A current warehouse system has six warehouses with 3,000 units at each warehouse. If the company desires to change the number of warehouses to become more centralized and keep the same customer service level, determine the average warehouse inventory levels, using the number of warehouses below and the square root rule.

a. Three warehouses

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b. One warehouse

c. What is the percentage reduction in system inventory for the two systems above, compared to the original system.

From the information given below, rank the customers in terms of their lifetime value.

AVg. ANNUAL SALES

AVg. PROFit MARgiN

ExPECtED LiFEtiME

Customer A

$ 2,500

17%

8 Years

Customer B

$ 4,000

12%

6 years

Customer C

$ 1,200

30%

12 years

Use a discount rate of 6 percent and treat the average annual sales figures as annuities. Should any of these customers be fired?

Problems activity, you will complete and submit the following items using the attachment for this one:

Data for many of the problems in this chapter can be found in the Excel workbook C08Data.xlsx on the Student Companion Site. Click on the appropriate worksheet tab as noted in the problem (e.g., Prob. 8–6, etc.) to access the data.

Problem 1

Leatherlike Manufacturing Company makes an artificial leather-like product for the fashion accessory market. The material is made in sheets and has the appearance of a thin rug. Each sheet is 36 inches wide and 100 feet long and is wound into a roll. The quality manager has requested that 200 rolls be inspected. Thirty-eight nonconformances were found.

a. Calculate the nonconformances per unit (NPU) and the throughput yield (TY).

b. If the production process consists of three steps, with step 1 having a TY of 94 percent; step 2, 90 percent; and step 3, 92 percent, what is the rolled throughput yield (RTY), and the proportion nonconforming?

Problem 2

Wellplace Insurance Company processes insurance policy applications in batches of 100. One day, they had 10 batches to process and, after inspection, it was found that 4 batches had nonconforming policies. One batch had 3 nonconformances, another had 5, another had 2, and another had 1 nonconformance. What were (a) the proportion nonconforming for each batch, (b) the nonconformances per unit (NPU), in total for the 10 batches, and (c) the total throughput yield (TY) for the 10 batches?

Problem 3

Nighthawk Airlines measured their numbers of lost bags in one month and found that they had lost 55 bags for 10,000 customers. If the average number of bags per customer is 1.3, how many errors per million opportunities (epmo) does this represent? The worldwide rate of baggage mishandling reported by SITA (Société Internationale de Télécommunications Aéronautiques) in 2013 was 6.96 per 1,000 passengers. If the average number of checked bags per passenger is assumed to be 1.3, how many errors per million opportunities (epmo) does this represent? How does this compare with the rate for Nighthawk—better or worse?

Problem 5 (Hint: Create 2 worksheets ~ calculations/implications and line chart with markers)

Analyze the cost data in the Excel workbook C08Data.xlsx for the Costcutin Co. What percent of sales are represented by each category of cost? What are the implications of these data for management?

Problem 9 (Hint: Create 2 worksheets ~ calculations/conclusions and Pareto chart)

The Excel workbook C08Data.xlsx provides data on quality losses at Nosoco Paper Mill. Construct an appropriate Excel chart to analyze the data. What conclusions do you reach?

Problem 22 (Hint: Create 3 worksheets ~ calculations, Histogram/chart, and Run Chart)

River Bottom Fire Department is evaluating their response times in order to determine whether a new fire station is needed. Samples were taken for 30 random days from 6 stations. These data can be found in the worksheet Prob. 8-22 in the C08Data.xlsx file.

a. Using Microsoft Excel® or similar software with statistical capability, construct a histogram for these 180 individual readings.

b. Construct a run chart for the sample means.

c. Interpret what the data show. Does the process appear to be in control?

Problem 29 (Hint: Use Xbar&R Template though you may want to review the Xbar&R Simulator too)

The data for 30 samples of three items each, from the study at Birdseye Magnetronics (from Prob. 8-24, above), was further analyzed in an effort to use it for process control. a. Compute the mean and range of each sample, calculate the control limits, and plot them on x and R control charts. b. Does the process appear to be in statistical control? Why or why not?

Problem 41 (Hint: Use P-Chart Template ~ do not be concerned with ‘Approximate Control Limits’)

Samples of packages orders were taken at the Alto-diez Package Co. to determine if the orders were prepared correctly. The percent defectives for each sample are given in the worksheet Prob. 8-41 in the C08Data.xlsx file on the Student Companion Site for this chapter for 25 samples. Two hundred orders are inspected each day for each sample. Construct a p-chart and interpret the results.

Problem 47 (Hint: Use C-Chart Template)

PharmaSuiyica, Inc., a mail-order prescription drug vendor, measured the number of defects per standard 200 line order being picked in their distribution center. Construct a c-chart for data in the table in the worksheet Prob. 8-47 in the C08Data.xlsx file and interpret the results.

Problem 50

Determine, using Figure 8.50, the appropriate sample size for detecting:

a. A 1-sigma shift in the mean with a 0.80 probability.

b. A 2-sigma shift with 0.95 probability

c. A 2.5-sigma shift with 0.90 probability

Note 1: Many of the problems above will use the data sets found in C08Data.xlsx. In addition, the Excel Templates folder on the course home page contains ‘templates’ that will aid in solving many of these problems.

Note 2: In order to earn credit for your answers to the problems, you are required to show all supporting work. Also, you may be expected to use Microsoft Office applications (Excel, Word, and/or PowerPoint) when showing your supporting work. If you use a ‘template’, save all of the information (numerical/visual).

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