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LeanSixSigmaGreenBeltFinalExamDuenolaterthan11:59pmonJune26,2015

Instructions:

Thisexam consistsof12questionsand shouldbe completed individually. Ifyouhavequestionsand/orneedanyassistanceinunderstandinganyofthequestions,feelfreetocontact the instructor (Dr. Mohammad Khasawneh: mkhasawn@binghamton.edu)and/ortheTA(AbdulazizAhmed:aahmed20@binghamton.edu).

TheanswersshouldbetypedandsubmittedasoneMSWordfile (withcharts/graphsdoneusingMicrosoftExcel,Minitab,and/orVISIOandinsertedintotheMSWordfile)along with one Excel and/or one Minitab file(s) with one sheet per question, asappropriate.

Please save yourexam files as follows: lastnamefirstname.doc, lastnamefirstname.xls,etc.

Even though the exam is due no later than 11:59pm on June 26, 2015, earliersubmissions are accepted/encouraged. Electronic submissions should be done usingBlackboard.Onceyou logontothetrainingprogramspage(LeanSixSigmaGreenBeltTrainingMay15),pleasegotoExamsandthenclickonLSSGBFinalExamSubmission.Youcanuploadmultiplefileswhileonthispage.

Program participants are not permitted to share and/or discussthe exam questionsand/oranswers,evenafterthecompletionoftheprogram.

Hint:ItisstronglyrecommendedthatyoustartQuestion1afteryoufinishalltheotherexamquestions.

Question1[250points]:LeanSixSigmaisusedtoimprovetheefficiencyofprocessesenhancethequalityofservicesandreducethecostofprovidedservices.Thiscasestudyisconductedina localgovernmentsfinancialadministrationdepartment.Theobjectivewastosystemizetheprocess and reduce the cycle time of the financial process. The city is a 7000citizenmunicipality inthestateofNewYork. It isacitymanagerformofgovernmentwherethecitymanagermanages the cityemployees and implementspolicydefinedby themayor and citycouncilmembers.Thefinancedirectorisresponsiblefordevelopingandmanagingthefinancialbudgets, the financial processes, themayors court processes, income tax collection, utilitybilling,andcollectionprocessesandhereportstothecitymanager.Thefinancialprocesses includepayroll,purchasingandaccountspayable,accountsreceivable,monthly reconciliation and budgeting. The financial clerk is responsible for preparing thepaychecksforadministrativepersonnel,thepolicedepartment,thefiredepartment,thepublicworks department and city council. The Fire Fighters Association (FFA) represents the firefighters who require union dues to be held from the members pay once a month to besubmitted to theunion.Otheractivities includepensionmatching,makingpensionpaymentsandreporting.The incometaxpayments,garnishments,childsupportandotherwithholdingstotheappropriateagenciesarealsoprocessedbythepayrolldepartment.Employeesreceivepaycheckseverytwoweeks.Pensionreportingisperformedonamonthlybasis.Thecustomers

