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Read the pages and make a brief summary of them with your own words, please. It is what you understand. Don't make copy-paste, please. Mention important parts only. Also, you will put your comments and ideas about the topic. Please don't write item by item. Write the summary in paragraph form.

Read the pages and make a brief summary of them with your own words, please. It is what you understand. Don't make copy-paste, please. Mention important parts only. Also, you will put your comments and ideas about the topic. Please don't write item by item. Write the summary in paragraph form.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Read the pages and make a brief summary of them with your own words, please. It is what you understand. Don't make copy-paste, please. Mention important parts only. Also, you will put your comments and ideas about the topic. Please don't write item by item. Write the summary in paragraph form.

TOTAL QUALITY TOOLS DEFINED and that 80% of the money supporting churches in the United States comes from 20% of the church membership. All of us have limited resources. That point applies to useful tool wherever one needs to separate the important you and to me, and to all enterprises-even to giant corpora- from the trivial. The chart, first promoted by Dr. Joseph tions and to the government. This means that our resources cal tools. Total quality tools also enable today's employees, Juran, is named after Italian economist and sociologist (time, energy, and money) need to be applied where they Vilfredo Pareto (1848-1923). He had the insight to recog- will do the most good. The purpose of the Pareto chart is to nize that in the real world a minority of causes lead to the show you where to apply your resources by distinguishing majority of problems. This is known as the Pareto Principle. the significant few from the trivial many. It helps us establish PARETO CHARTS Carpenters use a kit of tools designed for very specific func- tions. Their hammers, for example, are used for the driving of nails and their saws for the cutting of wood. These and others enable a carpenter to build houses. They are physi- The Pareto (pah-ray-toe) chart (see Figure 15.1) is a very whether engineers, technologists, production workers, managers, or office staff, to do their jobs. Virtually no one can function in an organization that has embraced total Pick a category, and the Pareto Principle will usually hold. priorities. For example, in a factory you will find that of all the kinds quality without some or all of these tools. Unlike those in the carpenter's kit, these are intellectual tools. They are not wood and steel to be used with muscle; they are tools for collecting and displaying information in ways to help the human brain grasp thoughts and ideas. When thoughts and ideas are applied to physical processes, the processes yield better results. When they are applied to problem solv- ing or decision making, better solutions and decisions are developed. The seven tools discussed in the following seven sec- tions of this chapter represent those generally accepted as The Pareto chart in Figure 15.1 labels a company's cus- of problems you can name, only about 20% of them will tomers A, B, C, D, E, and all others. The bars represent the produce 80% of the product defects: Eighty percent of the percentages of the company's sales going to the respective cost associated with the defects will be assignable to only customers. Seventy-five percent of this company's sales are about 20% of the total number of defect types occurring.? the result of just two customers. If one adds customer C, Examining the elements of this cost will reveal that once 90% of its sales are accounted for. All the other customers again 80% of the total defect cost will spring from only together account for only 10% of the company's sales. Bear in mind that "all others" may include a very large number of small customers. Which customers are the ones who should about 20% of the cost elements. Charts have shown that approximately 20% of the pro- fessionals on the tennis tour reap 80% of the prize money be kept happy? Obviously, A, B, and perhaps C are the most the basic total quality tools. Some authors would include others, and we discuss some of the others briefly later in this chapter. A case can be made that just-in-time (JIT), statistical process control, and Quality Function Deployment are total quality tools. But these are more than tools: They are com- plete systems under the total quality umbrella. This book de- votes an entire chapter