OM ASSIGNMENT SMITA DAYAL, ROLL - 88, SEC B, MBA PT 2012-15

ASSIGNMENT 1

SMITA DAYAL,

Roll No – 88, MBA PT 2012 – 15 Section B

Solve the following questions

Question 3-3: The Commonwealth Banking Corporation issues a national credit card through its various bank branches in five
southeastern states. The bank credit card business is highly competitive and interest rates do not vary substantially, so the
company decided to attempt to retain its customers by improving customer service through a reduction in billing errors. The
credit card division monitored its billing department process by taking daily samples of 200 customer bills for 30 days and
checking their accuracy. The sample results are as follows:

Number of Number of
Sample Defectives Sample Defectives
1 7 16 10
2 12 17 12
3 9 18 14
4 6 19 16
5 5 20 15
6 8 21 13
7 10 22 9
8 11 23 10
9 14 24 12
10 10 25 15
11 9 26 14
12 6 27 16
13 3 28 12
14 2 29 15
15 8 30 14

Develop a p-chart for the billing process using 3σ control limits and indicate if the process is out of control.

Solution:

Sample Defectives Defective p UCL LCL

1 7 0.035 0.05 0.1003 0.0054
2 12 0.060 0.05 0.1003 0.0054
3 9 0.045 0.05 0.1003 0.0054
4 6 0.030 0.05 0.1003 0.0054
5 5 0.025 0.05 0.1003 0.0054
6 8 0.040 0.05 0.1003 0.0054
7 10 0.050 0.05 0.1003 0.0054
8 11 0.055 0.05 0.1003 0.0054
9 14 0.070 0.05 0.1003 0.0054
10 10 0.050 0.05 0.1003 0.0054
11 9 0.045 0.05 0.1003 0.0054
12 6 0.030 0.05 0.1003 0.0054
13 3 0.015 0.05 0.1003 0.0054
14 2 0.010 0.05 0.1003 0.0054
15 8 0.040 0.05 0.1003 0.0054

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OM ASSIGNMENT SMITA DAYAL, ROLL - 88, SEC B, MBA PT 2012-15

16 10 0.050 0.05 0.1003 0.0054

17 12 0.060 0.05 0.1003 0.0054
18 14 0.070 0.05 0.1003 0.0054
19 16 0.080 0.05 0.1003 0.0054
20 15 0.075 0.05 0.1003 0.0054
21 13 0.065 0.05 0.1003 0.0054
22 9 0.045 0.05 0.1003 0.0054
23 10 0.050 0.05 0.1003 0.0054
24 12 0.060 0.05 0.1003 0.0054
25 15 0.075 0.05 0.1003 0.0054
26 14 0.070 0.05 0.1003 0.0054
27 16 0.080 0.05 0.1003 0.0054
28 12 0.060 0.05 0.1003 0.0054
29 15 0.075 0.05 0.1003 0.0054
30 14 0.070 0.05 0.1003 0.0054
Total 317        

0.120

0.100
Proportion Defective

0.080

0.060

0.040

0.020

0.000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Sample Number

Answer:

p-Chart formulas:

The process is within control and random till 23rd sample. After 23rd sample, there a trend of defects staying above the
average limit.

Question 3-6: One of the stages in the process of making denim cloth at the Southern Mills Company is to spin cotton yarn
onto spindles for subsequent use in the weaving process. Occasionally the yarn breaks during the spinning process, and an
operator ties it back together. Some number of breaks is considered normal; however, too many breaks may mean that the yarn
is of poor quality. In order to monitor this process, the quality-control manager randomly selects a spinning machine each hour
and checks the number of breaks during a 15-minute period. Following is a summary of the observations for the past 20 hours:

Number of Number of
Sample Defects Sample Defects

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OM ASSIGNMENT SMITA DAYAL, ROLL - 88, SEC B, MBA PT 2012-15

1 5 11 5
2 2 12 2
3 8 13 6
4 4 14 9
5 2 15 5
6 5 16 8
7 6 17 10
8 3 18 8
9 4 19 11
10 3 20 7

Construct a c-chart using 3σ limit for this process and indicate if the process was out of control at any time.

