East Coast Manufacturing, Inc. plans to locate a new production facility in Hartford, Philadelphia, or Baltimore. Six location factors are important: cost per product unit, labor availability, union activities, local transportation, proximity to similar industry and proximity to raw materials. The weighting of these factors, the scale for each factor and the scores for each location are shown below. Different SME's (subject matter experts) scored each of the non-economic factors. So, unfortunately, the scores for the non-economic factors are scaled differently. The scales are indicated on the table. On the scale, the highest score is always the best value. For example, for the scale 1-5, the best value is 5. For each of the Non-economic factors, it is possible to score the maximum.

Location Factor Factor Weight Scale Hartford Philadelphia Baltimore

Cost per product unit 0.55 $48 $59 $52

Labor availability 0.10 0-5 2.5 4.0 4.0

Union activities 0.10 0-3 2.7 1.8 0.9

Local transportation 0.15 0-3 1.2 2.4 2.4

Proximity to raw materials 0.10 0-1 0.7 0.6 0.4

For the following, calculate all results three decimal place (example, 0.xxx or x.xxx).

Using the factor rating (or equivalent the factor scoring) approach we studied in class and modified as appropriate, which site do you recommend? Why?

7. (19 points)

The Calculator Company (TCC) needs to estimate its sales revenue for next year for its most popular line of calculator. The most recent 12 years of revenue data for the company's popular line of calculators is provided below. In addition, the total industry sales revenue for the comparable calculators is also provided.

Year TCC Sales Revenue (in millions) Industry Sales Revenue (in billions) Year TCC Sales Revenue (in millions) Industry Sales Revenue (in billions)

1 $46.7 $6.1 7 $101.2 $16.0

2 59.3 11.4 8 100.8 16.0

3 74.2 12.8 9 104.5 16.5

4 77.9 10.5 10 107.1 17.5

5 85.1 15.3 11 109.3 19.5

6 98.0 14.4 12 108.3 18.5

Your work must reflect the correct independent and dependent variables based on the problem statements. This is part of the solution that is required.

a) It is believed that TCC's sales revenue changes with time. Develop a linear regression model that can be used to predict TCC's sales revenue for year 13. Provide the correct independent and dependent variables and provide the linear regression relationship in terms of these independent and dependent variables. What is the forecast for year 13 and based on the strength of the relationship would you use this forecast?

b) TCC believes that its sales revenue simply changes as the Industry Sales change. Develop a linear regression model that can be used to predict TCC's sales revenue for year 13 if the Industry Sales Revenue is projected to be $19.2 billion. Provide the correct independent and dependent variables and provide the linear regression relationship in terms of these independent and dependent variables. What is the forecast for year 13 for TCC's sales revenue based on the projected Industry Sales Revenue? Based on the strength of the relationship would you use this forecast?

c) During the 12 years analyzed in parts a) and b), the economy was strong and calculator sales were continuing to increase each year. However, the economists are now predicting that there will be a sharp down turn in the economy. As a result, industry sales are only projected to be $8.0 billion. What cautions would you recommend about using this linear regression relationship for predicting a TCC's sales revenue considering this outlook for the economy?

8. (21 points)

Data entry clerks at ARCO key in thousands of insurance records each day. They have just completed a new training program and want to establish a control chart based on the results of this training. Each day random samples of the work of the clerks were collected. The results are shown in the table below. Two hundred records were sampled daily and examined for errors. The number of records with errors was counted.

Day Number of Records with Errors Day Number of Records with Errors

1 14 11 12

2 10 12 14

3 6 13 6

4 8 14 12

5 10 15 10

6 10 16 12

7 8 17 12

8 10 18 13

9 6 19 11

10 4 20 12

a) You want to set control limits for the proportion of records with errors. Assume that the past twenty days performance is adequate for establishing the control limits and performing the analysis. Using 95% control limits, what are the upper and lower control limits for the proportion of records with errors? Calculate your proportion defective and the lower and upper control limits to 3 decimal places (0.xxx). Assume that the data provided is sufficient for performing a statistical analysis.

b) Plot the control chart and the sample values.

c) What would you conclude about the process, in other words, is the process in control? Explain your decision.

d) To be performing within the industry standard's, the company's daily performance must be within the industry's lower and upper limits which are 0.01 and 0.07 respectively. What can this insurance company conclude about its process relative to the industry standards? Base your conclusions on the control chart and individual daily results.