The product design group of Iyengar Electric Supplies, Inc., has determined that it needs to design a new series of switches. It must decide on one of three design strategies. The market forecast is for 200,000 units. The better and more sophisticated the design strategy and the more time spent on value engineering, the less will be the variable cost. The chief of engineering design, Dr. W. L. Very, has decided that the following costs are a good estimate of the initial and the variable costs connected with each of the three strategies:

a. low-tech: a low-tech technology, low-cost process consisting of hiring several new junior engineers. This option has a fixed cost of $45,000 and variable costs probabilities of .3 for $.55 each, .4 for $.50, and .3 for $.45.

b. Subcontract: immediate cost approach using a good outside design staff. This approach would have a fixed cost of $65,000 and variable cost probabilities of .7 for $.45, .2 for $.40, and .1 point $.35.

c. High-tech: a high-tech technology approach using the very best of inside staff and the latest computer aided design technology. This approach has a fixed cost of $75,000 and variable cost probabilities of .9 of $.40 and .1 of $.35.

What is the best decision based on an expected monetary value criterion? (Note: we want the lowest EMV, as we are dealing with the cost in this problem.)

Chapter 6: Managing Quality

2. A list of 16 items that led to the incorrect formulations in Tuncey Bayrak’s jam manufacturing unit in New England is provided below:

List of Issues

1. Incorrect maintenance 9. Variability in scale accuracy

2. Antiquated scales 10. Equipment in disrepair.

3. Lack of clear instructions 11. Technician calibration off

4. Incorrect measurement 12. Jam mislabeled

5. Damaged raw material 13. Temperature controls off

6. Operator misreads display 14. Incorrect weights

7. Inadequate cleanup 15. Priority miscommunication

8. Inadequate flow controls 16. Inadequate instructions

Create a fishbone diagram and categorize each of these issues correctly, using the “four M's” method.