Category: Supplement 6

Content related to Supplement 6

OM in the News: The “Nickel Pickle” and Other Electric Vehicle Tales

The Wall Street Journal (June 5, 2023) led with a front page article called the “Nickel Pickle” and then went on with two more stories about EV headwinds. Let’s summarize: To make batteries for EVs, companies need to mine and refine large amounts of nickel. The process of getting the mineral out of the ground and turning it into battery-ready substances is particularly environmentally unfriendly. Reaching the nickel means cutting down swaths of rainforest. Refining it is a carbon-intensive process that produces waste slurry that’s hard to dispose of.

Mining and refining nickel is a dirty business

The nickel issue reflects a larger contradiction within the EV industry: Though EVs are designed to be less damaging to the environment in the long term than conventional cars, the process of building them carries substantial environmental harm. One Indonesian miner, for example, said that rainforest clearing caused greenhouse gas emissions equivalent to 56,000 tons of carbon-dioxide. That’s equal to driving 12,000 conventional cars for a year.

Tesla adds that EVs cause more emissions during the manufacturing phase than conventional vehicles, due in part to the process of extracting and refining minerals.  Nickel is responsible for 1/3 of the carbon emissions generated from making a battery cell.

The second piece states that battery-powered EVs “are not the only way to achieve the world’s carbon neutrality goals.” Toyota is promoting its hybrids and plug-in hybrids as alternatives to battery-powered EVs. Plug-in hybrids contain an engine that can kick in when the battery runs low and are cheaper than EVs. That firm has pledged  to make all its vehicles carbon neutral by 2050.

Toyota’s CEO made news when he claimed that a “silent majority” in the auto industry “is wondering whether EVs are really OK to have as a single option.” He added that “the amount of raw materials in one long-range battery EV could instead be used to make 6 plug-in hybrid electric vehicles or 90 hybrid electric vehicles.” For that anti-EV comment, progressive investors and government pension funds have moved to oust him.

The 3rd article reports that VW “is searching the world, from Canada to Indonesia, for supplies to make the batteries in EVs it sells less dependent on Chinese components,” especially nickel. China dominates global production of refined battery materials used in EV batteries. “Today we are 100% dependent on China,” says a VW exec.

Classroom discussion questions:

  1. Why is nickel a supply chain problem?
  2. Why is the Toyota position controversial?

Guest Post: Peanuts, Peanut Butter, and Byproducts

Dr. Howard Weiss shares his thoughts with our readers monthly. Howard is a retired Temple U. professor.

Skippy Foods is recalling thousands of pounds of Skippy peanut butter because of stainless steel fragments possibly contaminating “a limited number of jars.” Clearly, the quality control department did not find the fragments in the jars that they inspected. While this is unfortunate, your Statistical Process Control chapter (Supplement 6) indicates that this can happen and describes the failure as a Type II error where a bad lot passes inspection but is accepted. 

Of course, placing the peanut butter in jars is only one step in the peanut butter supply chain. The supply chain for peanut butter is very similar to the supply chain for soft drinks described in Figure 1.2 of your Heizer/Render/Munson textbook.

 

Farmer: Peanuts are planted in spring, 4 to 5 months later are delivered to warehouses for cleaning, shelled, graded for size, shipped to peanut butter manufacturers

Producer: Peanuts are dry roasted, removed from heat, skins are removed. Nuts are screened and inspected. Peanuts are ground and converted to peanut butter 

Packaging: Peanut butter is packed

Distribution: Peanut butter goes to distributor

Sales: Peanut butter goes to retail outlets

Quality control is a part of each of the steps listed above. The peanut butter must meet standards maintained by the U.S. Department of Agriculture and the Food and Drug Administration and the peanut butter is graded by the USDA as Grade A or Fancy, Grade B or Choice or substandard. The grade is a weighted average of color, consistency, absence of defects and flavor and aromas

As is the case with many production operations, the processes yield byproducts. While peanuts are grown mainly as food or for their oil, after harvesting there are leaves, stalks, vines and pods that remain in the field. This residue has high nutritional value and is used as animal feed for assorted livestock. The peanut shells that are a byproduct of the shelling plant are used in the manufacturing of several products and also can be used as compost, mulch, kitty litter or used in fireplaces. Peanut shells can also be used in place of salt on icy sidewalks. And, of course, real peanut shells can be used as packing material in lieu of styrofoam peanut shells.

Classroom Discussion Questions: 

  1. Cite another product that produces byproducts during production.
  2. What other nuts are commonly turned into nut butter? 

 

Guest Post: Problem-Based Learning for SPC

bumblauskasToday’s Guest Post comes from Dr. Dan Bumblauskas, who is an assistant professor and the Hamilton/ESP International Fellow for Supply Chain and Logistics Management at the University of Northern Iowa. Dan is also VP at PFC Services, a consulting firm dedicated to helping businesses improve process efficiency. 

