Part 1: SPC
We’ve outlined several tools and techniques that have been used in business to improve organizational efficiency and effectiveness. Two useful tools that support this goal are statistical process control (SPC) and capability analysis. We’ve also focused on applying these techniques to reduce waste, improve product and service quality and increase customer satisfaction. That information provides the background needed to answer the following questions.
1.A x ̅ and R charts and capability analysis
The UWEX LED Electric Company produces LED light bulbs. The following data on the number of lumens for 15-watt light bulbs were collected.
Observation
Sample 1    2    3    4
1          604 612 588 600
2          597 601 607 603
3          581 570 585 592
4          620 605 595 588
5          590 614 608 604
Calculate control limits for an x ̅-chart.
Calculate control limits for an R-chart.
Is the process in control?
Since these data were collected, some new employees were hired. A new sample obtained the following readings: 570, 603, 623, and 583. Is the process in control after the new sample data were added to the original table?
Note: Use the control limits obtained in parts (a) and (b) above.
Suppose that the nominal amount of light emitted by a light bulb (in lumens) is 600±10. Calculate the capability index Cp for this process.
Note: Estimate the process mean and standard deviation using all sample observations, i.e. the original data and a new sample in part (d).
Briefly describe how you would use these results to improve process performance.

1.B p-chart
Thirty samples of 75 items each were inspected at the Pen Manufacturing Company and 75 items were found to be defective. Compute control limits for a p-chart for this process.
Briefly describe how you would use these results to improve efficiency and effectiveness.

Part 2: Scheduling
We’ve outlined several tools and techniques that have been used in business to improve organizational efficiency and effectiveness. One key issue that supports this goal is scheduling. The order of processing jobs on a resource has a major impact on system performance. Therefore applying scheduling techniques to improve system performance and increase customer satisfaction is key.
2.A Scheduling
John Smith is the supervisor of Cleaning Express, Inc. which provides facility cleaning services for downtown Milwaukee businesses. Five customers submitted their orders at the beginning of the week. Specific scheduling data are as follows:
Job (In Order of Arrival) Processing Time (Days) Due Date (Days Hence)
A                                                       3                            5
B                                                       4                            6
C                                                       2                            7
D                                                       6                            9
E                                                       1                               2
All orders require the use of one expensive cleaning machine, so, Smith must decide on the processing sequence for the five orders. The evaluation criteria are minimum flow time and minimum WIP inventory. Smith currently uses the FCFS rule in order to be fair to its customers. Evaluate the performance of the FCFS, EDD and SPT rules on average flow time and average WIP inventory. Which rule should Smith select?
Briefly describe the likely impact of these calculations on efficiency and effectiveness. Why is good scheduling important for business performance?

Part 3: Forecasting
We’ve outlined several tools and techniques that have been used in business to improve organizational efficiency and effectiveness. One important component that supports this goal is forecasting. Inaccurate forecasts lead to a mismatch between supply and demand for a product or service leading to operation strategy execution problems. Being able to apply forecasting techniques to better manage demand and increase customer satisfaction is a necessary skill.

3.A Forecasting
Historical demand for a product is:
Month          Demand
January       12
February       11
March          15
April             12
May             16
June             15
a. Using a weighted moving average with weights of 0.60, 0.30, and 0.10, find the July forecast.
b. Using a simple three-month moving average, find the July forecast.
c. Using single exponential smoothing with =0.2 and a June forecast = 13, find the July forecast. Make whatever assumptions you wish.
d. Using simple linear rPart 4: Inventory Management

We’ve outlined several tools and techniques that have been used in business to improve organizational efficiency and effectiveness. One key component of this strategy is sound inventory management and applying inventory models that help managers make better inventory decisions to reduce waste and costs.

4.A Inventory Management - EOQ Model
Items purchased from a vendor cost $20 each, and the forecast for next year’s demand is 1,000 units. If it costs $5 every time an order is placed for more units and the storage cost is $4 per unit per year:
a. What quantity should be ordered each time?
b. What is the total ordering cost for a year?
c. What is the total storage cost for a year?
d. What is the total inventory cost per year?
Briefly describe the likely impact of these calculations on efficiency and effectiveness. Is inventory an asset or a liability? When should it be considered waste?

4.B Inventory Management - Price-Break Model
Copper Inc. (CI) is a Tier 1 supplier to various industries that use components made from copper metal in their final products. Manufacturers of desktop computers and electronic devices are its primary customers. CI orders a relatively small number of different raw sheet metal products in very large quantities. The purchasing department is trying to establish an ordering policy that will minimize total costs while meeting the needs of the business. One of the highest volume items it purchases comes in precut sheets direct from the copper processor. Forecasts based on historical data indicate that CI will need to purchase 200,000 sheets of this product on an annual basis. The copper producer has a minimum order quantity of 1,000 sheets, and offers a sliding price scale based on the quantity in each order, as follows:
Order Quantity Unit Price
1       – 9,999          $2.35
10,000 – 29,999       $2.20
30,000 +                   $2.15
The purchasing department estimates that it costs $300 to process each order, and CI has an inventory carrying cost equal to 15 percent of the value of inventory. Based on this information, use the price-break model to determine an optimal order quantity.
Briefly describe the likely impact of these calculations on efficiency and effectiveness. Is inventory an asset or a liability? When should it be considered waste? Is it always appropriate to order more in order to get a lower per unit price?
egression analysis, calculate the regression equation for the preceding demand data.
e. Using the regression equation in d, calculate the forecast for July.
f. Use MSE and MAD to evaluate performance of these models. Which model would you recommend for forecasting? Justify your answer.
Briefly describe the likely impact of these calculations on efficiency and effectiveness. Also address how accurate forecasting impacts demand management and business performance?

Part 1: SPC We’ve outlined several tools and techniques that have...