Fabritek Corporation

Transformation processes in manufacturing and services

Session 4 Group Report

28 May 2012

Fabritek Corporation

Causes of high rejection rate

We understand the main causes for the high rejection rate at Miling Operations are the following:
The milling operator Arthur Moreno felt frustrated after making less money than his previous job, and having to work with

other colleagues with whom he didnt share any synergies;

Moreno started operating the 4 milling tasks at 167% to make up for his lost salary, feeding crap to the grinding operator,

Paul Clark (Page 4, 8) [=Paragraph number].

Moreno had raised a strong enough objection to have the job checked, which caused his produced parts to escape early

defect detection. At the quality checking stage, as 38 pieces were rejected, this means that Clark may have also worked with less attention to detail in order to finish the queue piling up before him, as he was not used to see a queue before Moreno.

Morenos bonus if works 167%

After proceeding to a serious of calculations, we conclude that:
Our understanding is that bonus is anything over 100% pace. As Morenos $174.14 check was his actual first pay, including

33% bonus over the 100% base performance pay of $130 per week, assuming no change from his previous job ($215 - $85 as given by the case). As such, the actual bonus possible was $130 x .67 = $87.1, or just above what he previously received.
If the weekly incentive pay was based on good output pieces instead of total output pieces, then Moreno should have

the prices of 38 faulty pieces deducted from his weekly pay.

Millers cycle time for Moreno to work at 167%

As the 4 milling machines have to be operated in sequence, and with automated load/unload operations, the longest cycle of the machines is the bottleneck (In this case, Milling Cut # 1, that takes 3.594 minutes).

Unpack and inspect purchased casting

Rough mill bearing surface 3.594

Finish mill bearing surface 2.964

Mill face

Mill keyway

Drill eight holes

Finish grind

Final inspection and pack

3.301

1.725

At the agreed rate of 135 pieces/day, this would require 135 x 3.594min = 485.19 mins /60 = 8.08 hours, meaning the employees were working their full 8 hours without taking their allotted 39 minutes of rest.
However, considering the mills would work sequentially (assuming the opening time is the sum of all four mills cycle, as

well as the closing time), then the total time needed to produce 135 pieces would be: 1 opening time (that would take the sum of 4 mills; ie, 11.584 minutes); 1 closing time (that would also take the sum of 4 mills; ie, 11.584 minutes); 133 day-time (that would basically take the time of mill 1x133 (ie, 478.002 minutes), considering theyre done sequentially); 39 minutes break per day for personal time of operators.

The result is that the total time needed is 540,17 minutes, which is exactly 9 hours.
To produce 167 per day at the bottleneck pace of Milling Cut #1, without incurring overtime, we would divide the total

daytime of 9 hours (discounted of the 39 minutes break) and divide per the 167 goal. The result is that the total time needed to produce 167 pieces would be exactly 3 minutes, which is faster than Mill 1 and Mill 3, if we assume that Moreno is taking the 39 minutes break and not just working straight. Otherwise, we get a required cycle time of all 4 milling cuts at 3.23mins. In any case, the above demonstrates that operator Moreno was probably not waiting for the full cycle of Milling machines 1 and 3 (Rough Mill and Mill face) to be completed, before he moves to the next step. He was therefore producing 167 pieces, but with significant lower quality output. Or else, he was faster than the assumed average in external time.
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Fabritek Corporation

What should Baker do

Alternative 1: Frank should request immediately from the final Inspector-material handler to check all output of Moreno

again, as this conforms with the Presidents fourth strategy objective of having a strong emphasis on inspection and quality control at several stages of the machining operations.
Alternative 2: Since Clark is probably still going at 135% or slower, the inspector could do random checks of the milling

(pre-grinding) work-in-progress storage at the end of the day, since this would also show greater than allowable average and perhaps be more practical than having the inspector check ALL of Morenos work. Again, based on the calculations above, we cannot say with certainty yet that Moreno is producing badly.
Regarding Moreno, Frank should make it very clear to him that he will be responsible of the quality of his output, similarly

to his old job where he worked alone and had his output checked.
Another alternative would be to allow Moreno to work at 167%, on the condition that no faulty pieces would be detected

anymore, which forces him to guarantee perfect quality, despite the fact that he may run out of work. As hes paid by the piece, he would still get his cherished $215 anyways.

Short-term and long-term actions for CEO

Alternatives
In the short-term, the CEO has two main alternatives:
Alternative 1: Put the other operating doing steps 2,3,4, and 5; and Moreno drilling and finishing. As these are the

operations made right before the final inspection This would mean adaptation costs (both operators would need to readapt and learn their new operations). There would still be a risk that Moreno didnt improve his performance.

Alternative 2: Pay Moreno the same money on the milling job as he had on his prior job (and rebalance the production at

135%). This would be $40,86 more but it is certainly less money that Clarks overtime. If we decide to Clark the same as Moreno, costs would increase in $81,72 ($40,86*2). In other words, this means requesting that the whole production line be rebalanced at 135%, as it was running perfectly for the first two weeks of production, which would guarantee that the Pilgrim test contract be finished on-time, leading to customer satisfaction and getting future deals rolling.

In the long-term, the CEO we considered the following alternatives:

Alternative 1: Leave as is

The Company will have increased its costs in $81,72 but it now knows that product has quality and his being delivered on time.

Alternative 2: Upgrade resources

Once the current operations are guaranteed, and as bigger deals were expected from Pilgrim later on (meaning bigger demand), it is justified then to consider upgrading the production line with faster machines and train the production personnel to work at the new Standard of 167%, if its attainable over long periods. Try to facilitate some sort of co-work between Clark and Moreno, as they obviously dont get along outside of work, and it could be friction on the work that is leading to this issue, until the original milling operator returns from his accident recovery leave.