Final Exam

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Final Exam – Fall 2011Name __Caroline Herring__

Part One – Discussion Questions. Answer the questions in sufficient detail. For these discussion questions, find at least two online references of examples for each of the questions. In other words, what companies are using these topics in their operations?

1..Explain process variation and process capability as it relates to the 6-sigma quality methodology. What companies are touting the use of 6-Sigma (other than Pocono Medical)? How are they using it? Give references.

Companies with Six-Sigma processes insist that a process making a part be capable of operating so that the design specification limits are six standard deviations away from the process mean. Companies use small samples to periodically check that the process is in statistical control. A process is capable when the mean and standard deviation of the process are operating such that the upper and lower control limits are acceptable relative to the upper and lower specification limits. Processes can be improved by reducing the standard deviation associated with products so that probability will be reduced. A capability index is used to measure how well processes are capable of producing relative to the design tolerances.

Process variation is the main course of quality problems, whether in business (transactional) or production processes. The main task of statistical process improvement methods such as Statistical Process Control, Six Sigma and Measurement Systems Analysis and the Taguchi approach to Experimental Design is to control and reduce process variation.

General Electric, the first company to use Six Sigma, is a good example of a company who is using Six Sigma as it relates to process variation and process capability. According GE’s website:

"...Six Sigma is a highly disciplined process that helps us focus on developing and delivering near-perfect products and services. Why 'Sigma'? The word is a statistical term that measures how far a given process deviates from perfection. The central idea behind Six Sigma is that if you can measure how many 'defects' you have in a process, you can systematically figure out how to eliminate them and get as close to 'zero defects' as possible. To achieve Six Sigma Quality, a process must produce no more than 3.4 defects per million opportunities. An 'opportunity' is defined as a chance for nonconformance, or not meeting the required specifications. This means we need to be nearly flawless in executing our key processes."

2.. What are the different types of qualitative techniques in forecasting? What companies are utilizing qualitative techniques for forecasting their sales? Why are qualitative forecasting techniques being used instead of quantitative techniques?

Qualitative forecasting techniques generally take advantage of the knowledge of experts and require much judgment. These techniques typically involve processes that are well defined to those participating in the forecasting exercise. These techniques are most useful when the product is new or there is little experience with selling into a new region.

There are several different types of qualitative techniques in forecasting: market research, panel consensus, historical analogy, and Delphi method. Market research occurs when firms hire outside companies that specialize in market research to conduct forecasting. This is used mostly for product research and the data collection method for this technique is primarily surveys and interviews. In a panel consensus, a panel of people from a variety of positions develop a more reliable forecast that a narrower group. Panel forecasts are developed through open meetings with free exchange of ideas from all levels of management and individuals. Historical analogies are used when trying to forecast demand and a similar product or service is used as a model. Finally, the Delphi method is similar to a panel...
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