Problem 1:  Create a flow chart for the following telephone-ordering process at a retail chain that specializes in selling books and music CDs. It provides an ordering system via the telephone to its time sensitive customers besides its regular store sales.

First, the automated system greets customers and identifies if they have a tone or pulse phone. Customers choose 1 if they have a tone phone; otherwise, they wait for the first available service representative to process their request. If customers have a tone phone, they complete their request by choosing options on the phone. First, the system checks if customers have an existing account or not. Customers choose 1 if they have an existing account or choose 2 if they want to open a new account. Customers wait for the service representative to open a new account if they choose 2.

Next, customers choose between the options of making an order, canceling an order, or talking to a customer representative for questions and/or complaints. If customers choose to make an order, then they specify the order type as a book or a music CD, and a specialized customer representative for books or music CDs picks up the phone to get the order details. If customers choose to cancel an order, then they wait for the automated response. By entering the order code via phone, customers may cancel the order. The automated system says the name of the ordered item and asks for the confirmation of the customer. If the customer validates the cancellation of the order, then the system cancels the order; otherwise, the system asks the customer to input the order code again. After responding to the request, the system asks whether the customer has additional requests; if not, the process terminates.

Problem 2:  Draw a fishbone diagram for the possible causes of poor reports submitted by staff to executives.

Problem 3:The Florida Company was flooded by a Hurricane and somehow lost part of their forecasting data. Positions in the table that are marked [a],[b],[c],[d],[e],and [f] must be recalculated from the remaining data. Exponential smoothing constant of 0.3 is used for both the forecast and updated MAD.

Period Actual Forecast Error MADt TSt
0 10.0
1 120 100 20 [a] 1.54
2 140 106 34 19.3 [b]
3 160 [c] [d] [e] [f]


Show your work in detail how you obtain each missing information, [a] through [f].

Problem 4:  Whole Grains Inc. uses statistical process control to ensure that its health-conscious, low-fat, multigrain sandwich loaves have the proper weight. In order to calculate 3σ control limits for both means and ranges, based on periodic process sampling, the following weights information (in ounces) were recorded.

Sample 1 Sample 2 Sample 3 Sample 4 Sample 5 Sample 6 Sample 7 Sample 8
Loaf # 1 6.5 6.1 5.7 6.7 5.6 5.4 6.0 5.9
Loaf # 2 6.2 6.7 6.4 5.9 6.0 5.8 6.2 6.4
Loaf # 3 6.6 6.3 6.2 6.1 6.4 6.6 6.4 6.3
Loaf # 4 5.8 6.0 6.1 6.3 5.9 6.1 6.0 5.9

a) Obtain the upper limit, center line, and lower limit for both charts.

b) Over the past few days, they have taken six random samples of four loaves each and have found the following:

Sample Loaf # 1 Loaf # 2 Loaf # 3 Loaf # 4
1 6.3 6 5.9 5.9
2 6 6 6.3 5.9
3 6.3 5.3 5.6 5.2
4 6.2 6 6.2 5.9
5 6.5 6.6 6.5 6.9
6 5.7 5.4 6 6.3

Is the process in control? Explain why or why not? Do the plotting below and write your recommendations.

Problem 5: Americans Family insurance company wants to design a control chart to monitor whether claim forms are being completed correctly. The company intends to use a control chart to see if the improvements in the design of the form are effective. To start the process the company collected data on the number of incorrectly completed forms over the past 10 days. The insurance company processes thousands of these forms each day, and due to the high cost of inspecting each form, only a small representative sample of 300 was collected each day. The data for the last 10 days are as follows: 10, 8, 9, 13, 7, 7, 6, 11, 12, and 8.

a) What type of control chart(s) should be used?
b) What is the value of central line?
c) Compute the upper and lower control limits for the chart.
d) Based on the data collected, what would you conclude?
e) Do the improvements in the design of the forms effective? What can we say?


Problem 6:Manager of a travel agency has been using a forecast to predict demand for packaged tours. The actual and predicted values are:

Period Demand Predicted
1 129 124
2 194 200
3 156 150
4 91 94
5 85 80
6 132 140
7 126 128
8 126 124
9 95 100
10 149 150

The manager asks you to assess the performance of the technique used in forecasting by plotting the tracking signals starting from period 5 through 10. Company uses exponential smoothing with ? = 0.3 in updating the mean absolute deviation. Hint: use the regular MAD for the fifth period as the initial MAD. If the action limits are set for 3σ, what would you conclude?

Problem 7: (10 points) An appliance manufacturer wants to contract with a repair shop to handle authorized repairs in Indianapolis. The company has set an acceptable range of repair time of 50 minutes to 90 minutes. Two firms have submitted bids for the work. In test trials, one firm had a mean repair time of 74 minutes with a standard deviation of 4.0 minutes and the other firm had a mean repair time of 72 minutes with a standard deviation of 5.1 minutes. Which firm would you choose? Why?