This activity consists of two problems.

Problem One

Gary Seitz is the director of procurement for the Forest Medical Center in Oak Park, Illinois. His medical center recently purchased more than 300 new side tables for the patient rooms from Quick-and-Cheap Furniture. His team, however, is not happy with the paint quality of these tables. They feel the firm providing the tables was rushed to get the order out and did not do a great job.

They have examined each of the 312 tables that they have received so far and found the following defects, listed in alphabetical order:

Table DefectsProblemNumber of OccurrencesDirt in paint65Off-color17Orange peel12Other1Sad looking43Scratch11Sealer under8Thin paint31

Instructions

Use Excel to:

1. Create a Pareto Chart for this situation.
2. Create and complete a table for this situation using the following headers:
   • Problem.
   • Frequency.
   • Cumulate Frequency.
   • Percentage.
   • Cumulate Percentage.
3. List the most frequently occurring problem first in the table, then the next more frequently occurring problem second in the table, and so forth.

In a Word document:

1. Draw two conclusions about the quality of the patient tables that Quick Furniture has shipped to the Forest Medical Center.

Submit both your Word and Excel files.

Problem Two

Ted Short, the manager of procurement at the Lake Luna Medical Center (LLMC), is starting a process to examine the general process that is followed at his center for procurement of medical supplies at his facility. His first step is to develop a flowchart for the current process that employees at his center follow. He has asked you to draw that flowchart for him and make any obvious changes to shorten the process.

Here are the key steps that are followed:

1. The LLMC employee fills out a paper requisition and sends that to his department head for approval.
2. The department secretary first examines the requisition to see if all the needed information is present. If it is, then she sends it to the department head for approval. If not, she returns to the employee for any needed corrections. The employee then returns the requisition to the department secretary for review again.
3. Requisitions with the correct information are sent to the department head.
4. The department head reviews the item to determine if the material requested seems appropriate. He may contact his employee to discuss any questions he might have.
5. If he feels it is inappropriate, then he rejects the request and sends it back to the employee.
6. If he feels it is appropriate, then he checks the budget to see if there are sufficient monies in the budget to pay for this. If there are not, then he rejects the request and sends it back to the employee. If there are sufficient funds, then he approves them.
7. If the requisition is approved, then the department secretary sends the requisition to a member of the LLMC Procurement Team.
8. The LLMC procurement specialist checks to see if the suggested vendor on the requisition is on the approved vendor list (AVL).
9. If not, he sends the request back to the department secretary and the process starts all over if the LLMC employee wants to continue to pursue it. If the employee does not, then the requisition is terminated.
10. If the vendor is on the AVL, the LLMC procurement specialist checks to see if a quote is required, either based on the type of equipment and material required or on the amount of the purchase.
11. If no quote is required, the procurement specialist transmits the PO to the vendor for execution.
12. If a quote is required, then the specialist contacts the vendor and asks for a quote. If the quote is satisfactory based on past purchases of such items, the specialist approves the quote and places the order.
13. If the quote is too high, the specialist contacts the LLMC employee and asks for another vendor to check. The procurement specialist then checks the second vendor. Usually, a procurement specialist will have to check only two vendors at most.
14. If the specialist cannot find a vendor with it suitable price after two tries, then the PO is canceled.
15. When the specialist finds a vendor who submits a suitable quote, she transmits the PO to the vendor for execution by US postal service or by telephone.
16. The procurement specialist then logs the transaction into the financial system.
17. The procurement specialist then forwards the request to the Accounts Payable Department for payment when the receipt of the materials and equipment ordered, is acknowledged.

Instructions

Use Microsoft Word to complete the following:

1. Develop a flowchart for this process.
2. Suggest three improvements, based on total quality management, that Ted Short can use to make the current process more efficient.

Submit your Word document(s).

View Rubric
 

1. In some ordering problems, like the one for Sam’s Bookstore, whenever demand exceeds existing inven- tory, the excess demand is not lost but is filled by expedited orders—at a premium cost to the company. Change Sam’s model to reflect this behavior. Assume that the unit cost of expediting is $40, well above the highest regular unit cost.

2. In the Sam’s Bookstore problem, the quantity discount structure is such that all the units ordered have the same unit cost. For example, if the order quantity is 2500, then each unit costs $22.25. Sometimes the quantity discount structure is such that the unit cost for the first so many items is one value, the unit cost for the next so many units is a slightly lower value, and so on. Modify the model so that Sam’s pays $24 for units 1 to 1500, $23 for units 1501 to 2500, and $22 for units 2501 and above. For example, the total cost for an order quantity of 2750 is 1500(24) 1 1000(23) 1 250(22). (Hint: Use IF functions, not VLOOKUP.)

3. Continuing Problem 1, create a two-way data table for expected profit with order quantity along the side and unit expediting cost along the top. Allow the order quantity to vary from 500 to 4500 in incre- ments of 500, and allow the unit expediting cost to vary from $36 to $45 in increments of $1. Each col- umn of this table will allow you to choose an opti- mal order quantity for a given unit expediting cost. How does this best order quantity change as the unit expediting cost increases? Write up your results in

a concise memo to management. (Hint: You will have to modify the existing spreadsheet model so that there is a cell for expected profit that changes automatically when you change either the order quantity or the unit expediting cost.)