The controller of a large chemical refinery is concerned about the late processing of some accounts payable, thereby failing to take advantage of discounts that are available for timely payments. The following data represent performance over the most recent 30-month period.

a. Construct a control chart to analyze this process, using control limits based on the average sample size. Is it appropriate to use the average sample size in this case? Explain.                  b. Identify the points that should be investigated based on the limits you calculated in part a. How many points did you need to investigate? Is the process in control?
c. Construct another control chart using the max/min approach described in Section 10.4.1.3. How many points do you need to investigate using this approach?
d. Over the next few months the controller challenged the employees to find ways to improve the process. Many suggestions were made and acted upon. Data for the next 30 months are shown below. Has the process improved? Where does it appear that the process has stabilized at a new level of performance? Construct a new control chart for this point onward and estimate the average percentage of payments that are now late.

Transcribed Image Text:

Total Total Number of Number of Number of Number of M Month Accounts Month Accounts Accounts Paid Late Processed aid Late Proc 1032April 1176 May 142 145 1243 Januan Februany 94 101 131 150 151 103 766 1014 1163 1099 939 1055 Ju 1110 August 97 42 640 768 746 INovember 516 1153 571Februarv 1031 March October Ju August September October November 1165 1104 784 836 December 220 100 nua 89 61 133 181 90 160 1199 anuan Februa une 39 588