to each of these systems. A tool, like a hammer, exists to help do a job. If the job includes continual improvement, problem solving, or deci- sion making, then these seven tools fit the definition. Each critical. This would suggest that customers A, B, and C are the company's core market and all the other customers rep- resent a marginal business. Decisions on where to allocate resources should be made accordingly. The Pareto chart in Figure 15.2 shows bars representing the sales of a particular model of automobile by age group of the buyers. The curve represents the cumulative percent- age of sales and is keyed to the y-axis scale on the right. The manufacturer has limited resources in its advertising budget, and the chart reveals which age groups are the most logical choice to target. Concentrating on the 26 to 45 age bracket will result in the best return on investment because 76% of 45 40 35 15 of these tools is some form of chart for the collection and 10 . display of specific kinds of data. Through the collection and display facility, the data become useful information- information that can be used to solve problems, enhance decision making, keep track of work being done, and even predict future performance and problems. The beauty of the charts is that they organize data so that we can im- mediately comprehend the message. This would be all but impossible without the charts, given the mountains of data flooding today's workplace. 5 the Swift V-12 buyers come from the combination of the 36 to 45 and 26 to 35 age groups. The significant few referred to in the Pareto Principle are in the 26 to 45 age group. The insignificant many are all those under 26 and over 45. A B D E All Others Customer FIGURE 15.1 Pareto Chart: Percentage of Total Sales by Customer. % of Total Sales
Transcribed Image Text:TOTAL QUALITY TOOLS DEFINED and that 80% of the money supporting churches in the United States comes from 20% of the church membership. All of us have limited resources. That point applies to useful tool wherever one needs to separate the important you and to me, and to all enterprises-even to giant corpora- from the trivial. The chart, first promoted by Dr. Joseph tions and to the government. This means that our resources cal tools. Total quality tools also enable today's employees, Juran, is named after Italian economist and sociologist (time, energy, and money) need to be applied where they Vilfredo Pareto (1848-1923). He had the insight to recog- will do the most good. The purpose of the Pareto chart is to nize that in the real world a minority of causes lead to the show you where to apply your resources by distinguishing majority of problems. This is known as the Pareto Principle. the significant few from the trivial many. It helps us establish PARETO CHARTS Carpenters use a kit of tools designed for very specific func- tions. Their hammers, for example, are used for the driving of nails and their saws for the cutting of wood. These and others enable a carpenter to build houses. They are physi- The Pareto (pah-ray-toe) chart (see Figure 15.1) is a very whether engineers, technologists, production workers, managers, or office staff, to do their jobs. Virtually no one can function in an organization that has embraced total Pick a category, and the Pareto Principle will usually hold. priorities. For example, in a factory you will find that of all the kinds quality without some or all of these tools. Unlike those in the carpenter's kit, these are intellectual tools. They are not wood and steel to be used with muscle; they are tools for collecting and displaying information in ways to help the human brain grasp thoughts and ideas. When thoughts and ideas are applied to physical processes, the processes yield better results. When they are applied to problem solv- ing or decision making, better solutions and decisions are developed. The seven tools discussed in the following seven sec- tions of this chapter represent those generally accepted as The Pareto chart in Figure 15.1 labels a company's cus- of problems you can name, only about 20% of them will tomers A, B, C, D, E, and all others. The bars represent the produce 80% of the product defects: Eighty percent of the percentages of the company's sales going to the respective cost associated with the defects will be assignable to only customers. Seventy-five percent of this company's sales are about 20% of the total number of defect types occurring.? the result of just two customers. If one adds customer C, Examining the elements of this cost will reveal that once 90% of its sales are accounted for. All