In measuring and evaluating the quality of banking services, analysts have found that customers regard accuracy, timeliness, and responsiveness as the most important characteristics. Accordingly, First Chicago Bank constantly monitors and charts almost 500 performance measures of these quality characteristics. Accuracy, for example, is measured by the error/ reject rate in processing transactions, timeliness by delays in collecting funds, and responsiveness by speed in resolving customer inquiries or complaints. For each measure, First Chicago also sets a level called Minimal Acceptable Performance ( MAP), which serves as an early warning signal to management, as a basis for comparison with the banking- industry com-petition, and as a constantly upgraded goal for ensuring continuous improvement of service quality. Over one six- month period, First Chicago recorded, on a weekly basis, errors per thousand items processed in all types of collection transactions. The resulting 26 numbers were as follows:
0, 2, 0, 17, 2, 4, 0, 2, 1, 0, 0, 5, 6, 5, 15, 5, 10, 5, 2, 2, 0, 2, 0, 0, 0, and 1. The Bank Administration Institute reports that the average error rate for such transactions is 1.5%.
a. Determine the appropriate process control limits on the fraction of transactions in error, or the number of errors per thousand transactions.
b. By way of comparison, plot the observations, process average, control limits, and industry standard. Is First Chicago’s process in control? How does its performance compare with the industry standard?