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of the payroll process are internal city employees and external agencies that receivewithholdingpaymentsandreports.The financialdirector thinks that thecurrentprocessesarenotefficient, lengthy,errorproneand containmanynonvalue added steps.Theentirepayroll,pension reporting,withholdingpayment process takes 1370 employee hours per pay period, depending if informationprocessingproblemsoccur.Thepurchasingandaccountspayableprocessesenablecitypersonnel topurchasematerials,products,andservices torun thecity.Purchaserequisitionsaregeneratedbypersonnel.Thefinanceclerkgenerates thepurchaseorder,which is thenapprovedby thecitymanager, thefinancedirector,andcitycouncil,ifnecessary.Invoicesarereceivedbythefinancedirectorandprocessedby the finance clerk,with the appropriate approvals and signatures.Payments tovendorsare frequently late.Multiple invoices for the samepaymentare frequently receivedandmustbe reviewed todetermine if theyhavebeenpaid.Theupfrontpurchasingprocesstakesapproximately710daystogenerateandapprovethepurchaseordersaftertheapprovedpurchaserequisition isreceived.Thepurchaseordersarefileduntilthe invoicesarereceived.Theentireaccountspayableprocess takesapproximately twoweeks toprocessabatch frominitialinvoicereceipttovendorpayment.The financeclerkrecordsrevenuereceiptsanddepositsrevenuechecks intothebank. Inthecurrentprocess there isa lagbetweenwhen the revenuechecksare received in the financedepartmentandwhentheyareentered intothefinancialsystemanddeposited intothebankduetoprocessinefficienciesandworkloadcapacityissues.The finance clerk is responsible for reconciling the financial records on a monthly basis.Reconciliation includes comparing the bank statements for the payroll account, a generalaccount,andseveralinvestmentaccounts,tothefinancialsystementries.Due mainly to process inefficiencies or workload capacity issues (or both), monthlyreconciliationcurrentlyisrarelyperformedinatimelymanner.Sometimesthefinancedirectorreconcilesthebooksandothertimesitisoutsourcedtoanaccountant.Thefinancedirectorisresponsibleformanagingthebudgetingprocessthroughoutthecity.Hereceives budget requests from departmentmanagers, consolidates them into a city budget,preparesbudgetreportsforstateandcountyagencies,andmakesbudget journalentries intothe financial information system. The finance director is also responsible for ensuring thatexpendituresarewithintheapprovedbudgets,aswellasprovidingbudgetinformationtocitymanagement. There are some training issueswith respect to using the financial system forbudgeting, aswell as duplicate data entry intomultiple information systems. The financial

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information system is also limited with respect to a userfriendly adhoc budget reportingsystem.AsaLeanSixSigmaGreenBelt,pleaseanswerthefollowingquestions:

1. Identify the team members in this project and what fundamental knowledge theyshouldbringtotheprocess.

2. Developaprojectcharter3. DefinetheCTQ4. DevelopaSIPOCdiagramforthehighlevelprocessbasedonyourunderstandingofthe

problem.5. Develop a suggestedprocessmap thatwilldescribewhatprocedures youwilluse to

identify the steps involved in the finance department activities related tobudgeting/investments, purchasing/accounts payable, accounts receivable, monthlyreconciliationandpayroll.Youmightneed todo some research toproposeaprocessmap.

6. Basedon your suggestedprocessmap,developaVSMand identify theVAandNVAactivitiesintheprocess.

7. CreateaWhyWhydiagramforwhypayrollprocessingtimetakessolong.8. Create a cause and effect diagram that identifies potential causes of process

inefficiencies.9. Createacauseandeffectmatrixforthefollowingeffects:

Accountspayabledefects Accountsreceivabledefects Payrolldefects Monthlyreconciliationdefects

10. Prepareaprocessanalysisforthefollowingprocesses: Accountspayableprocess Accountsreceivableprocess Payrollprocess Monthlyreconciliationprocess

11. Review the financial process database in LSSGB_Final_Exam_Summer_2015.xls excelfile.Forthetimetoprocessaccountspayablebatches Createahistogram Calculatethemeanandstandarddeviationforthetimetoprocesspayroll Dothedatafollowanormaldistribution?

12. Perform the followinghypothesis tests: Is theprocessing time for the first12payrollcyclessignificantlydifferentfromthelast12payrollcycles?

13. CalculatetheDPMOandrelatedsigmalevelfortheprocess,assuminga1.5sigmashift,forthefollowingdata: Opportunitiesforfailure: Timesheeterroneousdata Payrateerror

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Payrollprocessingerror Defects: Numberofpayrolldefectsperbatch:5

Units: Numberofpaychecksperbatch:100

14. Calculate the process capability for the accounts payable processing time with thefollowingspecifications: Lowerspecificationlimit:twohours Upperspecificationlimit:fourhours

15. QFD is a tool to ensure alignment between customer needs (CTS measures) orrequirements and the improvement recommendations. The Lean Six Sigma teamdevelopedasuggestedQFDmatrix(shownbelow).Completethematrixby identifyingtheabsoluteweightandtherelativeweight.Commentonyourresultsandidentifythepriorityrecommendationfortheproject.

