Question

In: Statistics and Probability

Stephen Lazy Co. produces electronic products. One critical part is AX200B5 which is designed to work...

  1. Stephen Lazy Co. produces electronic products. One critical part is AX200B5 which is designed to work under high temperature. Its conductivity is a critical concern. Higher conductivity performance is expected in higher temperature. The company currently is purchasing the part from Vendor A. Recently the company received a sample of AX200B5 from Vendor B who claimed that the sample performs as well as those of Vendor A. To investigate whether the two sources of AX200B5 perform the same and how the parts perform in different temperature settings (the higher the conductivity, the larger the conductivity tester reading, with 1 as the smallest and 100 as the highest), the Engineering Department has conducted a series of 22 experiment trials and obtained the data as follows:  

Sample

Conductivity reading

Vendor

Temperature (oC)

1

79

A

250

2

76

A

250

3

83

A

250

4

84

A

250

5

78

A

250

6

59

A

200

7

61

A

200

8

62

A

200

9

58

A

200

10

60

A

200

11

83

B

250

12

84

B

250

13

86

B

250

14

88

B

250

15

84

B

250

16

44

B

200

17

46

B

200

18

47

B

200

19

43

B

200

20

45

B

200

The following table reveals the result of design of experiment (DOE) for the data above:

Term                          Coefficient   SE Coefficient           T-Value P-Value  

Constant                         67.500          0.506                   133.34          0.000

Vendor                 -2.500           0.506                   -4.94             0.000

Temp                  15.000          0.506                   29.63            0.000

Vendor x Temp               5.000            0.506                   9.88              0.000

Questions:

  1. What is the main effect of Vendor and Temperature, and what do they mean?
  2. What is the Interaction effect and what does it mean?                          
  3. What is the temperature that the component of A & B will perform the same?
  4. Which vendor should Stephen select if AX200B5 is used at temperature >240oC?

Solutions

Expert Solution

a. What is the main effect ov Vendor and Temperature and what do they mean?

Here both temperature and vendor are having an impact on the conductivity

The temperature and vendor when having an independent impact on conductivity without the influence of each other are called as main effect

Term Coeff SE Coeff T-Value P-value
Constant 67.5 0.506 133.34 0
Vendor -2.5 0.506 -4.94 0
Temp 15 0.506 29.63 0
VendorXtemp 5 0.506 0.88 0

From the table above, the coefficient of temp and vendor given as -2.5 and 15 are the main effects. Further, the p-value of 0 signifies that these effects are significant and cannot be ignored

A vendor main effect of -2.5 means that for the change in vendor, there is a change of conductivity by -2.5

More specifically, when vendor A is changed to vendor B, the conductivity reduces by -2.5

Further temperature main effect of 15 implies that when temperature jumps from 200 deg C to 250 deg C,there is an increase in conductivity by 15 units

b. What is the Interaction effect and what does it mean ?

Interaction effect means combined impact of temperature and vendor change on the conductivity

The coefficient for VendorXtemp is 5. i.e when vendor changes from A to B and temperature increases from 200 to 250, the conductivity increases only by 5. This is different compared to main effects since those were independent impact on conductivity. As we saw earlier, only a temperature change was resulting in increase of conductivity by 15 however a vendor change simultaneously has bought it down to 5 since in the main effect we saw that vendor change from A to B is causing a reduction in conductivity by -2.5

3. What is the temperature that the component of A & B will perform the same?  

At lower temperature of 200, the average conductivity for A is 60 compared to 45 for B

At higher temperature of 250, the average conductivity for A is 80 compared to 85 for B

So as temperature has increased, the gap between average conductivity has reduced for vendors A and B and infact B has become better than A

So at a temperature of 250, the component of A and B will approximately perform the same

4. Which vendor should Stephen select if AX200B5 is used at temperature >240oC?

Considering the logic similar to question 3 above, as temperature has gone from 200 to 250, vendor B is giving a better conductivity than B. Hence for temperature > 240 oC, Stephen should select vendor B