Solution:

Sample Defects c-Bar UCL LCL

1 5 5.65 12.78 0.00
2 2 5.65 12.78 0.00
3 8 5.65 12.78 0.00
4 4 5.65 12.78 0.00
5 2 5.65 12.78 0.00
6 5 5.65 12.78 0.00
7 6 5.65 12.78 0.00
8 3 5.65 12.78 0.00
9 4 5.65 12.78 0.00
10 3 5.65 12.78 0.00
11 5 5.65 12.78 0.00
12 2 5.65 12.78 0.00
13 6 5.65 12.78 0.00
14 9 5.65 12.78 0.00
15 5 5.65 12.78 0.00
16 8 5.65 12.78 0.00
17 10 5.65 12.78 0.00
18 8 5.65 12.78 0.00
19 11 5.65 12.78 0.00
20 7 5.65 12.78 0.00
Total 113      

14
Number of Defects

12
10
8
6
4
2
0
1 2 3 4 5 6 7 8 9 10Number
Sample 11 12 13 14 15 16 17 18 19 20

Answer:

c-Chart Formulas: LCL=c −z √c UCL=c +z √c

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OM ASSIGNMENT SMITA DAYAL, ROLL - 88, SEC B, MBA PT 2012-15

The process is within control. However there's a trend of defects staying below the average of 5.65 or above the average. It
means the control used to limit the defects is either too tight or too loose.

Question 3-14: The City Square Grocery and Meat Market has a large meat locker in which a constant temperature of
approximately 40º F should be maintained. The market manager has decided to construct an R-chart to monitor the
temperature inside the locker. The manager had one of the market employees take sample temperature readings randomly five
times each day for 20 days in order to gather data for the control chart. Following are the temperature sample observations:

  Temperature (°F)
Sample 1 2 3 4 5

1 46.3 48.1 42.5 43.1 39.6

2 41.2 40.5 37.8 36.5 42.3
3 40.1 41.3 34.5 33.2 36.7
4 42.3 44.1 39.5 37.7 38.6
5 35.2 38.1 40.5 39.1 42.3
6 40.6 41.7 38.6 43.5 44.6
7 33.2 38.6 41.5 40.7 43.1
8 41.8 40 41.6 40.7 39.3
9 42.4 41.6 40.8 40.9 42.3
10 44.7 36.5 37.3 35.3 41.1
11 42.6 43.5 35.4 36.1 38.2
12 40.5 40.4 39.1 37.2 41.6
13 45.3 42 43.1 44.7 39.5
14 36.4 37.5 36.2 38.9 40.1
15 40.5 34.3 36.2 35.1 36.8
16 39.5 38.2 37.6 34.1 38.7
17 37.6 40.6 40.3 39.7 41.2
18 41 34.3 39.1 45.2 43.7
19 40.9 42.3 37.6 35.2 34.8
20 37.6 39.2 39.3 41.2 37.6
a) Construct an R-chart based on these data using 3σ limits, and plot the 20 sample range values.
b) Does it appear that the temperature is in control according to the criteria established by management?
Solution:

  Observations Calculations Xbar Chart R-chart

Sample 1 2 3 4 5 Sample Range UCL LCL UCL LCL
Mean

1 46.3 48.1 42.5 43.1 39.6 43.92 8.50 43.31 36.11 13.18 0
2 41.2 40.5 37.8 36.5 42.3 39.66 5.80 43.31 36.11 13.18 0
3 40.1 41.3 34.5 33.2 36.7 37.16 8.10 43.31 36.11 13.18 0
4 42.3 44.1 39.5 37.7 38.6 40.44 6.40 43.31 36.11 13.18 0
5 35.2 38.1 40.5 39.1 42.3 39.04 7.10 43.31 36.11 13.18 0
6 40.6 41.7 38.6 43.5 44.6 41.80 6.00 43.31 36.11 13.18 0
7 33.2 38.6 41.5 40.7 43.1 39.42 9.90 43.31 36.11 13.18 0
8 41.8 40 41.6 40.7 39.3 40.68 2.50 43.31 36.11 13.18 0
9 42.4 41.6 40.8 40.9 42.3 41.60 1.60 43.31 36.11 13.18 0
10 44.7 36.5 37.3 35.3 41.1 38.98 9.40 43.31 36.11 13.18 0
11 42.6 43.5 35.4 36.1 38.2 39.16 8.10 43.31 36.11 13.18 0
12 40.5 40.4 39.1 37.2 41.6 39.76 4.40 43.31 36.11 13.18 0
13 45.3 42 43.1 44.7 39.5 42.92 5.80 43.31 36.11 13.18 0
14 36.4 37.5 36.2 38.9 40.1 37.82 3.90 43.31 36.11 13.18 0

