Practical Operations Management
Practical Operations Management
2nd Edition
ISBN: 9781939297136
Author: Simpson
Publisher: HERCHER PUBLISHING,INCORPORATED
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Chapter 13, Problem 1DQ
Summary Introduction

Interpretation:

Risk which causes greater threat to operation.

Concept Introduction:Control charts are the graphical representation to check or monitor the variations of the process and length of deviations from average.

Expert Solution & Answer
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Explanation of Solution

In the given scenario, sample is normal distributed as mean, median and mode is same. So, there are less chances that any sample value would be out of the control limits. Any variation of sample value out of the control limits is called Type 1 error. There is no fixed cause for such an error. It could be due to producer’s interference of stopping production process, when any unseen natural variation occurs. This is called producer’s risk.

Practical Operations Management, Chapter 13, Problem 1DQ , additional homework tip  1

Apart from producer’s risk, there is also a possibility when sample value is lying under the control limits but it is a cause of interference in production process. The causes of interference may be assigned. It can be shown below:

Practical Operations Management, Chapter 13, Problem 1DQ , additional homework tip  2

Despite assignable causes, which would make the products coming out of the production process non-confirming to desired specifications, the sample mean is falling within the control limits. This type of error is called a Type 2 error. This is a consumer’s risk, as the defective products in that batch would reach the consumer, undetected by the producer.

A producers’ risk is a minor problem of loss of production, whereas consumers’ risk is a greater threat as the consumer may ask for warranty replacement, may take the company to court, there could be claims, loss of company’s image and so on.

Therefore, consumer’s risk is the greatest threat to the success of an operation.

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A production operation is making 150 units of a product by engaging five workers for 300 hours. However, 40 percent of the units appear to have various quality problems, and the company decides to sell them as seconds at a price of £50 each when a normal unit is sold for £150. To improve the situation, several initiatives are proposed, including a scheme where, for every improvement, 50 percent will be given to workers and the other 50 percent will be held by the company. This results in a significant drop in defects as now only 10 units are faulty out of an output of 130 units.   1. Compare the productivity after Bonus with the initial productivity.   2. Determine the appropriate bonus per hour for the workers under the bonus scheme if the cost per piece is £70 both before and after the scheme.
A production operation is making 150 units of a product by engaging five workers for 300 hours. However, 40 percent of the units appear to have various quality problems, and the company decides to sell them as seconds at a price of £50 each when a normal unit is sold for £150. To improve the situation, several initiatives are proposed, including a scheme where, for every improvement, 50 percent will be given to workers and the other 50 percent will be held by the company. This results in a significant drop in defects as now only 10 units are faulty out of an output of 130 units. a)  Compare the productivity after Bonus with the initial productivity b) Determine the appropriate bonus per hour for the workers under the bonus scheme if the cost per piece is £70 both before and after the scheme.
A manufacturing company has been inspecting units of output from a process. Each product inspected is evaluated on i ve criteria. If the unit does not meet standards for the criteria it counts as a defect for the unit. Each unit could have as few as zero defects, and as many as i ve. After inspecting 2,000 units, they discovered 33 defects. What is the DPMO measure for this process?
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