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Question2[30points]:AmanufacturingcompanywantstouseSPCtomonitortheproductionprocessofanengineshaft.Every60minutes,theytookarandomsampleofthreeshafts(i.e.,R1,R2,andR3)fromtheproductionlineandcarefullymeasuredthediameteroftheshaft.ThedataisshownbelowandisalsoavailableintheLSSGB_Final_Exam_Summer_2015.xlsExcelfile.

a) Determine if the process is under control using SPC charts (Xbar and Rcharts).Commentontheresults.

b) Drawrunchartsforeachofthereplicates.Commentontheresults.c) CalculatetheprocesscapabilityCpandprocesscapabilityindexCpkandcommentonthe

resultsforthefollowingscenarios: Thespecificationlimitsare2.00000.0500. Theupperandlowerspecificationlimitsare1.95000.0100.

SampleShaftDiameter

R1 R2 R31 2.0000 1.9998 2.00022 1.9998 2.0003 2.00023 1.9998 2.0001 2.00054 1.9997 2.0000 2.00045 2.0003 2.0003 2.00026 2.0004 2.0003 2.00007 1.9998 1.9998 1.99988 2.0000 2.0001 2.00019 2.0005 2.0000 1.999910 1.9995 1.9998 2.000111 2.0002 1.9999 2.000112 2.0002 1.9998 2.000513 2.0000 2.0001 1.999814 2.0000 2.0002 2.000415 1.9994 2.0001 1.999616 1.9999 2.0003 1.999317 2.0002 1.9998 2.000418 2.0000 2.0001 2.000119 1.9997 1.9994 1.999820 2.0003 2.0007 1.9999

Question3[40points]Answerthefollowingtwoquestions:

Parta)Asmachinesareusedoverlongperiodsoftime,theoutputproductcangetofftarget.Below istheaveragevalueofhowmuchofftarget(h)aproduct isgettingmanufacturedasafunctionofmachineuse(t).Developthepredictionequationanddeterminehowmanyhoursittakesthemachinetoproduceaproductwith2mmofftarget.Usemultiplepredictionmethodsand comment on the accuracy of the results. Data is also available in theLSSGB_Final_Exam_Summer_2015.xlsExcelfile.

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HoursofMachinUse,t(hrs) MillimetersOffTarget,h(mm)30 1.1033 1.2134 1.2535 1.2339 1.3044 1.4045 1.42

Partb)Assumearelationshipbetweenafirm'sdirectlaborhoursandmanufacturingoverheadcost are based on the use of direct labor hours as the allocation base for manufacturingoverhead.Developanestimatingequationusingdirectlaborhoursastheindependentvariableandmanufacturingoverheadcostasthedependentvariable.Developthepredictionequationand estimatemanufacturing overhead cost assuming that 2,100manufacturing direct laborhours will be needed to meet 20X8 production requirements. Use multiple methods andcomment on the accuracy of the results. Data is shown below and is also available in theLSSGB_Final_Exam_Summer_2015.xlsExcelfile.

Year ManufacturingDirectLaborHours ManufacturingOverhead

20X2 1,200 $73,00020X3 1,500 $97,00020X4 2,300 $128,00020X5 2,700 $155,00020X6 3,300 $175,00020X7 3,400 $218,00020X8 2,100(Est) ????

Question4 [20points]:Anunconfinedcompression testperformedon15concretecylindersproducedthefollowingstrengthresults(inPSI).DataisshownbelowandavailableisalsointheLSSGB_Final_Exam_Summer_2015.xlsExcelfile.

a) Find the 95%, 99%, 90%% confidence interval for the true average strength of theconcreteandcommentontheresults.

b) Developarunchartandcommentontheresults.

Sample Strength(PSI)1 26702 24903 24404 2590

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5 27306 25807 24008 26409 259010 217011 241012 273013 269014 248015 2360

Question5 [30points]:Astudywasconducted to investigate theprecisionofmeasuring theheightsof10steelpunches(in103inches)usingacertainmicrometercaliper.Threeoperatorswere randomly selected for the study. Ten partswith steel punches are randomly selected.Eachoperatormeasuredeachpunch three time (i.e.R1,R2,R3).Data isshownbelowand isalsoavailableintheLSSGB_Final_Exam_Summer_2015.xlsExcelfile.

a. YouarerequiredtoconductaGaugeR&Rstudyandcommentontheresults.b. Conductastatisticaltesttocomparethemeasurementsofthethreeoperators.Clearly

stateyourassumptions.c. PlotXbarandRchartsforeachoperatorandcommentontheplots.