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OM ASSIGNMENT SMITA DAYAL, ROLL - 88, SEC B, MBA PT 2012-15

15 40.5 34.3 36.2 35.1 36.8 36.58 6.20 43.31 36.11 13.18 0
16 39.5 38.2 37.6 34.1 38.7 37.62 5.40 43.31 36.11 13.18 0
17 37.6 40.6 40.3 39.7 41.2 39.88 3.60 43.31 36.11 13.18 0
18 41 34.3 39.1 45.2 43.7 40.66 10.90 43.31 36.11 13.18 0
19 40.9 42.3 37.6 35.2 34.8 38.16 7.50 43.31 36.11 13.18 0
20 37.6 39.2 39.3 41.2 37.6 38.98 3.60 43.31 36.11 13.18 0
          Mean 39.71 6.24        

Range

14.00

12.00

10.00

8.00
Mean

6.00

4.00

2.00

0.00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Sample

Answer:

x-Chart formulas:
LCL=x−A2 R UCL=x+A 2 R
R-Chart formulas:
LCL= D3 R UCL = D4 R
The process is within control. The sample ranges are within control and none of them are near to control lines.

Question 3-16: For the sample data provided in Problem 3-13, construct an x-chart in conjunction with the R-chart, plot the
sample observations, and, using both x- and R-charts, comment on the process control.

Solution:

  Observations Calculations Xbar Chart R-chart

Sample 1 2 3 4 5 Sample Range UCL LCL UCL LCL
Mean

1 9.06 9.13 8.97 8.85 8.46 8.89 0.67 9.393 8.649 1.364 0
2 8.52 8.61 9.09 9.21 8.95 8.88 0.69 9.393 8.649 1.364 0
3 9.35 8.95 9.20 9.03 8.42 8.99 0.93 9.393 8.649 1.364 0
4 9.17 9.21 9.05 9.01 9.53 9.19 0.52 9.393 8.649 1.364 0
5 9.21 8.87 8.71 9.05 9.35 9.04 0.64 9.393 8.649 1.364 0
6 8.74 8.35 8.50 9.06 8.89 8.71 0.71 9.393 8.649 1.364 0
7 9.00 9.21 9.05 9.23 8.78 9.05 0.45 9.393 8.649 1.364 0
8 9.15 9.20 9.23 9.15 9.06 9.16 0.17 9.393 8.649 1.364 0

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OM ASSIGNMENT SMITA DAYAL, ROLL - 88, SEC B, MBA PT 2012-15

9 9.98 8.90 8.81 9.05 9.13 9.17 1.17 9.393 8.649 1.364 0
10 9.03 9.10 9.26 9.46 8.47 9.06 0.99 9.393 8.649 1.364 0
11 9.53 9.02 9.11 8.88 8.92 9.09 0.65 9.393 8.649 1.364 0
12 8.95 9.10 9.00 9.06 8.95 9.01 0.15 9.393 8.649 1.364 0
          Mean 9.02 0.65        

X-Bar

9.60

9.40

9.20

9.00
Mean

8.80

8.60

8.40

8.20
1 2 3 4 5 6 7 8 9 10 11 12
Sample

Range

1.60
1.40
1.20
1.00
0.80
Mean

0.60
0.40
0.20
0.00
1 2 3 4 5 6 7 8 9 10 11 12
Sample

Answer: Both X bar and R charts show that the process is within control.

From R chart we can see that the sample ranges are within control, however there are 2 cases where the range is very near to
lower control limit.

X bar chart tell us that the controls are in place and samples show us a random behavior except in one case where defect range
is very near to lower control limit (sample 6).