the other customers again 80% of the total defect cost will spring from only together account for only 10% of the company's sales. Bear in mind that "all others" may include a very large number of small customers. Which customers are the ones who should about 20% of the cost elements. Charts have shown that approximately 20% of the pro- fessionals on the tennis tour reap 80% of the prize money be kept happy? Obviously, A, B, and perhaps C are the most the basic total quality tools. Some authors would include others, and we discuss some of the others briefly later in this chapter. A case can be made that just-in-time (JIT), statistical process control, and Quality Function Deployment are total quality tools. But these are more than tools: They are com- plete systems under the total quality umbrella. This book de- votes an entire chapter to each of these systems. A tool, like a hammer, exists to help do a job. If the job includes continual improvement, problem solving, or deci- sion making, then these seven tools fit the definition. Each critical. This would suggest that customers A, B, and C are the company's core market and all the other customers rep- resent a marginal business. Decisions on where to allocate resources should be made accordingly. The Pareto chart in Figure 15.2 shows bars representing the sales of a particular model of automobile by age group of the buyers. The curve represents the cumulative percent- age of sales and is keyed to the y-axis scale on the right. The manufacturer has limited resources in its advertising budget, and the chart reveals which age groups are the most logical choice to target. Concentrating on the 26 to 45 age bracket will result in the best return on investment because 76% of 45 40 35 15 of these tools is some form of chart for the collection and 10 . display of specific kinds of data. Through the collection and display facility, the data become useful information- information that can be used to solve problems, enhance decision making, keep track of work being done, and even predict future performance and problems. The beauty of the charts is that they organize data so that we can im- mediately comprehend the message. This would be all but impossible without the charts, given the mountains of data flooding today's workplace. 5 the Swift V-12 buyers come from the combination of the 36 to 45 and 26 to 35 age groups. The significant few referred to in the Pareto Principle are in the 26 to 45 age group. The insignificant many are all those under 26 and over 45. A B D E All Others Customer FIGURE 15.1 Pareto Chart: Percentage of Total Sales by Customer. % of Total Sales
Cascading Pareto Charts Figure 15.4 clearly showed that one type of relay ac- counted for about 60% of the failures. No other part fail- ures came close. In this case and at this time, the relay was the significant one, and all the other parts were the insig- nificant many. At this point, another team was formed to analyze the failure modes of the relay in order to determine You can cascade Pareto charts by determining the most sig- 70 nificant category in the first chart, making a second chart 80 70 60- 50- The next cycle of Pareto charts might look like those in 40 - Figure 15.6. Starting at the top, we see the following points: 30 - of e 20 10- 1. Miswires (wires connected to the wrong point or not properly attached to the right point) account for 40% of the remaining rework cost. 2. Wires connected with hand-wrapping tools represent more than 70% of all miswires. 3. Of the hand-wrap defects, more than 65% are caused by operator error. 4. Of all the operators doing hand-wrap work, operators 33 and 28 contribute more than 80% of the defects. 900 100% 90% - 80% 70% 800 700 Open Coil Open Erratic Open Diode 45 90 Others 600 Contacts Contacts 40 -60% e 50% 40% -80 70 A 500 3 400 A 300 200- 100 FIGURE 15.5 Relay Failure Categories. 30 60 E 25 -30% -20% -10% -50 Top Six Defects by Rework Cost 15 -30 50 r 80 0% 10 20 60 36- 45 26- 55- 46- 55 Customer Age Group 18- 10 35 Up 25 -40 Relay MOS- Diode Diode Op 20 Attention must be given to those operators in the form of training or, perhaps, reassignment. The third Pareto chart cascading would break down the Wrong Part problem. For example, perhaps Part abc is mistakenly substituted for Part xyz on a printed circuit board. The cycle may be repeated over and over, each time dealing with the significant few, while ignoring the trivial many. Eventually, perfection is approached. A few com- All FET Type A Type B Amp Others - 20 10 - FIGURE 15.2 Swift V-12 Sales by Age Group. FIGURE 15.4 Rework Cost by Top Five Part Failure Miswire, Wrong PC Bd PC Bd Solder Short Open ll 80 r90 Categories. Part Others 70 80 60 - 70 Top Sox Miswire Categories 50- 3 40- 60 a course of action for eliminating the relay problem. It was determined that there were a number of failure modes in 80 * 70 E60 E 50 100 -80 30 the relay. They were plotted on the Pareto chart shown in Figure 15.5, which immediately revealed that 66% of all the 30 60 * panies are getting close with some of their products, but 40 most have ample opportunity for significant improvement. 