Question

In: Statistics and Probability

ABC Insurance Company tracks absenteeism by weekly random samples. Based on historical experience and data, the...

ABC Insurance Company tracks absenteeism by weekly random samples. Based on historical experience and data, the company expects about 75 employees to be absent from its workforce of 5,000 on the average.

For a variety of financial reasons, the company has eliminated its flex time option for its employees. It has tracked absences over the past fifteen days. The size of each sample is 450. The numbers of absences per sample for the last 15 days are as follows:

Day Number Absent Day Number Absent Day Number Absent

1

5 6 5 11 7
2 7 7 8 12 6
3 6 8 7 13 7
4 7 9 6 14 6
5 7 10 8 15 5

Assume that these 15 days are sufficient to perform this analysis.

a) construct a 2o control chart for the proportion absent and plot the sample data points. Base the center line and control limits on the historical absentee rate prior to the elimination of the flex time.

b) Has there been a change in the absenteeism rate? Explain why or why not and base it on the control chart results.

c.) Suppose the insurance industry's standard for absenteeism is 1.2% (lower limit) to 3.4% (upper limit). What would you conclude about ABC's performance compared to the industry standard? Explain your reason and base it on the control chart results.

Solutions

Expert Solution

The population proportion of absentism is given by = P = 75/5000 = 0.015

The mean sample proportion

For calculation please refer below table

Day Number Absent Proportion
1 5 0.011
2 7 0.016
3 6 0.013
4 7 0.016
5 7 0.016
6 5 0.011
7 8 0.018
8 7 0.016
9 6 0.013
10 8 0.018
11 7 0.016
12 6 0.013
13 7 0.016
14 6 0.013
15 5 0.011
97
Average 6.47
Mean Sample Proporton 0.0143

The control chart is given below]

b) The absentism rate are well within control as the number of outliers are only 2

c) Based on the below control chart, we can conclude that performance of ABC is better than the industry standard as most of the values are near the LCL


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