Question 4-6: MagTech assembles tape players from four major components arranged as follows:

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OM ASSIGNMENT SMITA DAYAL, ROLL - 88, SEC B, MBA PT 2012-15

A C D

The components can be purchased from three different vendors, who have supplied the
following reliability data:

Vendor
Component 1 2 3
A .94 .85 .93
B .90 .88 .86
C .90 .92 .95
D .95 .93 .90

a) If MagTech has decided to use only one vendor to supply all four components, which
vendor should be selected?

b) Would your decision change if all the components were assembled in series?

A B C D

Solution a)

Vendor 1 – Parallel arrangement

0.90

0.94 0.90 0.95

Reliability = 0.94 x (1 - (1 - 0.90)x(1 - 0.90)) x 0.95 = 0.88

Vendor 2 – Parallel arrangement

0.88

0.852012-2015, Trimester
IIFT Delhi, MBA (PT) 0.92 IV 0.93 Page 7 of 14
OM ASSIGNMENT SMITA DAYAL, ROLL - 88, SEC B, MBA PT 2012-15

Reliability = 0.85 x (1 - (1 - 0.88)x(1 - 0.92)) x 0.93 = 0.78

Vendor 3 – Parallel arrangement

0.86

0.93 0.95 0.90

Reliability = 0.93 x (1 - (1 - 0.86)x(1 - 0.95)) x 0.90 = 0.83

Answer a: Vendor 1 offers highest reliability with .88 in parallel arrangement and hence Vendor 1
should be selected.

Solution b)

Vendor 1 – Serial arrangement

0.94 0.90 0.90 0.95

Reliability = 0.94 x 0.90 x 0.90 x 0.95 = 0.72

Vendor 2 – Serial arrangement

0.85 0.88 0.92 0.93

Reliability = 0.85 x 0.88 x 0.92 x 0.93 = 0.64

Vendor 3 – Serial arrangement

0.93 0.86 0.95 0.90

Reliability = 0.93 x 0.86 x 0.95 x 0.90 = 0.68

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OM ASSIGNMENT SMITA DAYAL, ROLL - 88, SEC B, MBA PT 2012-15

Answer b: No, our decision will not change if components were assembled in series. Vendor 1 still
offers highest reliability with .72 in serial arrangement and hence Vendor 1 should be selected.

Question 6-17: Sandra Saunders and her design team are analyzing the production costs for three
alternative monitor designs. Given the cost information below, and assuming form and function
are similar for each design, which monitor design would you recommend?

Monitor Fixed Cost Variable Cost

A $ 700,000 $250
B $1,000,000 $125
C $1,500,000 $100

Solution:

Input

Monitor Fixed Cost Variable

Cost
A $700,000.00 $250.00
B $1,000,000.00 $125.00
C $1,500,000.00 $100.00

Output

Point of
Pairwise Comparison Indifference
A B 2,400
A C 5,333
B C 20,000

Sample data for graph:

Volume A B C
0 $700,000 $1,000,000 $1,500,000
2,400 1,300,000 1,300,000 $1,740,000
4,800 1,900,000 1,600,000 $1,980,000
7,200 2,500,000 1,900,000 $2,220,000

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OM ASSIGNMENT SMITA DAYAL, ROLL - 88, SEC B, MBA PT 2012-15

$3,000,000
$2,500,000
$2,000,000
A
$1,500,000
B
$1,000,000 C
$500,000
$0
0 2,400 4,800 7,200

Point of Indifference between Monitor A and Monitor B =c f 1 −c f 2

| |
cv 2 −c v 1
Answer:

 Monitor design A has the lowest startup cost and is good for low volume of production.

 At volume level of 2400 units, Monitor A and B reach the point of indifference.

 Beyond 2400 units Monitor design B should be selected.

 At volume level of 5333 units, Monitor design A and C reach the point of indifference.
Beyond this point design C should be selected as it gives lower per unit cost.

 At volume level 20,000 units, Monitor design B and C reach the point of indifference.
Beyond this point design C should be used as it gives lower per unit cost.

Question 17-9: Lim’s Alterations has 8 jobs to be completed and only 1 sewing machine (and
sewing machine operator). Given the processing times and due dates as shown here, prioritize
the jobs by SPT, DDATE, and SLACK. Today is day 7.

Task Process Time(in days) Due Date

A 9 10
B 8 15
C 6 18
D 4 20
E 11 25
F 10 40
G 7 20
H 3 50

Calculate mean flow time, mean tardiness, maximum tardiness, and number of jobs tardy for
each sequence. Which sequencing rule would you recommend? Why?

