IE 184 Six Sigma Module 3 Define

Exercise 3.1
I. SIPOC
a. Draw a high-level SIPOC map of this process
b. Suggest a set of Critical-to-Quality (CTQs) for Legal Sea Food customers
Legal Sea Foods operates several restaurants and fish markets in the Boston area and
other East Coast locations. The companys standards of excellence mandate that it
serves only the freshest, highest quality seafood. It guarantees the quality by buying only
the top of the catch fish daily. Although Legal Sea Foods tries to make available the
widest variety every day, certain species of fish are subject to migratory patterns and are
not always present in New England waters. Weather conditions may also prevent local
fishermen from fishing in certain areas. Freshly caught fish are rushed to the companys
quality control center where they are cut and filleted in an environmentally controlled
state-of-the-art facility. All shellfish come from government certified beds and are tested
in an in-house microbiology laboratory for wholesomeness and purity. There are even
special lobster storage tanks so all lobsters are held under optimum conditions in clean,
pollution-free water. Every seafood item is inspected for quality eight separate times
before it reaches the table. At Legal Sea Foods restaurants, each meal is cooked to
order. Even though servers make every effort to deliver all meals within minutes of each
other, they will not jeopardize the quality of an item by holding it beneath a heat lamp
until the entire order is ready. The service staff is trained to work as a team for better
service. Frequently, more than one service person delivers food to a table. When any
item is ready, the closest available person serves it. Customer questions can be directed
to any employee, not just the person who took the initial order.
Option 1

Option 2

2. A manufacturing company wants to determine its cost of quality.

(a) Classify each of the costs below as prevention, appraisal, internal failure or external
failure.
(b) Total the costs in each category.
(c) Calculate the total cost of quality.
(d) What percentage of quality costs fall in each category?
(e) Use Pareto analysis to investigate and suggest which type of cost and CoQ they
might address for a Lean Six Sigma project.
Type of Cost
Customer quality survey
Penalty payments to customers late shipments
Materials and products scrapped
Raw material inspection
Quality training for employees
Losses due to defective products returned by customers
Finished goods inspection
Repairs to defective products before they leave the plant
Quality software and information systems
Overtime labor due to machine downtime
Product repairs under warranty

Amount (Php)
40,000
30,000
150,000
90,000
30,000
300,000
250,000
140,000
20,000
60,000
100,000

2.a
Type of Cost

Amount
(Php)

Type

Customer quality survey

Raw material inspection
Finished goods inspection
Penalty payments to customers late
shipments
Losses due to defective products
returned by customers
Product repairs under warranty
Materials and products scrapped
Repairs to defective products before
they leave the plant
Overtime labor due to machine
downtime
Quality training for employees
Quality software and information
systems

40,000
90,000
250,000
30,000

Appraisal
Appraisal
Appraisal
External

300,000

External

100,000
150,000
140,000

External
Internal
Internal

60,000

Internal

30,000
20,000

Prevention
Prevention

2.b to 2.d
CoQ

Amount

External

430,000

36%

Appraisal

380,000

31%

Internal

350,000

29%

Prevention

50,000

4%

Total

1,210,000

100%

2.e Pareto By Item

3. A manufacturing company wants to determine the effect after they implement Lean
Six Sigma.
a) Classify each of the costs below as prevention, appraisal, internal failure or external
failure.
b) Determine savings after implementing LSS. Identify the ff:
total savings:1,211,000
3 areas with highest savings: Field Service, Warranty Repairs, Product
recalls
Category of COQ with the highest savings: External Failure 420,000
savings
Area

Quality Manual
Testing
Rework prior to delivery
Disposal of defective
units
Product recalls
Field Service
Reengineering
Supervision
Downtime
Continuous
improvement
Testing of incoming
materials
Warranty repairs
Total

Type

Amount
Before
Savings
LSS
10,000
1,000
80,000
20,000
150,000
100,000
75,000
55,000

Prevention
Appraisal
Internal failure
Internal failure

After
LSS
9,000
60,000
50,000
20,000

External failure
External failure
Prevention
Appraisal
Internal failure
Prevention

50,000
250,000
150,000
150,000
50,000
50,000

220,000
500,000
200,000
250,000
200,000
100,000

170,000
250,000
50,000
100,000
150,000
50,000

75,000

150,000

75,000

Appraisal
Appraisal

CoQ

Cost

External failure

420,000

Appraisal

385,000

Internal failure

305,000

Prevention

101,000

50,000
240,000
190,000
964,000 2,175,000 1,211,000

c) Use Pareto analysis to investigate and suggest which items to prioritize for next LSS
projects.