If you’re reading this blog I am sure that you, like me, have experimented with and deployed a variety of teaching techniques in OM courses over the years. Today I’d like to share one such initiative I embarked upon a number of years ago: the development of a problem-based learning module for statistical process control (PBL-SPC).  Along with faculty and graduate students from both the colleges of business and education, I developed a web-based simulation in which students immerse themselves in a Frito-Lay factory environment based on Jay, Barry, and Chuck’s cases provided in their textbook.

The motivation for the PBL-SPC was that I found this to be a challenging topic to cover which students often find difficult to relate to and/or boring. Three different poor quality scenarios are provided (crushed chips, stale chips, and poor tasting or nasty chips) and students, as individuals or in teams, must traverse the simulated environment to assess the situation. By “speaking” with the fictitious characters created in the simulation the students get varying perspectives from the manufacturing supervisors for each area of the plant. In addition, some stations have data sets that can be downloaded as MS Excel spreadsheets to be further analyzed using SPC techniques.

Here is the link to the PBL-SPC: https://sites.uni.edu/bumblaud/ where you can access various menu options by hovering over the “Home,” button or clicking on 1 of the 3 scenarios. Under the “Home,” button, you will find the mission statement, production line schematic, staff profiles, an operational overview and a production video produced by Jay and Barry (Pearson) a few years ago.

For more information and materials, such as the team-based rubric created in conjunction with the PBL website, contact me at daniel.bumblauskas@uni.edu or 319-273-6793.

Teaching Tip: Building a p-Chart Using Airline Frequent Flier Award Data

Today’s Wall Street Journal (May 12, 2016) has an article that you can turn into a teaching exercise, on a topic your students will all have opinions about, namely airline travel award redemption. Of the 25 airlines studied, the Journal found a wide discrepancy in ease of booking a coach seat using frequent flyer miles.

airline seatsBest among the US carriers: Southwest, which had award seats available for 100% of queries, and Jet Blue, which offered seats 92.9% of the time. Among the worst US carriers: American, which did not have seats for 43.6% of requests.

The overall average of  76.6% (which was better than I expected) for the carriers shown can be used as the center line in a p-bar chart. Using Excel, Excel OM, or POM for Windows, your students can compute 3-sigma upper and lower limits and draw conclusions about which carriers are “out of control.”

This should lead to a nice discussion about service quality (Ch.6).

OM in the News: The Meningitis Scare and Acceptance Sampling

My family has been closely following the news of the recent meningitis outbreak caused by a contaminated steroid Methylprednisolone. The drug is injected for the treatment of acute back and leg pain. The Centers for Disease Control (CDC) reports 21 deaths and 257 people infected in 16 states from the steroid. Some 14,000 patients, including my sister-in-law, have received such contaminated injections and are in danger of contracting meningitis during the coming months.The specialty pharmacy, New England Compounding Center (NECC),  had the products tested at an independent lab, which in May stated that samples from a batch of steroids were “sterile.”

But The Wall Street Journal (Oct.25, 2012) reports that the sample size that was tested was too small to be meaningful and didn’t comply with industry guidelines. The Oklahoma City testing lab had examined just two 5-milliliter vials of the NECC drug, and found them to be both sterile. The vials came from a batch of 6,528  implicated by the CDC.

Drug makers and compounding pharmacies routinely have their drugs tested by labs as a quality-control measure. Industry experts say such testing can never completely rule out contamination unless every vial in a batch is tested, which is economically impractical. In the case of the NECC steroids tainted with fungi, the size of the testing sample—two vials—is much smaller than the industry standard for the test; for a batch of more than 6,000 vials, the lab should have tested at least 20. And one  drug-testing laboratory quoted in The Journal typically asks for double the number of samples called for in the US standards. “If they’re only testing two vials out of a batch of 6,000, the chances of finding a contaminated vial are very small. Half the batch could be contaminated, and you’d never find it,” says the firm.

For a test to detect contamination with 95% confidence, 18% of the batch would have to be tested, adds a Bristol-Myers executive. “You cannot test quality into a product. You’ve got to manufacture a product in a controlled way and only then does the testing mean anything”.

Discussion questions

1. Ask your students to read Supplement 6’s discussion of Acceptance Sampling and comment on NECC’s approach to quality.

2. Why can’t every vial be tested?

Teaching Tip: Using an SPC Chart to Examine American Airlines’ Pilots “Sick Out”

Looking for a current business issue to illustrate statistical process control when you are covering Supplement 6? The Wall Street Journal (Sept.24,2012) notes how “American Airlines continued to rack up high numbers of flight delays and cancellations, blaming a dispute with its pilots union. The union, meanwhile, denied that pilots disrupted flights unnecessarily.”

Percent of Pilots Sick

Can the same set of data be used to make opposite points in an argument?  It’s not that statistics lie, it is more in how we present all of the available data points, as can see in this timely example regarding the alleged “sick out” of American Airlines pilots. Here is a 13 month “snapshot” of percent of pilots out sick at American that you can use in class:  9/18/11, 4.9% ; 10/18/11, 9.5% ; 11/18/11, 5.0% ; 12/18/11, 6.5%, ; 1/18/12, 5.4% ; 2/18/12 , 6.6% ; 3/18/12, 6.6% ; 4/18/12, 6.0% ; 5/18/12, 7.0% ; 6/18/12, 7.4%; 7/18/12, 6.1%; 8/18/12, 6.6%; and 9/18/12, 7.5%. (The number of pilots dropped a few percent during this period in American’s financial struggles, from a high of 7,840 to a current 7,563.)

“By my calculations,” writes a Dallas Morning News(Sept. 20, 2012) reporter, “the number of pilots on sick leave was 45.7% higher on Sept. 18, 2012, than on Sept. 18, 2011, up 177 pilots. That seems like an increase in sick leave usage”. (See the bar chart graph above used to make this point).  American’s spokesman adds that sick leave “has been up more than 20 percent year over year and has been elevated for months.”

13 Month SPC Chart

Counters the union: “Contrary to claims by management, we have confirmed that pilot sick rates have not deviated from historical norms”. (Here we see the SPC p-chart showing percent of sick days being within p-chart control limits).

What happens to the p-chart if the 1st two months last year are excluded? Ask your students to recompute the control limits and draw conclusions.

Video Tip: Darden Restaurant’s Quality “From Farm to Fork”

What I really like about this 12 min. video on Darden Restaurants (Olive Garden and Red Lobster) is that the VP-Quality comes right out and says “we use SPC charts, Pareto charts, process flow diagrams, fishbone charts, and scatter charts”. When you are teaching Ch. 6 and Supp. 6, it’s good for your students to hear that a real company is employing all the tools they see in the text (as in Figure 6.6).

Darden calls its quality program “From Farm to Fork”, since the inspection process begins at the food source (be it farm or pond), continues with inspections throughout the supply chain, and ends with a final check by the chef and server before the customer is served. Fifty scientists and health specialists work in QA throughout the world, most close to the food source outside the US. With 50 million pounds of seafood coming into the US for Darden each year, it is clear that quality cannot be considered just at the end of the supply chain.

The video presents real data in the form of x-bar and R-charts and capability histograms and shows what happens when specs are not met on products like steaks, salmon fillets, and chicken breasts.

Before showing the film, you may want to ask students where they think inspections are taking place on a fish that is caught in Thailand and served 48 hours later in say, Dubuque, Iowa.

Teaching Tip: Building an SPC Chart with Airline Safety Data

A very interesting article just came out in US News and World Report (Jan.25,2011) that deals with airline safety “incidence reports”. I thought the data might make a good in class example of how to build and interpret a p-chart when you teach SPC in Supp.6. Here is the scenario US News reports:

 All the major US airlines are very, very safe, to begin. Rarely do they end with a fatal crash (the last one was Feb.12, 2009 when Continental Connection #3407 killed 50 people when it crashed in Buffalo). But safety incidents do occur. (Recall the plane that landed in the Hudson River not long ago).  Using FAA and other sources, documented incidents (such as mechanical issues) for the 8 largest carriers follow.

Jet Blue: 17 incidents per 219,000 flights in 2010. This averages to a p- value of .0000776

American Airlines: 87 per 1,241,000 or p=.0000701

United Airlines: 49 per 1,204,500 or p=.0000407

Delta Airlines: 77 per 1,994,725 or p=.0000386

Continental Airlines: 23 per 884,395 or p=.0000260

US Air: 24 per 1,131,865 or p= .0000212

Southwest Air: 23 per 1,131,500 or p=.0000203

Air Tran: 5 per 255,500 or p=.0000196

Take these 8 observations and have the class create a p-chart using these timely, real-world data.  Are any of the major airlines “out-of-control”? ( I computed that the overall p-bar =.000038 (at 95% confidence). The UCL=.000042, and the LCL=.000033. Only two airlines are “in control”, but 4 are better than the LCL. I did this by computing the total sample size to be 8,062,985 with no. incidences =305).

 Thanks to Prof. Kevin Watson at Iowa State for today’s link and idea.

Video Tip: SPC at Frito-Lay

Of the 30+ videos Jay and I have produced to accompany our books, I would have to say my favorite is the one called “Frito-Lay’s Quality Controlled Potato Chips” (to accompany Supp.6, SPC). Why is it top of my list?

There are a few reasons. First, its the only video we ever made where I got to star! Normally, our films are narrated, then Jay and I come on at the end to summarize a few points. But in this one, I act as narrator. Second, this is a pretty exciting topic…watching how chips are made and seeing how critical a role SPC and TQM take.  Third, because my older son and some of his friends were given a cameo eating chips (early in the video).

But the most important reason I like to show this 10 minute video in class is because it shows the SPC process from start to finish. We see how the chips are inspected and tested at 9 checkpoints. Even better, we create, from scratch, an X-bar chart. This means setting the upper and lower control limits in a real company, for a real process that every student can relate to. So this video is a tutorial of sorts.

When I teach SPC, I stop the video at each math step along the way and recreate the numbers in the video on the board. I like to take my time and make sure the students comprehend each calculation in the video. Supp.6 takes on a more important role when the class sees that an everyday firm has to use all the tools we talk about.