Solution:

a) Sequencing rule: SLACK; sort the given data as per Slack.

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OM ASSIGNMENT SMITA DAYAL, ROLL - 88, SEC B, MBA PT 2012-15

Today’s date: 7th

Processing
Job time Duedate Slack
A 9 10 -6
B 8 15 0
C 6 18 5
G 7 20 6
E 11 25 7
D 4 20 9
F 10 40 23
H 3 50 40

Calculations:

Completion
Job Start time Processing time Time Due date Tardiness
A 7 9 16 10 6
B 16 8 24 15 9
C 24 6 30 18 12
G 30 7 37 20 17
E 37 11 48 25 23
D 48 4 52 20 32
F 52 10 62 40 22
H 62 3 65 50 15
Total 334 136
Average     41.75   17.00

Performance Measures
Mean Flowtime 41.75
Mean Tardiness 17.00
No. of Jobs Tardy 8
Max Tardiness 32

b) Sequencing rule: SPT; sort the given data as per processing time

Today’s date: 7th

Processing
Job time Duedate Slack
H 3 50 40
D 4 20 9
C 6 18 5
G 7 20 6
B 8 15 0
A 9 10 -6
F 10 40 23
E 11 25 7

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OM ASSIGNMENT SMITA DAYAL, ROLL - 88, SEC B, MBA PT 2012-15

Calculations:

Completion
Job Start time Processing time Time Duedate Tardiness
H 7 3 10 50 0
D 10 4 14 20 0
C 14 6 20 18 2
G 20 7 27 20 7
B 27 8 35 15 20
A 35 9 44 10 34
F 44 10 54 40 14
E 54 11 65 25 40
Total 269 117
Average     33.63   14.63

Performance Measures
Mean Flowtime 33.63
Mean Tardiness 14.63
No. of Jobs Tardy 6
Max Tardiness 40

c) Sequencing rule: DDATE; sort the given data as per Due date.

Today’s date: 7th

Processing
Job time Due date Slack
A 9 10 -6
B 8 15 0
C 6 18 5
D 4 20 9
G 7 20 6
E 11 25 7
F 10 40 23
H 3 50 40

Completion
Job Start time Processing time Time Due date Tardiness
A 7 9 16 10 6
B 16 8 24 15 9
C 24 6 30 18 12
D 30 4 34 20 14
G 34 7 41 20 21
E 41 11 52 25 27
F 52 10 62 40 22
H 62 3 65 50 15
Total 324 126
Average     40.50   15.75

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OM ASSIGNMENT SMITA DAYAL, ROLL - 88, SEC B, MBA PT 2012-15

Performance Measures
Mean Flowtime 40.50
Mean Tardiness 15.75
No. of Jobs Tardy 8
Max Tardiness 27

Answer: We should select SPT sequencing method as it gives lowers number of Tardy Jobs, i.e. 6
jobs. First 2 jobs complete on time with 0 tardiness and third jobs gets completed with lowest
tardiness among the 3 types of sequencing.

Question 17-14: Given that all the jobs listed below must be machined first, then polished,
determine a sequence that will minimize the time required to process all 6 jobs. Chart the
schedule on a Gantt chart and indicate the makespan.

Job Process 1 Process 2

A 8 9
B 1 2
C 3 5
D 8 6
E 7 5
F 7 4

Solution:

Input

Job Process 1 Process 2

A 8 9
B 1 2
C 3 5
D 8 6
E 7 5
F 7 4

Sequence

B C A D E F

Output

  B C A D E F
Process 1 1 4 12 20 27 34
Process 2 3 9 21 27 32 38

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OM ASSIGNMENT SMITA DAYAL, ROLL - 88, SEC B, MBA PT 2012-15

Makespan = 38

Gantt chart

Idle B Idle C Idle A Idle D Idle E Idle F

Process 2 1 2 1 5 3 9 0 6 0 5 2 4
Process 1 1 3 8 8 7 7

Process 1

Process 2

0 5 10 15 20 25 30 35 40
Time
Idle B Idle C Idle A Idle D Idle E Idle F

*****************************************************

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