1. United Technologies procures a large number of O-rings every month. Product s
ID: 425933 • Letter: 1
Question
1. United Technologies procures a large number of O-rings every month. Product specifications are rigorous: ULS= 16.2 oz. and LLS=15.8 oz. The firm obtained the following information about three possible suppliers:
Supplier
Cost per unit
Delivery lead time (weeks)
Maximum quantity delivered per week
Process average (oz.)
Process standard deviation (sigma)
Armand & Co.
$154
2
700
16.01
.12 oz.
Bertrand, Inc.
$128
1
1,000
15.97
.05 oz.
Copland, Corp.
$132.50
3
1,500
16.15
.03 oz.
a) Calculate the production capability each supplier.
b) Which supplier would you select?
Supplier
Cost per unit
Delivery lead time (weeks)
Maximum quantity delivered per week
Process average (oz.)
Process standard deviation (sigma)
Armand & Co.
$154
2
700
16.01
.12 oz.
Bertrand, Inc.
$128
1
1,000
15.97
.05 oz.
Copland, Corp.
$132.50
3
1,500
16.15
.03 oz.
Explanation / Answer
Though the term “Production capability” has not been explicitly defined, we will assume Process capability Index, Cpk representing Production capability.
Process capability Index
= Minimum ( (ULS – Process average ) / 3 x Process standard deviation , ( Process average – LLS) / 3 x Process standard deviation )
Production capability , Cpk for Armand & Co
= Minimum ( ( 16.2 – 16.01) / 3 x 0.12 , ( 16.01 – 15.8) / 3 x 0.12 )
= Minimum ( 0.527, 0.583 )
= 0.527
Production capability , Cpk for Bertrand Inc
= Minimum ( ( 16.2 – 15.97 ) / 3 x 0.05 , ( 15.97 – 15.8)/ 3 x 0.05 )
= Minimum ( 1.533, 1.133)
= 1.133
Production capability , Cpk for Copland Corp
= Minimum ( ( 16.2 – 16.15) / 3 x 0.03 , ( 16.15 – 15.8) / 3 x 0.03 )
= Minimum ( 0.555, 3.888)
= 0.555
Out of above , since Cpk for Bertrand Inc is highest ( as well as same is > 1 which is a necessity for a process to be capable of meeting six sigma limit ) , we would choose Bertrand Inc
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