20 20 40 10- E 30 20 10 failures were associated with one failure mode. The sec- One need not worry about running out of improvement possibilities. -20 ond longest bar in Figure 15.5 represented another mani- festation of the same root cause. The relay contacts were not switching on at all (longest bar) or were not switch- ing on completely (next longest bar). With this information Part Fallure PC Bd All Others Open ae 10 Miswire Wrong Part PC Bd Short Hand- Solder Hamess Mach Ribbon All Others FIGURE 15.3 Top Five Defects by Rework Cost. Wrap, PUPt Wrap related only to that category, and then repeating this as far known, the relay contacts were carefully examined, and it as possible, to three, four, or even five or more charts. If the was determined that the relays were being damaged at in- cascading is done properly, root causes of problems may be coming inspection where they were tested with a voltage determined rather easily. Consider the following example. A company pro- contacts. Changing the incoming test procedure and work- duces complex electronic assemblies, and the test depart- ment is concerned about the cost of rework resulting from ing with the relay vendor to improve its plating process test failures. It is costing more than $190,000 per year, and eliminated the problem. that amount is coming directly out of profit. The depart- ment formed a special project team to find the cause of particular problem might be insignificant at one point in the problem and reduce the cost of rework. The Pareto time, it might not stay that way. Consider what happens chart in Figure 15.3 showed them that about 80% of the to the bars on the cascaded charts when the relay contact cost was related to just five defect causes. All the others, problem is solved. The second longest bar on the chart in and there were about 30 more, were insignificant-at least Figure 15.3 clearly becomes the longest (assuming it was Hand-Wrap Defects by Category 70 100 60 50- 40- 30 - 80 that was high enough to damage the gold plating on the 60 a 40 20 20 10 Earlier in this chapter, we implied that although a Operator Tool Op Sheet All Others % of Hand-Wrap Defects by Operator 60 100 F80 -60 * - 40 3 40 30 at that time. The longest bar alone accounted for nearly 40% of the At this point, more than $100,000 a year is still being spent cost. If the problem it represents could be solved, the result from profit to rework product rather than making it prop- would be an immediate reduction of almost $75,000 in re- work cost. The team sorted the data again to develop a level erly in the first place. The cycle must continue to be re- 2 Pareto chart, Figure 15.4, to focus on any part types that peated until perfection is approached. might be a major contributor to the failures. not being solved simultaneously with the relay problem). 8 20 10 20 Operator Operator Operator 28 Others 33 11 FIGURE 15.6 Second Cascading of Pareto Charts. Note: The tallest bar becomes the subject of the next Pareto chart. Rework Cost (SK) Rework Cost ($K) % ung Rework Cost (SH % ung
Transcribed Image Text:Cascading Pareto Charts Figure 15.4 clearly showed that one type of relay ac- counted for about 60% of the failures. No other part fail- ures came close. In this case and at this time, the relay was the significant one, and all the other parts were the insig- nificant many. At this point, another team was formed to analyze the failure modes of the relay in order to determine You can cascade Pareto charts by determining the most sig- 70 nificant category in the first chart, making a second chart 80 70 60- 50- The next cycle of Pareto charts might look like those in 40 - Figure 15.6. Starting at the top, we see the following points: 30 - of e 20 10- 1. Miswires (wires connected to the wrong point or not properly attached to the right point) account for 40% of the remaining rework cost. 2. Wires connected with hand-wrapping tools represent more than 70% of all miswires. 3. Of the hand-wrap defects, more than 65% are caused by operator error. 4. Of all the operators doing hand-wrap work, operators 33 and 28 contribute more than 80% of the defects. 