Hi-Ho Yo-Yo, Inc.
Assignment 5
You’ve been invited to your second staff meeting and you assume that ‘honor’ might be in recognition of your recent contributions. But, you’ve also been here long enough to know that being invited to the staff meeting usually means someone has some work in mind for you. That’s okay because you have been a little bored since finishing that last project for Jeff. You make sure to arrive early since you don’t want to catch the coffee-making chore this time.
John Cooper opens the meeting and several topics are discussed which are of only passing interest to you. The next item on the agenda is quality. Wayne Taylor and Ian Winlof make a joint presentation on quality costs over the past couple of months. Both are concerned that internal failure costs are higher than normal. Mary Pat chimes in that customer complaints are up very slightly, but that Wayne and Jeff are apparently catching most of the problems before they get to the customers. Ian is concerned that the material usage variance in FY 2005 to date was about what it was in FY 2004 until last month. Then it jumped up by about 20%. “And the extra rework has had an impact on morale in the plant,” interjects Sarah Chen. “I don’t think our employees get the same satisfaction from fixing a reject that they get from doing the job right the first time. They tend to blame themselves for the rejects.”
Then Wayne turns to you. “I’ve got more on my plate than I can handle right now. Would you have time to investigate the causes of the jump in rejects last month and also make some recommendations for areas we should be looking at to improve our P&L? (NOTE: Consider the P&L in the background material to be last year’s – 2005) I know that you are not an engineer, so I don’t expect any technical solutions, but I do hope that you can point my quality engineers and Jeff’s process engineers in the right direction.”
You squirm a little in your seat. The only time you covered quality at the university was in your operations management seminar. You now wish that you had taken that Quality Management course as an elective. You do remember discussing cost of quality in your cost accounting class, but that was sooooo long ago. As for improving the P&L, you only took the basic accounting courses, and then you considered having “DEBITS” tattooed on your left wrist to remember which side they go on.
You become aware that the room is silent and everyone is looking at you. “Well,” you say, seeing no other way out, “I would be happy to look into the problems. Just remember that I am no quality or accounting expert. And as for engineering, I barely know how to spell it.”
Everyone but you laughs. “Based on your past work, I think you can handle this assignment just fine,” says John. “I think Anne and Sarah did a great job in hiring you. I’ve made it a point to read your past reports. They are clear and to the point. More importantly, they get the job done. The rest of the meeting will address some esoteric financial topics. You can hang around if you choose, but if you would rather get started on your new project, feel free to leave.”
You take immediate advantage of the opportunity to escape before someone else comes up with a project for you. On your way to your office you stop off at the Quality Assurance (QA) office to get last month’s reject logs (attached). When you get to your office you open up your operations management text, which is now looking a little dog-eared. You review the chapters on quality, then take your computer off sleep mode so that you can begin your analysis.
As you get into the reject logs, you are confused by some of the shorthand notation, so you call Wayne Taylor for clarification. “We have three production lines: Line 1, Line 2, and Line 3. We sample 100 yo yos per day from each line and check them thoroughly. The defects can be generally lumped into 7 categories. “Falls Apart” means that when we apply the specified force on the two halves, the yo yo comes apart. We use an Instron machine for this test. The yo yo should hold together under the specified force. “Scratched Finish” means there is a defect in the finish of the yo yo. “Over Pressed” means that the yo yo was subjected to too much force when the two halves were pressed together (assembled). The result is that the gap between the halves is too small. “Glue Bleed” means there is glue visible on the dowel of the assembled yo yo. “Mismatched Halves” means halves of different types were assembled together. I know this sounds incredible, but we sometimes get one red half and one green half—and that’s not a Christmas Special yo yo—it’s scrap. “Rough Dowel” means the finish of the dowel has been damaged and the string doesn’t run freely so the yo yo doesn’t spin correctly. “Fail to Unwind” means the string doesn’t unwind from the yo yo freely when the specified force is applied. We use a spring scale to test this. Does that answer your questions?”
You reply that it does, but that you may have other questions later. Wayne agrees to help in any way he can. “I would normally be doing this job if I wasn’t so swamped with the Rework Operation. We are really backlogged there. I appreciate your help,” says Wayne.
NOTE: Double click on this embedded spreadsheet to see the full data.