a consumer electronics manufacturer. Danika rst discusses the long and successful vendor-buyer relationship that MM and Semicon have had for six
years. Then she informs MM that Semicon engineers
have drastically tightened the design specications
for the components going into the new line of superhigh-denition televisions with three-dimensionallike imagery. Danika informs John Tagole that
although MMs products meet Semicons current
specication limits, they do not meet the newly
designed specication limits, and unless MM can
meet the new specication, Semicon might have to
take its business elsewhere.
After the call John Tagole wonders, Should I just
ignore this call? Are these new specication limits temporaryimposed by a young, overenthusiastic design engineer? Maybe, he speculates, if we
wait long enough, Semicon will eventually be forced
to relax the specications and buy MMs current product, especially if none of the other chip manufacturers
can meet the new specications. On the other hand,
what if Semicon does not relax the specications and
drops MM as its supplier? Can I really afford to lose
such an important customer?
He makes a quick decision and decides to call The
Famous Fivehis batch mates who are now running
a consulting company. (As he places the call, why,
he tries to remember, were they called The Famous
Five at GWPGSB?)

The Process

John Tagole describes the manufacturing process to


The Famous Five during their visit: The critical raw

INFORMS Transactions on Education 10(2), pp. 7984, 2010 INFORMS

material for virtually all integrated circuits is silicon,


which is the primary constituent of common sand.
The circuits are manufactured from many die that
are fabricated on silicon wafers (in a facility referred
to as a fab). The die are also known as chips. The
silicon wafer can be from about four to 10 inches in
diameter and may contain from a hundred to several
thousand chips. During the wafer fabrication process,
each wafer goes through several steps to produce
the nal chip. These steps include processes such as
plasma etching, ion implantation, chemical deposition, and photolithography. Once a wafer has been
processed and tested, it is cut into individual chips.
The chips are then packaged for sale and used in the
electronic systems of cars, computers, and many other
products.

The End of the First Visit

John Tagole is clearly proud of his success as he nishes giving The Famous Five a tour of his plant.
They too must be proud of his achievement (as he
is of theirs), because all ve of them have shown
up for this fact-nding trip. They ask the right questions, and John Tagole is impressed by the speed with
which they zero in on the problem. The diffusion
stage, The Famous Five conclude, is the problem with
the current process. Lets address the problems at
the diffusion stage rst, and then we will look at the
remaining stages of the process. John Tagole marvels: These people must have a sixth sense. Danika
Katzs new specs all deal with the diffusion stage. In
any event, he goes ahead and describes the diffusion
stage to The Famous Five.
In many process steps, the wafers are processed in
a batch, with several wafers processed together at the
same step. One such process is the diffusion step. As
many as two hundred wafers may be batch processed
together in a diffusion furnace. During this step, a
layer of material (e.g., silicon dioxide) is deposited
onto each wafer. The thickness of the deposit must be
tightly controlled at a specied target thickness. The
target thickness for this diffusion process is 3,000 .3
To ensure the desired functionality and reliability of
the chip, the deposit thickness must lie in the range
of 2,900 to 3,100 .
The Famous Five go into a huddle. John Tagole
is used to their loud arguments from his time back
at the GWPGSBbut his staff is not. He chuckles to
himself as he overhears worried staff members muttering about calling plant security.
After about an hour, The Famous Five emerge and
discuss their plan of action with John Tagole. They
3

An angstrom () is a unit for measuring length and equals 1010


meters.

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instruct John Tagole on what data to collect, and then


