Practical Operations Management
Practical Operations Management
2nd Edition
ISBN: 9781939297136
Author: Simpson
Publisher: HERCHER PUBLISHING,INCORPORATED
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Chapter 13, Problem 1DQ
Summary Introduction

Interpretation:

Risk which causes greater threat to operation.

Concept Introduction:Control charts are the graphical representation to check or monitor the variations of the process and length of deviations from average.

Expert Solution & Answer
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Explanation of Solution

In the given scenario, sample is normal distributed as mean, median and mode is same. So, there are less chances that any sample value would be out of the control limits. Any variation of sample value out of the control limits is called Type 1 error. There is no fixed cause for such an error. It could be due to producer’s interference of stopping production process, when any unseen natural variation occurs. This is called producer’s risk.

Practical Operations Management, Chapter 13, Problem 1DQ , additional homework tip  1

Apart from producer’s risk, there is also a possibility when sample value is lying under the control limits but it is a cause of interference in production process. The causes of interference may be assigned. It can be shown below:

Practical Operations Management, Chapter 13, Problem 1DQ , additional homework tip  2

Despite assignable causes, which would make the products coming out of the production process non-confirming to desired specifications, the sample mean is falling within the control limits. This type of error is called a Type 2 error. This is a consumer’s risk, as the defective products in that batch would reach the consumer, undetected by the producer.

A producers’ risk is a minor problem of loss of production, whereas consumers’ risk is a greater threat as the consumer may ask for warranty replacement, may take the company to court, there could be claims, loss of company’s image and so on.

Therefore, consumer’s risk is the greatest threat to the success of an operation.

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