Exam paper Quality Control Management and Six sigma

Topics: Inventory, Chair, Car seat Pages: 7 (1625 words) Published: December 3, 2013
TQM, Six Sigma and LEAN (29259-E09) BACHELOR

EXAM data

Open book

Exam prepared by Mikkel Nüssler

Please note: Each of the exam assignments has an individual weight. The weight is expressed as a percentage.

Assignment 1 (Weight: 20%):LEAN and TQM

Based on the case ‘Office Chairs Inc.’:

A. Evaluate the organizational changes made by the company in 2005 relative to the theory of LEAN and TQM.

Assignment 2 (Weight: 60%):LEAN – Value Stream Analysis

Based on the case ‘Office Chairs Inc.’:

A. Make a Value Stream Map (VSM) of the company’s current set-up B. Analyze the current value stream and describe waste and improvement opportunities (Kaizen events). C. Present a VSM future state, and discuss/argue for your choices of design

Assignment 3 (Weight: 20%):Six Sigma
A. Explain what characterize a process that has a Six Sigma Capability. B. Explain the difference between special cause variation and common cause variation (i.e. assignable variation versus system variation), and why the ability to identify and distinguish between these types of variation is crucial when working with Six Sigma. Case to the exam assignment: Office Chairs Inc.

The company ‘Office Chairs, Inc. (in the case ‘the Company’) designs and produces office chairs. The company is placed in Denmark where administration, design and manufacturing takes place.

The company sells its chairs to whole sellers throughout the EU, who in turn sell the chairs to retailers. Both the whole sellers and retailers keep a small inventory of the company’s chairs.

Market situation:
Since 2005 the company has experienced an increasing pressure from the whole sellers demanding: 1. Lower prices
2. Faster delivery performance (lead time)
3. More product variants
4. Customer tailoring (i.e. the customer designs his/her own chair)

Key financial figures:

Figure
Year

2006
2007
2008
Total revenue (in million DKR)
235
243
238
Number of chairs sold (in thousands)
213
241
265
EBIT (in million DKR)
31
5
-11
Total number of full time employees
110
114
119
Orders delivered on time -performance
82%
98%
99%
Raw material inventory (average, in million DKR)
2
7
11
Work in progress inventory (average, in million DKR)
1
5
6
Finished goods inventory (average, in million DKR)
4
9
18

Organizational changes made in 2005:
In 2005 the company made the following organizational changes:

1. The company builds a new production plant (schematically shown at the last page of the case) 2. New vision: The company wants to be the best supplier in the EU with regards to delivery time. The goal, which the company more or less reached in 2006, is to be able to ship orders the day after the order is placed. Most of the company’s whole sellers now expect this fast service, the effect being a significant increase in the company’s inventories. 3. The company changed its chair design so that all office chairs are build using the same basic components.

The company produces the following components:
2 types of feet (one with and one without wheels)
2 types of seats (soft and hard)
2 types of back rest (low and high)

The company orders the following components from suppliers:
1 type of piston (making the seating height adjustable)
1 type of arm rest

These basic components allows for 16 different basic models (8 basic models that can be fitted with arm rests if the customer so desires). All components are in the same color (black).

The company offers 5 different types of fabric (for the seat and back rest) in 10 different colors.

4. With the new design the company also changes the way offices chairs are ordered by retailers. The company have made a catalogue and an order sheet showing the different design components (i.e. types of feet, seat, arm rest…) fabrics and colors, and the customer (end user) simply fill out this order sheet in the retail shop. The retailer then fills out an order form...
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