The manufacturer determines that the Intrinsic Viscosity (IV) is the biggest area of opportunity for improving quality. They record the IV measurements from 50 batches/Jumbo Rolls: Create a probability distribution chart and calculate the mean and sample standard deviation of the data. Sample Standard Deviation (S) Create a Probability Histogram of the Batch IV’s. Convert the histogram to a Normal Distribution (estimate the bell curve/shade in the poor quality area). Compute the of Poor Quality” by determining the Opportunity Cost of not being able to sell the “Cost pulp that does not meet Customer A’s specifications for the highest price (having to sell to Customer B instead). Total # Batches # Batches Total Tons Customer Batches Opportunity Cost Of Poor Below Above (10 A Spec of cost/ton Quality “out Spec Spec tons/batch) spec” 21 25 $300 $ – If the manufacturer produces 100,000 tons, of this every year, what is the total annual of Poor “Cost Quality”. % of Bad Pulp # Tons Produced Cost of Poor Annual Cost of Poor Produced* Annually Quality/Ton** Quality % 100,000 $1,200 - $900 = $300 $ *Probability of pulp being out of spec. **Assumes product meets Customer B Specs Cost even higher if – “off-graded”.
The manufacturer determines that the Intrinsic Viscosity (IV) is the biggest area of opportunity for improving quality. They record the IV measurements from 50 batches/Jumbo Rolls: Create a probability distribution chart and calculate the mean and sample standard deviation of the data. Sample Standard Deviation (S) Create a Probability Histogram of the Batch IV’s. Convert the histogram to a Normal Distribution (estimate the bell curve/shade in the poor quality area). Compute the “Cost of Poor Quality” by determining the Opportunity Cost of not being able to sell the pulp that does not meet Customer A’s specifications for the highest price (having to sell to Customer B instead). Customer A Spec # Batches Below Spec # Batches Above Spec Total Batches “out of spec” Total Tons (10 tons/batch) Opportunity cost/ton Cost Of Poor Quality 21 – 25 $300 $ If the manufacturer produces 100,000 tons, of this every year, what is the total annual “Cost of Poor Quality”. % of Bad Pulp Produced* # Tons Produced Annually Cost of Poor Quality/Ton** Annual Cost of Poor Quality % 100,000 $1,200 - $900 = $300 $ *Probability of pulp being out of spec. **Assumes product meets Customer B Specs – Cost even higher if “off-graded”.
CCGPS%20Math%20Advanced%20Algebra%20Unit1SE.docx