opportunities (epmo) does this represent? How does this compare with the error rate for
Nighthawk—better or worse?
5.73 per 1,000 passengers is equivalent to 57.30 per 10,000 passengers if each passenger
only had one bag. However, customers may have different numbers of bags; thus the
43. Boardwalk Electronics manufactures 300,000 circuit boards per month. A random sample
of 3,000 boards is inspected every week for five characteristics. During a recent week,
three defects were found for one characteristic, and two defects each were found for the
other four characteristics. If these inspections produced defect counts that were
representative of the population, what are the dpmo’s for the individual characteristics
and what is the overall dpmo for the boards?
For the individual characteristics, we have
44. Analyze the cost data below. What implications do these data suggest to managers?
Because quality costs are provided only in terms of percentages, it is not possible to
45. Given the cost elements in the table below, determine the total percentage in each of the
four major quality-cost categories.
The key to this problem is correct identification of the proper categories.
Appraisal:
Incoming test and inspection
Inspection
Prevention:
Quality training
Quality audits
Internal Failure
Scrap
Rework
Correcting imperfections
Rework due to vendor faults
Problem solving
Quality costs: $140,000 (56.577 percent)
External Failure
Total quality costs = $247,450
46. Classify the cost elements shown below for the Impressive Printing Company into the
proper quality cost categories and find the total quality cost by category and percentage of
total quality cost by category.
Cost classification:
Customer complaint remakes
$24,300
External Failure
Printing plate revisions
$25,200
Other waste
$34,200
Internal Failure
Correction of typographical errors
$189,000
Internal Failure
Proofreading
$405,000
Quality planning
$50,400
Press downtime
$256,400
Internal Failure
Bindery waste
$45,900
Checking and inspection
$37,800
Total Prevention costs: $62,100 (5.31%)
Total Appraisal costs: $532,800 (45.54%)
Although external failure costs are relatively small (2.08%), the company is incurring
extensive costs for appraisal and internal failure (45.54% + 47.07% = 92.61%). Prevention
costs are low (5.31%), suggesting that more effort be spent on preventing defects and
waste.
47. Reship Solutions, Inc. has a distribution center in Cincinnati where it receives and breaks
down bulk orders from suppliers’ factories and ships out products to retail customers. The
different quality cost elements are shown in the table below. Classify these into the
appropriate quality cost categories and compute the percentage of total quality cost for
each category.
Cost Elements by Category
External failure
Customer complaint rework $34,000
internal Failure
Downtime due to conveyor/computer problems $342,125
Appraisal
Checking outbound boxes for errors $607,750
Incoming product inspection $51,000
Total $1,241,000
The data show that the company is spending too much on appraisal and incurring high
48. The following list gives the number of defects found in 30 samples of 100 electronic
assemblies taken on a daily basis over one month. Plot these data on a run chart,
computing the average value (center line). How do you interpret the chart?
The average is 4.3. The chart shows an unusual spike at observations 21 and 22, which
49. Develop cause-and-effect diagrams for any one of the following problems:
a. Poor exam grade
b. No job offers
c. Too many speeding tickets
d. Late for work or school
There is no one correct answer for these diagrams, but you will find some student
EXCEL-BASED PROBLEMS
For these problems, you may use Excel or the spreadsheet templates in MindTap to assist in
your analysis.
50. Nighthawk Airlines measured their numbers of lost bags in one month and found that they
had lost 35 bags for 10,000 customers. If the average number of bags per customer is 1.2,
use the Six Sigma Excel template to find at what sigma level is the airline operating.
51. The worldwide rate of baggage mishandling reported by SITA (Société Internationale de
Télécommunications Aéronautiques) in 2017 was 5.73 per 1,000 passengers. If the average
52. A bank has set a standard that mortgage applications be processed within eight days of
filing. If, out of a sample of 1000 applications, 75 fail to meet this requirement, what is the
epmo metric and how does it compare with a six-sigma level? Use the Six Sigma Excel
template for your analysis.
53. Over the last year, 1,200 injections were administered at a clinic. Quality is measured by
the proper amount of dosage as well as the correct drug. In nine instances, the incorrect
54. Analysis of customer complaints at an e-commerce retailer revealed the following:
We see that shipping delays (39% of errors) and packing errors (24%) account for the
majority of customer complaints; these should be the focus of improvement activities. If
you fix these two root causes you solve more than 60% of customer complaints.
55. The following cost-of-quality data were collected at the installment loan department of the
Kenney Bank. Classify these data into the appropriate cost-of-quality categories, and
analyze the results with a Pareto chart (use the Excel Pareto template). What suggestions
would you make to management?
Loan Processing
1. Run credit checks: $2,675.01
2. Review documents: $3,000.63
3. Make document corrections; gather additional information: $1,032.65
4. Prepare tickler file; review and follow up on titles, insurance, second meetings: $155.75
Loan Payment
1. Receive, inspect, and process payments: $800.00
2. Respond to inquiries when no coupon is presented with payments: $829.65
Loan Payoff
1. Receive, inspect, and process payoff and release documents: $224.99
2. Research payoff problems: $15.35
Classification:
Credit checks Appraisal $2,675.01
Review documents Appraisal $3,000.63
Make corrections Internal failure $1,032.65
Compensate for system downtime Internal failure $519.01
Conduct training Prevention $1,500.00
Total Prevention costs: $1,500
Total Appraisal costs: $9,100
Appraisal activities appear to be keeping failure costs relatively low; however, better
prevention should allow the company to reduce appraisal and save a substantial amount of
cost.
56. One industry expert stated that software today has six errors for every 1,000 lines of code.
Assuming that there is only one opportunity to make an error for each line of code, at what
sigma level is the coding processing operating? If eight errors are discovered, use the Six
Sigma Excel template to determine how many lines of code there must be for the process
to be at a six-sigma level.
This question may be answered by trial-and-error using the Six Sigma Excel template. We
can also find the answer exactly using the Goal Seek tool in Excel: set cell B11 to the value
of 6 by changing cell B5. This results in the following exact answer: 2,345,414 lines of code
(see Excel model that follows!)
57. Use the Excel Pareto template to investigate the quality losses in a paper mill shown
below. What conclusions do you reach?
Note that students can enter the data in the order in the problem and then sort the range
A6:B121 on column B, largest to smallest.
Bonnie Blaine, Director of Hospital Operations
Overview
A hospital diabetic patient is delivered the wrong food tray and goes into diabetic shock and
almost dies. The central issue in the case is “Who is responsible for quality in the hospital’s
dietary service?” Of course, the answer to be discovered during the class discussion is
Case Questions for Discussion: