Metrics and Quality Exercise Lab Exercise (25 Points) SCM 300

RELIABILITY (2 Points per question)

A certain company produces 22,000 tables per year in a three-step process. The three steps in the process employ machines with the reliabilities listed here:

Step A - 0.989 Step B – 0.977 Step C – 0.905

1. What is the reliability of the present process? Provide reliability to three digits.

2. How many defects does this process presently produce annually? Round up to get a whole number.

3. If the cost per defective unit is $28.50, what is the annual cost of defects to the company at this time?

4. The company can choose to buy a back-up machine for Step C for an additional $30,000. The back up would also have a reliability of 0.905, just like the one that is presently used. If they decide to get this back-up machine, what will the new reliability of the system be? Assume that once a machine malfunctions, the process continues to produce product, acceptable and defective. Use THREE decimal places in you calculations.

5. With the back up in place, how many defects will the process produce annually given the same demand rate?

Round up to get a whole number.

6. How much do they stand to save this year if the cost of the back-up machine is included in your calculation? Remember to include the cost of the back-up into your calculations.

SUPPLY CHAIN METRICS – PROCESS VELOCITY (4 Points)

A computer technician arrives at work at 8AM and finds a department manager delivering three malfunctioning laptop computers. The computer technician begins to repair the problems as soon as possible. The technician begins on the first computer and does not start the second computer until the first is repaired. The technician works on only one computer at a time. The technician takes a lunch break from 12-1PM.

The first computer is repaired by 10am

The second computer is repaired by 10:30am

The third computer is repaired by 2PM

.

7. What is the total process velocity?

HINTS: All jobs are there at 8am. Each job leaves when it is completed.

Take the total throughput for all three jobs and divide it by the total value added for all three jobs.

SUPPLY CHAIN METRICS – CASH TO CASH CYCLE (4 Points)

A certain company sells 500 units of inventory per day

They purchase the inventory at a cost of $10 per unit

They sell the inventory at a price of $25 per unit

Present inventory level = 5,500 units

Present Accounts Payable = $30,000

Present Accounts Receivable = $50,000

8. Calculate the cash to cash cycle?