4.

45 The following are monthly actual and forecast demand levels for May through December for units of a product manufactured by the N.Tamimi Pharmaceutical Company. Month May June July August September October November December Actual Demand 100 80 110 115 105 110 125 120 Forecast Demand 100 104 99 101 104 104 105 109

What is the value of tracking signal as of the end of December? Solution:

n

Tracking signal

t 1

( At Ft ) MAD

Month

Actual Demand At 100 80 110 115 105 110 125 120

Forecast Demand Ft 100 104 99 101 104 104 105 109

Forecast Error (At-Ft) 0 -24 11 14 1 6 20 11

(At-Ft) = 39

May June July August September October November December

Absolute Forecast Error |At-Ft| 0 24 11 14 1 6 20 11

Cumulative Absolute Forecast Error 0 24 35 49 50 56 76 87

MAD

0 12 11.67 12.25 10 9.33 10.86 10.875

Tracking signal at the end of December = (At-Ft) MAD = 39 10.875 = 3.586

6. 25 The accounts receivable department at Rick Wing Manufacturing has been having difficulty getting customers to pay the full amount of their bills. Many customers complain that the bills are not correct and do not reflect the materials that arrived at their receiving docks. The department has decided to implement SPC in its billing process. To set up control charts, 10 samples of 50 bills each were taken over a months time and the items on the bills checked against the bill of lading sent by the companys shipping department to determine the number of bills that were not correct. The results were:
Sample No. 1 2 3 4 5 6 7 8 9 10 No. of incorrect bills 6 5 11 4 0 5 3 4 7 2

a) Determine the value of p-bar, the mean fraction defective. Then determine the control limits for the pchart using a 99.73% confidence level (3 standard deviations). Is this process in control? If not which sample(s) were out of control? b) How might you use the quality tool discussed in Chapter 6 to determine the source of the billing defects and where you might start your improvement efforts to eliminate the causes? Solution: (a) Given that: 10 samples of 50 bills each were taken over a months time
Sample No. No. of incorrect bills Fraction Defective (No of incorrect bills/50 bills) 0.120 0.100 0.220 0.080 0.000 0.100 0.060 0.080 0.140 0.040 = 0.094 Process in control or out of control? In control In control Out of control In control In control In control In control In control In control In control

1 2 3 4 5 6 7 8 9 10

6 5 11 4 0 5 3 4 7 2 = 47

Mean fraction defective (p-bar) = Total no of incorrect bills (Sample Size)(Total sample) = 47 50 (10) = 0.094

Standard deviation of sampling distribution, p

= 0.094(1-0.094) 50 = 0.041 Upper Control Limit, = = Lower Control Limit, = 0.094 - (3)(0.041) =0 Based on the calculated p- bar value of each sample, sample number 3 is having fraction defactive value of 0.220 which exceeds the Upper Control Limit.Thus, only sample number 3 is out of control. 0.094 + (3) (0.041) 0.217

(b) Total quality management (TQM) tools help organizations to identify, analyze and assess qualitative and quantitative data that is relevant to their business. It should be noted that tools should be used in conjunction with other tools to understand the full scope of the issue being analyzed or illustrated.

The Pareto principle suggests that most effects come from relatively few causes. A Pareto Chart could be constructed showing which types of errors occurred most frequently. Pareto charts can be used to compare 'before and after' situations. General use is to decide where to apply initial effort for maximum effect. This identification of the critical few would allow a team to focus on eliminating the most important causes first.

A brainstorming session could result in a fish-bone chart depicting the potential causes of incorrect bills. Then a check sheet could be designed to collect data on the types of defects that occurred most frequently. Random sampling of a large sample of bills could identify a sufficient number to investigate. Each would be studied and the types of errors noted.

The improvement efforts to eliminate the causes can be started after the possible assignable causes present is identified, the process should be sampled again to determine new control limits.