Operator1 Operator2 Operator3Part R1 R2 R3 R1 R2 R3 R1 R2 R31 496 496 499 497 499 497 497 498 4962 498 497 499 498 496 499 497 499 5003 498 498 498 497 498 497 496 498 4974 497 497 498 496 496 499 498 497 4975 499 501 500 499 499 499 499 499 5006 499 498 499 500 499 497 498 498 4987 503 499 502 498 499 499 500 499 5028 500 499 499 501 498 499 500 501 4999 499 500 499 500 500 498 500 499 50010 497 496 496 500 494 496 496 498 496

Question6[30points]:Amanufacturingcompanyismeasuringthediameterofaballbearingby12inspectors,eachusingtwodifferentkindsofcaliperstotestthedifferencebetweenthesample means of the two calipers used. Data is shown below and is also available in theLSSGB_Final_Exam_Summer_2015.xlsExcelfile.

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a. Isthereasignificantdifferencebetweenthemeansofthepopulationofmeasurementsfromwhichthetwosampleswereselected?Use=0.01,0.05,0.1andcommentontheresults.

b. FindthePvalueforthetestinpart(a).c. Construct 90%, 95%, and 99% confidence intervals (CIs) on the difference in mean

diametermeasurementsforthetwotypesofcalipers.Commentontheresults.d. Constructarunchartforeachofthetwocalipersandcommentontheresults.

Inspector Caliper1 Caliper21 0.265 0.2642 0.265 0.2653 0.266 0.2644 0.267 0.2665 0.267 0.2676 0.265 0.2687 0.267 0.2648 0.267 0.2659 0.265 0.26510 0.268 0.26711 0.268 0.26812 0.265 0.269

Question 7 [20 points]: The diameters of steel shafts produced by a certainmanufacturingprocess should have a mean diameter of 0.255 inches. The diameter is known to have astandard deviation of 0.0001 inch. A random sample of 10 shaftswas performed and theaveragediameterwas0.2545inch.

a. Setupappropriatehypothesesonthemean.b. Testthesehypothesisusing=0.05and=0.1.Whatareyourconclusions?c. FindthePvalueforthistest.d. Constructa95%confidenceinterval(CI)forthemeanshaftdiameter.

Question8[30points]:AHealthinformationexchange(HIE)enablesthemovementofmedicalrecords between healthcare entities. Due availability of patients information, HIE helpshealthcare providers to provide high quality health service and reduce the costs ofmedicalprocedures as well. A study is conducted to investigate the effects of HIE service on theperformanceofhealthcareproviders(HCPs).Adiscreteeventsimulation(DES)modelisbuilttoinvestigate the effects ofHIE service on the performance ofHCPs. Themodel is built for anetworkcontainsfiveHCPsandHIEagent.ThefiveHCPshavedifferentsizeswhereHCP1isthesmallestandHCP5isthelargestintermofadmittedpatientsperyear.WhenaHCPjoinedthenetwork,a subscription feemustbepaidby theHCPsbasedonagreementbetweenagents.Four subscription policies are discussed: perservice, perbedpermonth, pervisit, and per

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pageofmedicalrecords.Intheperservicesubscriptionpolicy,theHCPonlypayHIEwhenthemedicalrecordsareavailable intheHIEdatabase,while inthepervisitpolicytheHCPpayforeverypatiententerthehealthcarefacility.Intheperbedpolicy,theHCPpaymonthlypaymentforHIE for each bed and fixed payment is paid perpage ofmedical record in the perpagepolicy.TheHCPshavethechoicetonotjointhenetwork,sonopolicywillbechoseninthiscase(i.e.,NoHIE).Otherfactorsalsoincludedinthemodelwhicharethepercentageofreadmission,percentageofpatientwho return to the samehospitaland thepercentageof cost from thetotal charge of the medical procedures. Therefore, a full design of experiment (DOE) isconductedtoevaluatetheeffectsoffourfactorsontheperformanceofthefiveHCPs:A)PolicyType(perbed,pervisit,perpage,perserviceandNoHIE),B)thepercentageofreadmission,C)percentageofpatientswho return to thesameHCP,andD) thepercentageofcost from thetotalchargeofthemedicalprocedures.Thestudyevaluatedtheimpactofthesefourfactorsonthe overall cost ofmedical procedures for healthcare providers (results are only shown forHCP1inthisexample).