Related Solutions

Command Company produces two types of electronic products, Product A and Product B. Electronic gaming products...
Command Company produces two types of electronic products, Product A and Product B. Electronic gaming products are hot products now and either product A or product b could be sold to keep the manufacturing facility operating a full capacity. The constraint is direct labour hours and it is insufficient to meet the combined demand for both.   Both products are processed through the same production departments. The relevant information is as follows: Product A Product B Sales Price $ $250 $140...
Schmidt Corporation produces a part that is used in themanufacture of one of its products....
Schmidt Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows: Direct materials $45,000 Direct labour 45,000 Variable factory overhead 30,000Fixed factory overhead 70,000 Total costs $190,000 Of the fixed factory overhead costs, $30,000 is not avoidable. 2. Phil Company has offered to sell 10,000 units of the same part to Schmidt Corporation for $13 per unit. Assuming there is...
Spahr Company produces a part that is used in the manufacture of one of its products....
Spahr Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this part, assuming a production level of 5,000 units, are as follows: Direct materials $2.00 Direct labour $4.00 Variable manufacturing overhead 4.00 Fixed manufacturing overhead $2.00 Total cost $12.00 The fixed overhead costs are unavoidable. Erickson Company has offered to sell 5,000 units of the same part to Spahr Company for $11 per unit. Assuming the company has no...
Spahr Company produces a part that is used in the manufacture of one of its products.
  Spahr Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this part, assuming a production level of 5,000 units, are as follows: Direct materials $2.00 Direct labour $4.00 Variable manufacturing overhead 4.00 Fixed manufacturing overhead $2.00 Total cost $12.00 The fixed overhead costs are unavoidable.   Erickson Company has offered to sell 5,000 units of the same part to Spahr Company for $11 per unit. Assuming the company...
Cruise Company produces a part that is used in the manufacture of one of its products.
Cruise Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this part, assuming a production level of 6,000 units, are as follows: Direct materials $4.00 Direct labour $4.00 Variable manufacturing overhead $3.00 Fixed manufacturing overhead $4.00 Total cost $15.00 The fixed overhead costs are unavoidable. 6. Assuming Cruise Company can purchase 6,000 units of the part from Suri Company for $13 each, and the facilities currently used to make...
Bunny Company produces a part that is used in the manufacture of one of its products....
Bunny Company produces a part that is used in the manufacture of one of its products. The costs associated with the production of 11,000 units of this part are as follows: Direct materials $25,000 Direct labor 34,000 Variable factory overhead 65,000 Fixed factory overhead 50,000 $174,000 Of the fixed factory overhead costs, $9,000 is avoidable. Required: a. Assuming there is no alternative use for the facilities, should Bunny Company take advantage of an offer from a supplier who is willing...
Landry's Inc. produces a part that is used in the manufacture of one of its products....
Landry's Inc. produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows:                               Direct materials                        $ 90,000                               Direct labor                              130,000                               Variable factory overhead            60,000                               Fixed factory overhead              140,000                                     Total costs                      $420,000 Of the fixed factory overhead costs, $60,000 is avoidable. Cooper Company has offered to sell 10,000 units of the same part to Landry's Inc...
Part IV Lazy Q Ranches, one of the largest ranching consortiums in the world, is considering...
Part IV Lazy Q Ranches, one of the largest ranching consortiums in the world, is considering two projects. The first project, building a resort on one of its ranches in Montana and the other is to expand into Argentina and raise racehorses. The analysis is being done assuming a 10 year life for both projects. Lazy Q has a corporate tax rate of 25%, a required rate of return of 12% on projects and has a weighted average cost of...
MC Qu. 45 Garrison Co. produces three products ... Garrison Co. produces three products — X,...
MC Qu. 45 Garrison Co. produces three products ... Garrison Co. produces three products — X, Y, and Z — from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Last year all three products were processed beyond split-off. Joint production costs for the year were $120,000. Sales values and costs needed to...
Supler Corporation produces a part used in the manufacture of one of its products. The unit...
Supler Corporation produces a part used in the manufacture of one of its products. The unit product cost is $21, computed as follows: Direct materials $ 7 Direct labor 6 Variable manufacturing overhead 3 Fixed manufacturing overhead 5 Unit product cost $ 21 An outside supplier has offered to provide the annual requirement of 2,900 of the parts for only $13 each. The company estimates that 60% of the fixed manufacturing overhead cost above could be eliminated if the parts...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT