Operations and Supply Chain Management The Core

338 OPERATIONS AND SUPPLY CHAIN MANAGEMENT
LO10–6 SOLVED PROBLEM 3
Management is trying to decide whether part A, which is produced with a consistent 3 percent
defective rate, should be inspected. If it is not inspected, the 3 percent defectives will go through a
product assembly phase and have to be replaced later. If all part A’s are inspected, one-third of the
defectives will be found, thus raising the quality to 2 percent defectives.
a. Should the inspection be done if the cost of inspecting is $0.01 per unit and the cost of
replacing a defective in the final assembly is $4.00?
b. Suppose the cost of inspecting is $0.05 per unit rather than $0.01. Would this change your
answer in (a)?
Solution
Should part A be inspected?
0.03 defective with no inspection.
0.02 defective with inspection.
a. This problem can be solved simply by looking at the opportunity for 1 percent improvement.
Benefit = .01($4.00) = $0.04
Cost of inspection = $0.01
Therefore, inspect and save $0.03 per unit.
b. A cost of $0.05 per unit to inspect would be $0.01 greater than the savings, so inspection
should not be performed.
DISCUSSION QUESTIONS
LO10–1 1. Is the goal of Six Sigma realistic for services such as the Best Buy airport or
Redbox DVD kiosks?
2. “If line employees are required to work on quality improvement activities, their
productivity will suffer.” Discuss.
3. “You don’t inspect quality into a product; you have to build it in.” Discuss the
implications of this statement.
4. “Before you build quality in, you must think it in.” How do the implications of
this statement differ from those in question 3?
LO10–2 5. Is certification under the ISO standards in this chapter necessary for competing in
the modern market? What should companies consider when deciding whether or
not to become certified?
6. Do you see any relationship between the ISO standards mentioned in this chapter
and the competitive strategy concepts mentioned earlier in the text?
LO10–3 7. Business writer Tom Peters has suggested that in making process changes, we
should “Try it, test it, and get on with it.” How does this square with the DMAIC/
continuous improvement philosophy?
8. Develop a cause-and-effect (fishbone) diagram to address everything that impacts
your grade in this course. How much is under your control?
LO10–4 9. The capability index allows for some drifting of the process mean. Discuss what
this means in terms of product quality output.
10. In an agreement between a supplier and a customer, the supplier must ensure that
all parts are within specification before shipment to the customer. What is the
effect on the cost of quality to the customer?
11. In the situation described in question 10, what would be the effect on the cost of
quality to the supplier?