Based on the three pages already completed, project case and addendum information, complete the following in 3.5 - 4 pages. 1. Identify statistical tools and methods to collect data: A. Identify th

Quantitative Analysis 510

Quantitative Analysis 510

05/20/2018

Quantitative Analysis

Introduction

A-CAT Corporation (A-CAT) is a manufacturing company located in India. A-CAT is a leading manufacturer of domestic electrical appliances sold to the rural population in and around the Vibarbha region of India. The company has been in the manufacturing business since 1986, currently employees about 40 employees and owns and operates two medium-sized manufacturing plants.

The company offers close to 100 different models of electrical appliances, but its main product offering is a 500-kilovolt amps voltage regulator (VR-500). The product is particularly important for use with appliances such as refrigerators and television sets. The VR-500 protects these large appliances from load fluctuations and frequent power failures, which are common in their region of India. The VR-500 requires a transformer as one of its main components that is supplied by another company. Previously the number of transformers needed for a given time frame was estimated by looking at sales figures from the prior months as well as the same month of the two prior years. This method has not been effective and recently the company has been experiencing difficulty with under supply and over supply of the necessary transformer on hand.

The under and over supply of transformers affects both internal and external stakeholders. When the supply of transformers is insufficient, the company is not able to meet normal production levels, which has an effect on the number of workers needed for a shift and causes scheduling issues. The company also risks losing sales by not having the required products on hand when needed by customers-generally voltage regulator orders come in throughout the year and are categorized as rush orders. When the company has too much stock-on-hand of transformers, cash reserves are tied up with the excess inventory and causes issues with other products manufactured by the company. Key external stakeholders include customers and the supplier of transformers. When A-CAT has insufficient transformers and is not able to produce enough VR-500 regulators to meet demand, customers may become upset when they are unable to get the product they need and take their business to another company. A-CAT previously had access to four supplies but currently only has access to one supplier. This supplier would likely raise the prices they charge the company if transformers are not ordered regularly and with some uniformity in amounts ordered; ordering too many transformers at one time exposed issues on the supplier side.

Milestone One: Analysis Plan

Quantifiable Factors

Previously the company has estimated the number of transformers needed to meet demands by looking at the previous few months and the same month for the last two years. While this method has provided some data to help inform an estimate, the sales department has had no way of analyzing if the previous few months or prior years same month figures are consistent with “normal” requirements or if the coming month is likely to require similar numbers of transformers. This uninformed and imprecise method of estimating requirements has led to the problems the company is currently experiencing with under and over supply of transformers. The company has started analyzing its data more completely and provided descriptive statistics for calendar year 2006, including mean, median, standard deviation, minimum, maximum and range. While these statistics are helpful, they do not provide a clear picture of how many transformers may be needed currently. The transformer requirements for 2006 are only a small portion of the data available for analysis. In addition, the operations manager has indicated she believes the needed number of transformers has grown since 2006, so the 2006 transformer requirement would not be indicative of current transformer needs.

Problem Statement

A-CAT Corporation needs a method to accurately estimate the number of transformers needed each month so they are able to order the correct number from their suppliers. Currently the Corporation is under stocked or over stocked on a regular basis causing issues with their customers, suppliers, cash on hand and workers.

Improvement Strategy

The data of transformer requirements from year 2006 to 2010 will be analyzed to determine the correct number of transformers to be ordered each month. The data will be plotted to determine the appropriate model to use for statistical analysis. Based on the initial analysis, a model will be chosen and used to analyze the data and predict the correct number of transformers to be ordered. Potential models to use include the normal distribution model. The operations manager has suggested that the number of transformers required has been rising over time so time series analysis will also be reviewed to determine if it is more applicable. Once a model has been chosen and analyzed, the data points provided will be reviewed to ensure the model is appropriately describing the data. A model will also be developed and analyzed to forecast the number of transformers needed based on the sales figures for refrigerators.