900 100% 90% - 80% 70% 800 700 Open Coil Open Erratic Open Diode 45 90 Others 600 Contacts Contacts 40 -60% e 50% 40% -80 70 A 500 3 400 A 300 200- 100 FIGURE 15.5 Relay Failure Categories. 30 60 E 25 -30% -20% -10% -50 Top Six Defects by Rework Cost 15 -30 50 r 80 0% 10 20 60 36- 45 26- 55- 46- 55 Customer Age Group 18- 10 35 Up 25 -40 Relay MOS- Diode Diode Op 20 Attention must be given to those operators in the form of training or, perhaps, reassignment. The third Pareto chart cascading would break down the Wrong Part problem. For example, perhaps Part abc is mistakenly substituted for Part xyz on a printed circuit board. The cycle may be repeated over and over, each time dealing with the significant few, while ignoring the trivial many. Eventually, perfection is approached. A few com- All FET Type A Type B Amp Others - 20 10 - FIGURE 15.2 Swift V-12 Sales by Age Group. FIGURE 15.4 Rework Cost by Top Five Part Failure Miswire, Wrong PC Bd PC Bd Solder Short Open ll 80 r90 Categories. Part Others 70 80 60 - 70 Top Sox Miswire Categories 50- 3 40- 60 a course of action for eliminating the relay problem. It was determined that there were a number of failure modes in 80 * 70 E60 E 50 100 -80 30 the relay. They were plotted on the Pareto chart shown in Figure 15.5, which immediately revealed that 66% of all the 30 60 * panies are getting close with some of their products, but 40 most have ample opportunity for significant improvement. 20 20 40 10- E 30 20 10 failures were associated with one failure mode. The sec- One need not worry about running out of improvement possibilities. -20 ond longest bar in Figure 15.5 represented another mani- festation of the same root cause. The relay contacts were not switching on at all (longest bar) or were not switch- ing on completely (next longest bar). With this information Part Fallure PC Bd All Others Open ae 10 Miswire Wrong Part PC Bd Short Hand- Solder Hamess Mach Ribbon All Others FIGURE 15.3 Top Five Defects by Rework Cost. Wrap, PUPt Wrap related only to that category, and then repeating this as far known, the relay contacts were carefully examined, and it as possible, to three, four, or even five or more charts. If the was determined that the relays were being damaged at in- cascading is done properly, root causes of problems may be coming inspection where they were tested with a voltage determined rather easily. Consider the following example. A company pro- contacts. Changing the incoming test procedure and work- duces complex electronic assemblies, and the test depart- ment is concerned about the cost of rework resulting from ing with the relay vendor to improve its plating process test failures. It is costing more than $190,000 per year, and eliminated the problem. that amount is coming directly out of profit. The depart- ment formed a special project team to find the cause of particular problem might be insignificant at one point in the problem and reduce the cost of rework. The Pareto time, it might not stay that way. Consider what happens chart in Figure 15.3 showed them that about 80% of the to the bars on the cascaded charts when the relay contact cost was related to just five defect causes. All the others, problem is solved. The second longest bar on the chart in and there were about 30 more, were insignificant-at least Figure 15.3 clearly becomes the longest (assuming it was Hand-Wrap Defects by Category 70 100 60 50- 40- 30 - 80 that was high enough to damage the gold plating on the 60 a 40 20 20 10 Earlier in this chapter, we implied that although a Operator Tool Op Sheet All Others % of Hand-Wrap Defects by Operator 60 100 F80 -60 * - 40 3 40 30 at that time. The longest bar alone accounted for nearly 40% of the At this point, more than $100,000 a year is still being spent cost. If the problem it represents could be solved, the result from profit to rework product rather than making it prop- would be an immediate reduction of almost $75,000 in re- work cost. The team sorted the data again to develop a level erly in the first place. The cycle must continue to be re- 2 Pareto chart, Figure 15.4, to focus on any part types that peated until perfection is approached. might be a major contributor to the failures. not being solved simultaneously with the relay problem). 8 20 10 20 Operator Operator Operator 28 Others 33 11 FIGURE 15.6 Second Cascading of Pareto Charts. Note: The tallest bar becomes the subject of the next Pareto chart. Rework Cost (SK) Rework Cost ($K) % ung Rework Cost (SH % ung
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