$6.$

A CS&F Quality Team is investigating reducing the SMED for sweet production. The cleaning time for the boilers has been identified as a major time bottleneck. To reduce this two alternatives have been identified:

Three new boilers could be purchased so that they could be prepared before shutting down the line

Three used $($second hand$)$ boilers could be procured and refurbished instead. Refurbished boilers are considerably cheaper than new units but will take longer to acquire, also, there are concerns that the second$-$hand boilers may not be economically viable to refurb and the cost of ownership could be greater in the long term, when compared against brand new boilers

The information used by the team to establish which is the best way forward is shown on the following table:

Project Estimated

Savings

Probability

of success

Estimated

Cost

Estimated

Duration

$1.$ Purchase

new boilers

$750$K

$95\%$

$90$K

$2$ months

$2.$ Purchase

and

refurbishment

of second

hand boilers

$750$K

$75\%$

$30$k

$5$ months

Based on the above table and your understanding of Lean $6$ Sigma, which ONE of the following statements is correct?

$($PPI $=$ Pareto Priority Index$)$

$3$ marksQuestion $6$Select one:

Project $2$ should be selected as it has the lower PPI

Project $1$ should be selected as it has the higher PPI

Project $1$ should be selected as it has the higher risk

Project $2$ should be selected as it has the least risk

Project $2$ should be selected as it has the higher PPI