Homework activity: \- should be done individually. Due Thursday Feb 21 on D2L by 5:00 pm.

1. Assume that 75% of the sales in a retail company are accounted for by 25% of the customers. (a) Determine the parameter A in the Pareto cumulative distribution equation. (b) Given that the relationship is valid for the remaining sales, how much of the sales value is accounted for by 50% of the customers? (for part b, the question is asking you to calculate the parameter y)

1. HINT: y = cumulative fraction of the value variable (in this case “sales”), x = cumulative fraction of the item variable (in this case “customers”).

2. The marketing research department for the Stitch Clothing Company has determined that 22% of the items stocked account for 70% of the dollar sales. A typical outlet store carries 1000 items. The items accounting for the top 60% of sales are replenished from the company’s distribution center. The rest are shipped directly from the supplier (manufacturer) to the stores. How many items are represented by the top 60%?

1. You should be able to solve this problem using problem 1 as a guideline. Remember to answer the actual question of how many items are represented by the top 60%.

3. A factory has 10 departments, all of which have quality problems leading to delays in shipping products to customers. A breakdown of the number of quality problems for each department (listed alphabetically) is as follows: (1) assembly, 16; (2) final packaging, 9; (3) finishing, 37; (4) forging, 73; (5) foundry, 362; (6) machine shop, 294; (7) plastic molding, 120; (8) receiving inspection, 124; (9) sheet metalworking, 86; and (10) tool-making, 42. (a) Construct a Pareto chart for this data using Excel. (b) Assuming that all quality problems are of equal value, in which department would you start to take corrective action to reduce the quality problems? (c) Determine the percentage of total quality problems that are attributable to the two departments (20% of the departments) with the most quality problems (just add the percentages of the two departments with the most quality problems). (d) construct a cause and effect diagram to find the root cause of the major quality problem(s). Your categories should be machine, man, material and method. Be creative and think about reasons why this might be happening. You should use a software package to do your drawing (Power point, excel, word, visio, etc.) Cause and effects diagram done by hand will not be accepted.

Laboratory #5 Homework Grading Rubric

Grading criteria

Points

Question 1 – calculations are accurate (parts a and b)

6

Question 2 – answer the question in terms of “how many items or number of units”

8

Question 3 – Pareto chart construction (all axis labeled and general title)

10

Discussion about pareto (parts b and c)

8

Cause and effect diagram (not by hand, use all the categories listed in the question)

8

Total points

40