Factor Level1 Level2 Level3 Level4 Level5A. Policy NoHIE Perbed PerPage PerService PerVisitB. %Readmission 5% 20% C. %Return 85% 95% D. %costfromprice 40% 50%

a) WhataretheassumptionsneededforconductingaDOE?b) Whathypothesesarebeingtestedinthisstudy?c) TheANOVAresultforHCP1isshownbelow.Commentontheresults.d) ThemaineffectsandinteractionplotsforHCP1areprovided.Interprettheplots.e) Based on the analysis, what recommendations would you provide to increase the

systemthroughput?

Source DF SeqSS AdjSS AdjMS F PPolicy 4 2.16E+13 2.16E+13 5.39E+12 33938.54 0.000%Readmission 1 9.49E+11 1.54E+12 1.54E+12 9722.08 0.000%Return 1 4.39E+10 1.37E+11 1.37E+11 86.37 0.000%Costofprice 1 3.13E+13 3.05E+13 3.05E+13 192223.4 0.000Policy*%Readmission 4 1.65E+12 1.65E+12 4.12E+11 2595.38 0.000Policy*%Return 4 4.16E+10 4.16E+11 1.04E+11 65.52 0.000Policy*%Costofprice 4 2.75E+11 2.75E+11 6.86E+11 432.36 0.000%Readmission*%Return 1 4.62E+8 4.62E+9 4.62E+9 2.91 0.088%Readmission*%Costofprice 1 4.81E+10 4.81E+10 4.81E+10 30.34 0.000%Return*%Costofprice 1 7373354 7373354 7373354 0.05 0.829Error 697 1.11E+11 1.11E+11 1.58E+9Total 719 5.59E+13 S=12603.2RSq=99.80%RSq(adj)=99.80%

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Question9[40points]:Datawascollectedtodeterminethe factorsthataffecttheAmericanlife insmallcities.Thedata isprovided intheLSSGB_Final_Exam_Summer_2015.xlsExcel file.Thereareatotalof53datapoints.Dataoneachoneofthefollowingvariables/factors(i.e.,X1,X2,X3,andX4)andresponseareprovided:X1=doctoravailabilityper100,000residents,X2=

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Question11[20points]:Answerthefollowingquestions:

Parta)AnewfoodcompanywasintroducedinUSAmarketinJanuary1992.Afterapooryearfor sales themanufacturers initiatedan intensiveadvertising campaignduring January1993.Thetablebelowrecordsthesales,inthousandsofdollars,foraonemonthperiodbeforeandaonemonthperiodaftertheadvertisingcampaigninelevenregions.Isthereanyevidencethatthis campaign increased the mean sales? State and test the hypothesis at the followingsignificancelevels:1%,5%,10%andcommentontheresults.ThecollecteddataareavailableintheLSSGB_Final_Exam_Summer_2015.xlsExcelfile.

Region A B C D E F G H I J KSalesBeforeCampaign 2.4 2.6 3.9 2.0 3.2 2.2 3.3 2.1 3.1 2.2 2.8SalesAfterCampaign 3.0 2.5 4.0 4.1 4.8 2.0 3.4 4.0 3.3 4.2 3.9

Partb)Foodservedatarestaurantshouldbebetween38Cand49Cwhen it isdeliveredtothe customer. Theprocessused to keep the food at the correct temperaturehas aprocessstandarddeviationof2Candthemeanvalueforthesetemperatureis23.WhatistheprocesscapabilityCpandprocesscapabilityindexCpk?

Question12[20Points]:AfteracarefulreviewandstudyofallthetoolsunderLeanThinking,youarerequestedtoverybrieflyprovideandexplain(withpicturesanddiagrams, ifneeded)onepossibleapplicationoffiveofthesetoolsinyouroffice.