Question: Let us consider again the equipment rental process. This time we take the perspective of the site engineer, whose goal is to have the required
Let us consider again the equipment rental process. This time we take the perspective of the site engineer, whose goal is to have the required equipment available on site when needed. From this perspective, the main issue is that in about 10 % of cases, the requested equipment is not available on-site the day when it is required. When this happens, the site engineer contacts the suppliers directly to resolve the issue, but still, resolving the issue may take several days. It is estimated that each such delay costs $400 per day to BuildIT. By inspecting a random sample of delayed equipment deliveries during a one-year period and investigating the cause of each occurrence, an analyst found that:
- 8 occurrences were due to the site engineer not having ordered the equipment with sufficient advance notice: The site engineers ordered the equipment the day before it was needed when at least two days are needed. These cases cause delays of one day on average.
- 14 occurrences were due to the fact that none of BuiltITs suppliers had the required type of equipment available on the requested day. These cases cause delays of one to four days (three days on average).
- 21 occurrences were due to the approval process taking too long (more than a day) due to mistakes or misunderstandings. For these cases, the delay was one day on average.
- 41 occurrences were due to the equipment having been delivered on time, but the equipment was not suitable and the site engineer rejected it. These cases cause delays of two days on average.
- 6 occurrences were due to mistakes or delays attributable entirely to the supplier. These cases lead to delays of one day. However, in these cases, the supplier compensated BuildIT by providing the equipment for two days for free (the remaining days are still charged). Recall that the average cost of an equipment rental per day is $100.
- For 4 occurrences, the analyst did not manage to determine the cause of the delay (the process participants could not recall the details). The delays in these cases were two days per occurrence.
The sample of analyzed occurrences represents around 20 % of all occurrences of the issue during a one-year period. Draw/Graph a Pareto chart corresponding to the above data. Which problem should receive most attention?
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
