Problem: Statistical Process Control for a Services Business

National Underground Recreation (NatURe) is a firm that organizes recreational activities for young singles in major urban markets. Its business model is based on creating unique and entertaining experiences for its customers, and its profits are driven by the number of members that are acquired and retained.

NatURe management has created a Customer Satisfaction Survey that its management believes is an accurate gauge of the quality of service that the company is providing to its clients. Each month, NatURe management conducts a brief surveys of 25 randomly selected clients, asking them to classify themselves on a scale of 1 ("Totally Dismayed and Unsatisfied") to 100 ("Totally Stoked and Very Definitely Satisfied") with the company’s services.

1. (12 points) Based on the data contained in the NatURe spreadsheet, create an \[\bar{x}\] chart for NatURe’s Customer Satisfaction Surveys over the past year. You can either draw this Control Chart by hand or include a print out from Excel – but be sure to label your chart clearly and make it easy to find
   [NOTE: for your control limit calculations, assume a process standard deviation value of 10.00].
2. (8 points) Based on the rules presented in class, identify any points on the chart where the process appears to be out of control, In addition, list 2-3 things that you would do to search for potential problems associated with those periods of time where the process appears to be out of control.

Problem: Determining the Optimal Reorder Point with Shortage and Holding Costs and Random Demand (20 points)

You are a materials manager at San Francisco General Hospital , and one of your responsibilities is determining how much inventory to stock of common hospital supplies.

You are currently trying to figur e out when to place orders for Rubber Surgical G loves (RSGs) , which are both expensive and essential for the hospital to have in ample amounts.

You know that you have a 2-day Lead Time (LT) for orders with your RSG supplier. You make an average of 8 orders per year.

You also estimate that your annual Holding Cost for each case of RSGs is $1 0 0, and also that if you run out of RSGs you temporarily borrow gloves from another local hospital at a cost of $50 per case.

Your demand during your LT period is uncertain, but you have estimated the following probabilities from historical data:

1. (5 points) What is the Expected Value of the demand during the LT period?
2. (10 points) You have decided to choose a Reorder Point (ROP) that is either at or higher than the Expected Value of demand during the LT period. In addition, for simplicity, you require your ROP to be a multiple of 10 cases.
   Based on the holding costs and stock out costs given above, determine the optimal ROP and Safety Stock Level by computing the Additional Annual Holding Cost, the Expected Stockout Cost, and the Expected Total Cost of each possible ROP.
   Once again, you can either do your calculations by hand or include a print out from Excel – but be sure to label your possible ROPs and associated costs clearly. Also be sure that your recommended ROP and Safety Stock values are very clearly marked and easy to locate.
3. (5 points) How does your ROP change if the annual Holding Cost is reduced from $100 to $75?

Price: $18.01

Solution: The downloadable solution consists of 10 pages, 801 words and 1 charts.
Deliverable: Word Document