Lucy Liu has been asked to monitor the efficiency and effectiveness of a newly installed machine. The specialized machine has been guaranteed by the manufacturer to package 2,000 engine gaskets per kilowatt hour (kWh).
The rate of defects on production is estimated at 2 percent. The machine is equipped with a device to measure the number of kWhs used. During the first month of use, the machine packaged 350,000 gaskets, of which 5,000 were fl awed, and it used 180 kWh.
a. What is the efficiency standard for flawless output?
b. Calculate the achieved efficiency for the first month and briefly comment on it.
c. Determine the achieved effectiveness and briefly comment on it.
d. Assume that the company was charged $4.50 per kWh during the first month this machine was in service. Estimate the company's savings or loss in power costs because of the machine's efficiency level in the first month of operations.
e. If you were a customer buying this company's gaskets for use in automobile production, what level of quality control would you want the company to have and why?