Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 35

Control Charts Refer to the background information in Exercise 17-60 for the Destin Company. One of the quality improvements management instituted recently was the use of statistical control charts. Over the most recent 12-week period, you have obtained the following average cycle-time data regarding the valve-production process:

Week	Average Manufacturing Cycle Time (minutes)
1	12.5
2	18.0
3	15.0
4	10.0
5	15.5
6	12.8
7	23.5
8	16.5
9	17.5
10	11.0
11	14.5
12	16.0

Required

1. Use Excel to prepare a control chart from the weekly, sequential observations given above. Management has determined that the target performance level for cycle time is 14.0 minutes, and that the upper and lower control limits should be set, respectively, at 16.0 and 12.0 minutes.

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2. What is the mean and what is the standard deviation of the 12 manufacturing cycle-time observations?

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3. What conclusions can you draw about the process, based on the cycle-time data contained in your spreadsheet?

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4. What is the primary difference between the control chart you produced and what is called a statistical control chart?

Step 1 of 5

Management and Control of Quality

Quality is explained as a term associated with customer satisfaction. It is the total level of satisfaction any customer gets from any organization’s products or service. There are two components of quality- Design Quality and Performance Quality. There are various approaches to setting quality related expectations and among those alternatives one is the Cost of Quality (COQ) Reporting. It provides relevant cost and revenue data used for decision-making purposes.