say, Play time, John. You owe us at least a lunch!
Lets catch up on whats been happening on the personal front.
Part A. Should John Tagole have waited out the
storm, hoping that Semicon will relax its new, more
stringent specications? Would this strategy have
worked in the short term? In the long term?
Part B. John Tagole provides your group, The
Famous Five, with the data set in Table 1 and in the
Pre_Improvement worksheet of the le MotoTech
(PCI) Data.xls. The data were taken from the diffusion process. Samples of three wafers were randomly
selected from each batch of 200 wafers, and the thickness of the silicon dioxide deposition was measured
on the wafers. The data are from 72 batches.
Answer the following questions for this data set.
1. For this data set, construct the X-bar and range
control charts. Attach a printout showing your X-bar
and R control charts.
2. Use the range chart to determine whether the
process variation is in control.
3. Use the X-bar chart to determine if the process
mean is in control.
4. If the range chart is found to be out of control in
Part B2 above, would the control limits of the X-bar
chart have been valid? Why or why not?
Part C. After observing the control charts in Part B,
The Famous Five investigate the reasons for the identiable causes of variation. They nd that the process went out of control during times when the plant
air conditioning system was shut down for preventive maintenance. They recommend that a back-up
air conditioner be installed and that the temperature in the diffusion room be maintained at 60 F.
This recommended temperature setting is based on
The Famous Fives general experience, although local
atmospheric conditions and raw-material composition can also potentially affect the recommended
temperature. Until the new air conditioner can be
installed, The Famous Five recommend that the preventive maintenance be carried out on weekend
nights, when the diffusion process is stopped. They
ask John Tagole to collect data for an additional
72 batches under these controlled conditions. These
data are enclosed in Table 2 and in the worksheet
Post_Improvement.
1. For this data set, construct the X-bar and range
charts. Attach a printout showing your control charts.
2. Use the range chart to determine whether the
process variation is in control.
3. Use the X-bar chart to determine whether the
process mean is in control.
Part D. Based on your analysis in Parts B and C,
what would you recommend?
Part E. In Part C, we found that the process is in
control when we set the temperature in the diffusion

81

room to 60 F. The Famous Five construct a histogram


of the Post_Improvement observations and conclude that the distribution is normal.4 Answer the following questions for the data used in Part C.
1. What is the cumulative probability for a single
wafer to have a thickness of 3,000 ?
2. What is the percentage of defectives being produced under the current setup?
3. Compute the process capability index, Cp , for
this situation. Is the process capable of meeting the
customers requirements? Is Cp the appropriate metric for measuring process capability in this case? If so,
why? If not, why not? What other metric would you
suggest?
4. Is this a six sigma process? If not, what is its
sigma level? Assuming that the process mean can
drift by, at most, 1.5 sigma in either direction of the
target without being detected, compute the approximate number of defectives out of a million. (Hint:
In Motorolas experience, process mean shifts of up
to 1.5 sigma can go undetected, and so they recommended the use of this assumption to calculate the
proportion of defectives for a given sigma level.)
Part F (Looking Ahead).
John Tagole is pondering over what to do next   
the secret of his success has been making many small
process improvements continuously and making fundamental process reengineering changes as and when
needed. The diffusion process has been brought under
control following the initial analysis done by The
Famous Five. However, the rejection rate is still high,
which leads to higher unit costs and cuts into MMs
prots. He has been advised by The Famous Five to
do a design of experiments5 study. This study will
help in determining whether 60 F is the right temperature, or whether this setting needs to be netuned. He believes that such experimentation is in line
with the philosophy of continuous improvement
advocated by many quality gurus. This approach has
made Toyota an automotive powerhouse worldwide,
resulting in its overtaking General Motors in 2008
global sales,6 even before the reorganization of GM.
Through this investigation, he hopes to identify the
right temperature setting, possibly also identifying
any underlying interaction between temperature and
other input factors. This study is ongoing, and its
ndings will be implemented in the next few weeks.
4
You should check this by constructing your own histogram using
Excel or by doing a check for normality, using a statistical package.
5
The case The MotoTech Manufacturing Company: Design of
Experiments/ANOVA shows how to use Design of Experiments
for making further quality improvements.
6
GM Fell Behind Toyota in 2008. 2009. The Wall Street Journal
(January 22). (Toyota sold almost nine million vehicles in 2008
worldwide, while GM sold about 8.3 million.)

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82
Table 1

INFORMS Transactions on Education 10(2), pp. 7984, 2010 INFORMS

Pre_Improvement Data
Data and Initial Computations
Thickness
(in thousands of )

Sample no.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37

Table 2

Sample
mean

Sample
range

3265
3273
3197
3215
3321
3253
3186
3255
3195
3205
3008
3191
3108
3005
3228
3080
3152
3144
3244
3062
3141
3179
3180
3195
2960
3175
3286
3005
3065
3173
3068
2919
3001
3250
3179
3109
2996

3097
3244
3174
3158
3200
3254
3172
2927
3145
3160
3098
3122
3103
3301
3007
3069
3029
3133
3308
3100
3025
3037
3137
3098
3051
3215
3212
3123
3062
3177
3090
2970
3021
3127
3104
3100
3042

3201
3125
3186
3122
3320
3177
3138
3173
3125
3131
3094
3151
3105
3010
3000
3063
3202
2993
3202
3091
3113
3207
3171
3173
3046
3096
3265
3138
3030
3075
3064
2979
2930
3230
3194
3227
3063

31877
32140
31857
31650
32803
32280
31653
31183
31550
31653
30667
31547
31053
31053
30783
30707
31277
30900
32513
30843
30930
31410
31627
31553
30190
31620
32543
30887
30523
31417
30740
29560
29840
32023
31590
31453
30337

01680
01480
00230
00930
01210
00770
00480
03280
00700
00740
00900
00690
00050
02960
02280
00170
01730
01510
01060
00380
01160
01700
00430
00970
00910
01190
00740
01330
00350
01020
00260
00600
00910
01230
00900
01270
00670

Thickness
(in thousands of )
Sample no.

Sample
mean

Sample
range

38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72

3170
3067
3819
3216
3156
3141
3226
3247
3164
3012
3209
3125
3111
3306
3170
3011
3137
3178
3105
3044
3164
3008
3236
3011
3170
3304
3037
3075
3255
3273
3108
3001
2978
3116
3022

3171
3146
3898
3253
3200
3019
3236
3250
3051
3260
3002
3132
3023
3119
3203
3197
3031
3003
3068
3005
3058
3025
3091
2982
3176
3243
2968
3174
3245
3067
3132
2987
2890
3110
3007

3229
3178
3309
3310
3067
3162
3250
3233
3136
3202
3174
3134
3177
3133
3210
3076
3039
3193
3249
3010
3197
3053
3271
2959
3098
3064
2959
3027
3241
3000
2904
3064
2952
3115
2997

31900
31303
36753
32597
31410
31073
32373
32433
31170
31580
31283
31303
31037
31860
31943
30947
30690
31247
31407
30197
31397
30287
31993
29840
31480
32037
29880
30920
32470
31133
30480
30173
29400
31137
30087

00590
01110
05890
00940
01330
01430
00240
00170
01130
02480
02070
00090
01540
01870
00400
01860
01060
01900
01810
00390
01390
00450
01800
00520
00780
02400
00780
01470
00140
02730
02280
00770
00880
00060
00250

31326

01165

Mean

Post_Improvement Data
Data and Initial Computations
Thickness
(in thousands of )

Sample no.
1
2
3
4
5
6
7
8
9
10

Thickness
(in thousands of )

Sample
mean

Sample
range

Sample no.

Sample
mean

Sample
range

3039
3041
3047
3074
3081
3018
3061
3075
3042
3083

3011
3071
3089
3047
3109
3148
3093
3080
3067
3133

3095
3049
3102
3019
3010
3030
3094
3074
3019
3057

30483
30537
30793
30467
30667
30653
30827
30763
30427
30910

00840
00300
00550
00550
00990
01300
00330
00060
00480
00760

38
39
40
41
42
43
44
45
46
47

3032
3157
3073
3068
3059
3057
3003
3025
3046
3060

3105
3079
3049
3041
3024
3109
3032
3051
3105
3133

3111
3014
3056
3042
2970
3068
3046
3066
3074
3121

30827
30833
30593
30503
30177
30780
30270
30473
30750
31047

00790
01430
00240
00270
00890
00520
00430
00410
00590
00730

Mirchandani: Case: The MotoTech Manufacturing Company: Process Control and Improvement

83

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Table 2

Post_Improvement Data (Continued)


Data and Initial Computations
Thickness
(in thousands of )

Sample no.
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37

Sample
mean

Sample
range

3057
3086
3084
3122
3132
3096
3048
3067
3014
3089
3094
3031
3051
3086
3045
3039
3047
2961
3044
3051
3071
3101
3073
3096
3075
3046
3079

3119
3040
3040
3056
2987
3044
3103
3040
3004
3006
3066
3139
3086
3018
3026
2980
3030
3076
3053
2982
3046
3093
2998
3071
3085
3098
3030

3105
3021
3087
3033
3048
3126
3057
3108
3062
3038
3005
3106
3058
3104
3036
3034
3099
3015
3027
3137
3074
3007
3103
3040
3049
3046
3135

30937
30490
30703
30703
30557
30887
30693
30717
30267
30443
30550
30920
30650
30693
30357
30177
30587
30173
30413
30567
30637
30670
30580
30690
30697
30633
30813

00620
00650
00470
00890
01450
00820
00550
00680
00580
00830
00890
01080
00350
00860
00190
00590
00690
01150
00260
01550
00280
00940
01050
00560
00360
00520
01050

Planning for the more distant future, John Tagole


wants to evaluate if modernizing the diffusion equipment is economically worthwhile. He does not want
to purchase new equipment (which can cost several
tens of millions of dollars), because Intel has recently
claimed7 that it has found a replacement material for
silicon dioxide; the claim, if substantiated, will make
the current chip manufacturing technology obsolete in
the next ve to seven years. Even if Intels technology
is unsuccessful, IBMs new technology, which allows
chips to consume less power, might become available
in this time frame.8 (Power consumption by chips has
become a major issue with computer manufacturers.)
To summarize: John Tagoles current planning horizon is ve to seven years. MMs equipment supplier has informed John Tagole that MM will be
able to lease, on an annual basis, very precise diffusion equipment at an incremental (over the cost of
7
Intel claims a breakthrough in chip design, 2003. The Wall Street
Journal (November 5).
8

Start-Ups power-saving chip to be based on IBM technology.


2005. The Wall Street Journal (October 24).

Thickness
(in thousands of )
Sample no.

Sample
mean

Sample
range

48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72

3108
3068
3037
3047
3008
3058
3075
3042
3042
3072
3031
3023
3043
3032
3094
3017
3070
3063
3073
3078
3062
3078
3046
3152
3035

3007
3105
3060
3056
3052
3059
3017
3133
3048
3020
2981
3105
3077
3073
2991
3046
3099
2970
3120
3075
3129
3113
3069
3073
3094

3108
3007
3074
3067
3004
3095
3043
3111
3041
3034
3053
3075
3085
3060
3080
3044
2970
3057
3086
3109
3002
3051
3079
3053
3127

30743
30600
30570
30567
30213
30707
30450
30953
30437
30420
30217
30677
30683
30550
30550
30357
30463
30300
30930
30873
30643
30807
30647
30927
30853

01010
00980
00370
00200
00480
00370
00580
00910
00070
00520
00720
00820
00420
00410
01030
00290
01290
00930
00470
00340
01270
00620
00330
00990
00920

30613

00677

Mean

the current equipment) leasing and operating cost of


$15,000,000 per year. This new machine will have a
process standard deviation of 15 , but as with the
current equipment, it will be difcult to detect process
mean shifts of up to 1.5 sigma. The capacity of the
new machine will be the same as that of the current
machine. John Tagole calls The Famous Five again
to evaluate whether the MM should lease the new
equipment.
John Tagole informs The Famous Five that MM produces a million wafers per year. MM has an enviable
brand equity that allows it to sell its entire production and has led to a sales growth rate of 20% per
year. Now that the quality has been improved, John
Tagole expects this growth rate to continue in the near
future. You therefore expect the production and sales
to increase by 20% per year, starting from the current
value of a million wafers per year.
The wafers have a unit contribution of $150 unless
any rework is needed. Because Semicon is a major
MM customer, The Famous Five decide to do the
analysis using Semicons specications which allow
thicknesses between 2,900 and 3,100 . John Tagole

Mirchandani: Case: The MotoTech Manufacturing Company: Process Control and Improvement

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84

INFORMS Transactions on Education 10(2), pp. 7984, 2010 INFORMS

informs The Famous Five that the rework costs for


wafers with thicknesses in different ranges is as
follows:
Thickness between
(in )
2,860
2,880
3,100
3,120

to
to
to
to

2,880
2,900
3,120
3,140

Rework cost
per unit ($)
125
50
50
125

Thus, the unit contribution for a wafer that originally had a thickness of 3,110 gets reduced to
$150 $50 = $100 because of rework. Any wafers with
a thickness exceeding 3,140 or less than 2,860
cannot be reworked; for these wafers, MM must
expense the variable cost of $500, which it has already
incurred.

1. Should The Famous Five recommend that MM


lease the new equipment?9 Why or why not? (In the
computation of the expected costs, you can ignore the
time value of money because some of you have not
yet taken the nancial management course and may
not know how to incorporate it. You can also ignore
ination.)
2. What else would you recommend for the future?

Supplementary Material

Files that accompany this paper can be found and


downloaded from http://ite.pubs.informs.org.
Acknowledgments

I am grateful to Dr. Skip Weed, formerly of Motorola University, for suggesting the semiconductor environment as a
backdrop of the case and providing a short description of
the production process. The actual problem situation has
been modied for pedagogical reasons.

To nd the probabilities, you can use the normal tables, or you


can use Excels = NORMDIST function.