SolutionstoReviewQuestionsSession4

SpecialtyCoffeehouse
(a)EOQ=229.13pounds
(b)Timebetweenorders=0.82years
(c)Averageannualsetupandholdingcost=$109.98
(d)Reorderlevel=16.15pounds

DavidsDelicatessen
(a)Optimalorder=1297salamis,Cycletime=0.62years
(b)Reorderpoint=122salamis
(c)Annualrevenueis$4515,Annualsalamipurchasecostis$3885andAnnualsetupandholding
costis$647.75andthereforetheannuallossis$17.75.

UncleBob
(A)Answerb).Theprocessisnotat6sigma(foraprocesstobeat6sigmaCpkshouldbe2).
(B)Answer:c).FortheprocesstobeatsixsigmaCpkmustbe=2.Toachievethisobjectiveone
should:
Centertheprocessmeanwithinthetolerancelimits(i.e.setprocessmeanat=43.5),and
Reducestandarddeviationsothat, min( 43.5 42.0 , 45.0 43.5 ) 2
3

Iftheprocessmeaniscentered,itisindifferentwhetheroneconsidersthelowerortheupper
tolerancelimittocomputethenewprocessstandarddeviation.ForinstanceifoneusestheLTL,the
newstandarddeviationcanbecomputedasfollows
43.5 42.0
43.5 42.0
0.25
2, hence
C
pk

3 new

new

3 2

Notethatstrictlyspeakingitisnotnecessarytocentertheprocessmeanatthemidpointofthe
toleranceintervaltoachieve6sigma.Doingsoisconvenientbecauseitallowsthedesiredsixsigma
objectivetobereachedwiththeminimalreductioninthevariance.Forinstance,toreachthe6
sigmacapabilitylevelwithoutcenteringtheprocessmeanonewouldhavetoreducetheprocess
standarddeviationat: 43.2 42.0 0.20
3 2

Forevon
A) No.Theinformationprovidedbythecontrolchartsonlysuggeststhattheprocessisin
control(i.e.itsunderlyingdistributionisnotshifting).Howeveritdoesntsayanythingabout
itscapability.Inotherwordstheprocesscouldstillgenerateanunacceptablenumberof
defectiveitems(althoughitwoulddosoquiteconsistently...).Toconcludethatno
immediateimprovementactionisneeded,themanagershouldalsocomputeacapability
indexandconductacapabilityanalysistocheckwhethertheprocessdeliversoutputsin
accordancetocustomerrequirements.
B) LineA.TheproblemsoccurredinlineBaremoredifficulttoidentifybecausetheyseemto
beduetorandomornaturalvariation.Inotherwordstherearenoclearsignalsthatcan
helpthemanageridentifythesourceoftheproblem.Mostlikelythedeteriorationofquality
iscausedbythesimultaneousdegradationofanumberoffactors.Conversely,theproblems
occurredtolineAareclearlyduetoanassignablecausewhichdeterminesasystematic
biasintheprocess.Assignablecausesaremucheasiertoidentifyandshouldimmediately
triggertheimplementationofaPDCAcycle.

InventoryManagementCosts
Yes.Inapushproductionsystem,theproductionscheduleofeachstationissetaheadoftimeand
dependsontheestimateddemand.Apushsystemadjuststodemandfluctuationsbyeither
consumingorbuildingupinventory.Conversely,apullproductionprocessisaselfregulatedsystem
inwhichproductionisauthorizedwhenthelevelofinventorybeforeeachstation(i.e.WorkIn
Progress)fallsbelowapredeterminedthreshold.Apullenvironmentreactstofluctuationsin
demandbyautomaticallyslowingdownorspeedingupoperationswhilemaintainingaconstant
levelofWIPinthesystem.Therefore,apushsysteminmorelikelythanapullsystemto incur
higherinventorycostswhendemandforecastsareinaccurate.
Solarex
LineA:Donotinvestigate.Theprocessappearstobeincontrol.Nosamplefalloutsidethecontrol
region.Furthermorethesamplesfollowacompletelyrandompattern,withnocleartrendorerratic
behavior.
LineB:Investigate.Theprocesswentoutofcontrolonday20.Althoughnosamplefallsoutsidethe
controlregion,for10consecutivedaystheaveragethicknessofthecellsmanufacturedwasbelow
thenaturalmeanoftheprocess,therebyindicatingthatanassignablecauseofvariationmusthave
occurred.Giventhatinthisparticularcaseproducingthincellsisdesirable,Petershouldanalyzethe
reasonsthatledtotheparticularlygoodperformanceinthelasttendaysoftheanalysisandtryto
replicatetheminasystematicfashion.
LineC:Investigate.Theprocesswasneverincontrol.Althoughnosamplefelloutsidethecontrol
regionduringthetimeoftheanalysis,thepatternisclearlynotrandombuterratic(odddaysabove
themeanandevendaysbelowthemean).Thiscouldbedueforinstancetothefactthattwo
operatorswithdifferentskillsworkalternativelyontheprocess.Again,giventhatinthisparticular
caseproducingthincellsisdesirable,Petershouldanalyzethebehavioroftheskilledoperator,
codifyitandrenderitavailabletootherworkersintheorganization.