Posted: January 11th, 2016
Is it acceptable to follow Rob's suggested course of action, based on the numerical and design data shown in Section II
(Allowing Defective Chips to go to Market…)
Section I – Chip Production Scenario
Shane, a production line engineer, is checking every chip for quality control (QC). His workers are finding defective chips once every 150 chips. The defective chips must either be sent back for repair or discarded. His manager, Rob, has mandated that all defective chips be discarded.
Rob walks over to Shane’s production line and engages him in conversation by saying, “I don’t understand why some other production lines spend additional dollars on failed chips. We only make a 25-cents profit from each chip anyway! Spending an additional $2.00 per chip to repair it only means that more money is being wasted.
Shane, in our line of work we can’t afford to flush money down the drain.”
The following afternoon Rob informs Shane that his production line is discarding too many chips, “One chip every hundred and fifty is unacceptable! This is becoming a substantial cost to the company. I believe that it would be more beneficial to allow all the chips to go out the door without performing quality control.”
Shane asks, “What about the defective chips? Won’t customers complain?”
Rob replies, “Yeah, yeah, but that’s not your problem. Our company has a return department that will replace the defective chips as customers complain.” Rob further estimates that allowing all the chips to be sold on the market will yield a $416,000 profit for the compa
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