Data entry clerks at ARCO key in thousands of insurance records each day. They have just...

Data entry clerks at ARCO key in thousands of insurance records each day. They have just completed a new training program and want to establish a control chart based on the results of this training. Each day random samples of the work of the clerks were collected. The results are shown in the table below. Two hundred records were sampled daily and examined for errors. The number of records with errors was counted.

Day	Number of Records with Errors	Day	Number of Records with Errors
1	14	11	12
2	10	12	14
3	6	13	10
4	8	14	12
5	10	15	10
6	10	16	12
7	8	17	12
8	8	18	13
9	6	19	11
10	4	20	10

a) You want to set control limits for the proportion of records with errors. Assume that the past twenty days performance is adequate for establishing the control limits and performing the analysis. Using 95% control limits, what are the upper and lower control limits for the proportion of records with errors? Calculate your proportion defective and the lower and upper control limits to 3 decimal places (0.xxx). Assume that the data provided is sufficient for performing a statistical analysis.

b) Plot the control chart and the sample values.

c) What would you conclude about the process, in other words, is the process in control? Explain your decision.

d) Suppose the industry’s lower and upper control limits are 0.01 and 0.06 respectively. What can this insurance company conclude about its process relative to the industry standards?

Solutions

Expert Solution

a.The required control chart is p-chart.For 95 % confidence interval, the z value =1.96

we first calculate p-bar i.e the center line

p-bar =sum of np values/sum of n values =200/4000=0.050

Next, we calculate Sp =sqrt(p-bar(1-p-bar)/n))

=sqrt(0.050*(1-0.95)/200))

=0.0154

UCLp =p-bar+z *Sp=0.050+1.96*0.0154=0.080

LCLp=p-bar-z*Sp=0.050-1.96*0.0154=0.020

Calculations are as shown below:

b.Control chart is as shown below

c.The process is in control because all the sample values lie within the control limits as clearly shown in the above control chart.

d.The process is out of control when compared to the control limits of the industry standard because there are sample value that are greater than the upper control limit value of 0.06.

keosha answered 1 year ago

Next > < Previous

Related Solutions

Bryan is performing data entry for an insurance company by taking handwritten records and entering them...

Bryan is performing data entry for an insurance company by taking handwritten records and entering them into the database. Thus far, 1.8% of the handwritten records have had missing data that prevented them from being entered into the database. If the probability that the first record with missing data is found within the first five records is greater than 5%, Bryan will stop data entry and ask for more information. Will Bryan stop entering data? Use Excel to find the...

A sample of five data entry clerks employed in the Horry County Tax Office revised the...

A sample of five data entry clerks employed in the Horry County Tax Office revised the following number of tax records last hour: 73, 98, 60, 92, and 84. (a) Find the mean, median, and the standard deviation. (b) Compute the coefficient of skewness using Pearson’s method. (c) Calculate the coefficient of skewness using the software method. Answer each of the three questions that relate to the data given above. Discuss how you derived your answers and your conclusion regarding...

The following data (in thousands of dollars) have been taken from the accounting records of the...

The following data (in thousands of dollars) have been taken from the accounting records of the Maroon Corporation for the just-completed year. Sales $1,700 Raw materials inventory, beginning $50 Raw materials inventory, ending $25 Purchases of raw materials $210 Direct labor $360 Manufacturing overhead $330 Administrative expenses $400 Selling expenses $200 Work-in-process inventory, beginning $120 Work-in-process inventory, ending $150 Finished goods inventory, beginning $80 Finished goods inventory, ending $120 Use the above data to prepare (in thousands of dollars) a...

The following data (in thousands of dollars) have been taken from the accounting records of Larner...

The following data (in thousands of dollars) have been taken from the accounting records of Larner Corporation for the year just completed: Sales $870 Purchase of raw materials 100 Direct labour 140 Manufacturing overhead 220 Administrative expenses 150 Selling expenses 150 Raw materials inventory, beginning 50 Raw materials inventory, ending 75 Work-in-process inventory, beginning 60 Work-in-process inventory, ending 5 Finished goods inventory, beginning 120 Finished goods inventory, ending 180 Required: (a) Prepare a schedule of cost of goods manufactured in good...

The following data (in thousands of dollars) have been taken from the accounting records of Larop...

The following data (in thousands of dollars) have been taken from the accounting records of Larop Corporation for the just completed at the year Sales ................................................................................ Purchases of raw materials ............................................. Direct labor ..................................................................... Manufacturing overhead ................................................. Administrative expenses ................................................. Selling expenses.............................................................. ended of 31 March 2018 $870 $190 $200 $230 $150 $140 Raw material Work in process Finished goods Required: Inventory at Inventory at 31.3.2017 31.3.2018 $$ 10 40 20 50 90 130 a. Prepare a Schedule of Cost...

(TCO A) The following data (in thousands of dollars) have been taken from the accounting records...

(TCO A) The following data (in thousands of dollars) have been taken from the accounting records of the Maroon Corporation for the just-completed year. Sales 1,300 Raw materials inventory, beginning 25 Raw materials inventory, ending 30 Purchases of raw materials 250 Direct labor 350 Manufacturing overhead 500 Administrative expenses 300 Selling expenses 250 Work in process inventory, beginning 150 Work in process inventory, ending 100 Finished goods inventory, beginning 80 Finished goods inventory, ending 110 Use the above data to...

The following data (in thousands of dollars) have been taken from the accounting records of Larmont...

The following data (in thousands of dollars) have been taken from the accounting records of Larmont Corporation for the year just completed: Sales $990 Purchases of raw materials* $100 Direct labour $240 Indirect labour $100 Indirect material $10 Other Factory Overhead $100 Administrative expenses $100 Selling expenses $140 Raw materials inventory, beginning* $20 Raw materials inventory, ending* $80 Work in process inventory, beginning $50 Work in process inventory, ending $30 Finished goods inventory, beginning $160 Finished goods inventory, ending $150...

The following data (in thousands of dollars) have been taken from the accounting records of Larmont...

The following data (in thousands of dollars) have been taken from the accounting records of Adi’s...

The following data (in thousands of dollars) have been taken from the accounting records of Adi’s Custom Shoe Company as at September 30th Sales $ 450 Purchases of raw materials $ 50 Direct Labour $ 70 Manufacturing overhead $ 60 Administrative expenses $ 80 Selling expenses $ 65 Ram materials inventory, beginning $ 20 Ram materials inventory, ending $ 20 Work in process inventory, beginning $ 30 Work in process inventory, ending $ 20 Finished goods inventory, beginning $ 45...

The following data (in thousands of dollars) have been taken from the accounting records of Karling...

The following data (in thousands of dollars) have been taken from the accounting records of Karling Corporation for the year just ended. Sales $990 Raw materials inventory, beginning $40 Raw materials inventory, ending $70 Purchases of raw materials $120 Direct labour $200 Manufacturing overhead $230 Administrative expenses $150 Selling expenses $140 Work-in-process inventory, beginning $70 Work-in-process inventory, ending $50 Finished goods inventory, beginning $120 Finished goods inventory, ending $160 1.) What was the cost of goods manufactured (finished) for the...

Subjects