Case 10.1

Motive Power Company-Part 1

Cregg Hart is manufacturing manager for Motive Power Company, a locomotive engine and rail car manufacturer. The company has been very successful in recent years, and in July 2006 signed two major contracts totaling nearly $\$ 200$ million. A key to the company's success has been its focus on quality. Customers from around the world have been very pleased with the attention to detail put forth by Motive Power.

One of the things Cregg has been adamant about is that Motive Power's suppliers also provide high quality. As a result, when the company finds good suppliers, it stays with them and tries to establish a long-term relationship. However, Cregg must also factor in the costs of parts and materials and has instructed his purchasing staff to be on the lookout for "better deals."

Recently, Sheryl Carleson, purchasing manager at Motive Power, identified a new rivet supplier in Europe that claims its rivets are as good or better quality than Motive Power's current supplier's but at a much lower cost. One key quality factor is the rivet diameter. When Sheryl approached Cregg about the possibility of going with the new supplier for rivets, he suggested that they conduct a test to determine if there is any difference in the average diameter of the rivets from the two companies. Sheryl requested that the new company send 100 rivets and she pulled a random sample of 100 rivets from her inventory of rivets from the original supplier. She then asked an intern to measure the diameters to three decimal places using a micrometer. The resulting data from both suppliers is given in the CD-ROM file called Motive Power.

Required Tasks:

1. Develop histograms showing the distribution of rivet diameters from the two suppliers.
2. Compute the sample means and standard deviations for the two sets of data.
3. Comment on whether it appears the assumptions required for testing if the two populations have equal mean diameters are satisfied.
4. Select a level of significance for testing whether the two suppliers have rivets with equal mean diameters. Discuss the factors you used in arriving at the level of significance you have selected.
5. Perform the appropriate null and alternative hypothesis test. Discuss the results.
6. Prepare a short report outlining your recommendation.

Case 1 3.1

American Oil Company

Chad Williams sat back in his airline seat to enjoy the hour flight between Los Angeles and Oakland, California. The hour would give him time to reflect on his upcoming trip to Australia and the work he had been doing the past week in Los Angeles.

Chad is one man on a six-man crew employed by the American Oil Company to literally walk the earth searching for oil. His college degrees in geology and petroleum engineering landed him the job with American, but he never dreamed he would be doing the exciting work he now does. Chad and his crew spend several months in special locations around the world using highly sensitive electronic equipment for oil exploration.

The upcoming trip to Australia is one that Chad has been looking forward to since it was announced that his crew would be going there to search the Outback for oil. In preparation for the trip, the crew has been in Los Angeles at American's engineering research facility working on some new equipment that will be used in Australia.

Chad's thoughts centered on the problem he was having with a particular component part on the new equipment. The specifications called for 200 of the components, with each having a diameter of between 0.15 and 0.18 inch. The only available supplier of the component manufactures the components in New Jersey to specifications calling for normally distributed output, with a mean of 0.16 inch and a standard deviation of 0.02 inch.

Chad faces two problems. First, he is unsure that the supplier actually does produce parts with means of 0.16 inch and standard deviations of 0.02 inch according to a normal distribution. Second, if the parts are made to specifications, he needs to determine how many components to purchase if enough acceptable components are to be received to make two oil exploration devices.

The supplier has sent Chad the following data for 330 randomly selected components. Chad believes that the supplier is honest and that he can rely on the data.

Chad needs to have a report ready for Monday indicating whether he believes the supplier delivers at its stated specifications and, if so, how many of the components American should order to have enough acceptable components to outfit two oil exploration devices.

Case 14.4

Continental Trucking

Norm Painter is the newly hired cost analyst for Continental Trucking. Continental is a nationwide trucking firm, and, until recently, most of its routes were driven under regulated rates. These rates were set to allow small trucking firms to earn an adequate profit, leaving little incentive to work to reduce costs by efficient management techniques. In fact, the greatest effort was made to try to influence regulatory agencies to grant rate increases.

A recent rash of deregulation moves has made the long-distance trucking industry more competitive. Norm has been hired to analyze Continental's whole expense structure. As part of this study, Norm is looking at truck repair costs. Because the trucks are involved in long hauls, they inevitably break down. In the past, little preventive maintenance was done, and if a truck broke down in the middle of a haul, either a replacement tractor was sent or an independent contractor finished the haul. The truck was then repaired at the nearest local shop. Norm is sure this procedure has led to more expense than if major repairs had been made before the trucks failed.

Norm thinks that some method should be found for determining when preventive maintenance is needed. He believes that fuel consumption is a good indicator of possible breakdowns, as trucks begin to run badly, they will consume more fuel. Unfortunately, the major determinants of fuel consumption are the weight of a truck and headwinds. Norm picks a sample of a single truck model and gathers data relating fuel consumption to truck weight. All trucks in the sample are in good condition. He separates the data by direction of the haul, realizing that winds tend to blow predominantly out of the west.

Although he can rapidly gather future data on fuel consumption and haul weight, now that Norm has these data, he is not quite sure what to do with them.

Price: $22.95

Solution: The downloadable solution consists of 9 pages, 1395 words and 2 charts.
Deliverable: Word Document