Business

Business Research Method III After reviewing Riordan Manufacturing Inventory Management System, it was noticed that the current inventory system needs improvement. There are flaws with how the inventory is received, updated in the inventory system and the time factor when the inventory can be viewed in the system. This paper will discuss the current processes and the changes that are necessary to improve the efficiency of the process for the success of the company. The data collected is further analyze, the necessary five step hypothesis testing is applied and the challenges are reviewed and resolved. Statistical analysis The management at Riordan manufacturing wants to identify the defects in the critical areas of business operations. Statistical analysis of the sample data collected from different business operation is one of the most accurate ways to identifying the defects in the process. Several statistical tools and techniques allow business to measure the efficiency in the business process. Riordan Manufacturing is trying to bring the efficiency to the several areas of business operations. Team A has decided to evaluate the efficiency of raw material arrival time. Team has collected random sample of raw material arrival time from each quarter of the year 2008. Sample data listed in table 1. Table 1: Four random sample data collected for raw materials receiving process for each quarter of the year 2008. Quarter Samples Arrival time Variation Quarter 1 Sample 1 90% (10%) Sample 2 88% (12%) Sample 3 92% (8%) Sample 4 89% (11%) Quarter 2 Sample 1 91% (9%) Sample 2 90% (10%) Sample 3 92% (8%) Sample 4 89% (11%) Quarter 3 Sample 1 94% (6%) Sample 2 91% (9%) Sample 3 90% (10%) Sample 4 91% (9%) Quarter 3 Sample 1 88% (12%) Sample 2 89% (11%) Sample 3 93% (7%) Sample 4 95% (5%) Note: Data presented in this table shows significant variation in arrival time for every sample data listed for each quarter. The statistical analysis based on the sample data depicted in table 2. Table 2 Total number of samples collected (n) = 16 Description of the test Result Conclusion Number of times Raw material arrived on time as per the Effectiveness Standards 95% 1/16 The probability of on time arrival is 1 out of 16. It indicates that most of time raw material never arrived on time. Average truck arrival time 90.75% Average truck arrival time is below Effectiveness Standards 95% Range, the dispersion of the arrival time 0.070 There is a 7% dispersion in arrival time. Variation in truck arrival time 0.00042 There is a 0.00042 variation in truck arrival time Note: Table 2 depicts the different statistical analysis results. The chart in figure 1 shows the variation in raw material arrival time.  Figure 1: This chart represents variation in raw material arrival time Five step hypothesis test Riordan Manufacturing schedules the order for raw materials with its vendor based on the capacity needed. On receipt of raw materials from their preferred vendor, it is validated, documented, and pushed into the inventory system. The firm has defined a standard timelines for each activity of Raw materials receiving processes. As per the standards set by the Riordan, raw material truck must arrive within the 14 days of order and the mean Effectiveness Standards must be greater than 95%. Riordan has implemented several process control measures to achieve the effectiveness standards. Management at Riordan wants to determine whether raw material arrival time is greater than the effective standards 95% at 0.01 significance level. Sample data is depicted in table 1. Step 1: State the null and alternate hypothesis. The Effectiveness Standards is 95%. The null hypothesis is “Arrival time is less than or equal to Effectiveness Standards” and the alternate hypothesis is “Arrival time is greater than Effectiveness Standards”. H0: µ ≤ 95%, mean arrival time is less than or equal to 95%. H1: µ > 95%, mean arrival time is greater than 95%. This is a one-tailed test because the alternate hypothesis states a direction and management want to determine whether there is an improvement in arrival time efficiency (Lind, Marchal, & Wathen, 2008, p. 339). Step 2: Select the level of significance. The level of significance is 0.01. Step 3: Select the test statistic. The test statistic for a mean is t. Using formula (1), t value is calculated (Lind, Marchal, & Wathen, 2008, p. 339).  (1) With n -1 degrees of freedom, where: = The sample mean, which is 90.75% = 0.9075. µ = The hypothesized population mean, which is 95% =0.95. s = The sample standard deviation, which is 0.0205. n = the number of observations in the sample, which is 16 (Lind, Marchal, & Wathen, 2008, p. 345) Step 4:Formulate the decision rule. “The decision rule is formulated by finding the critical values of t from Appendix B.2” (Lind, Marchal, & Wathen, 2008, p. 339). The number of sample is 16 and degrees of freedom is 15. The critical value from the Appendix B.2 is 2.602 (Lind, Marchal, & Wathen, 2008, p. 342, p. 785). The decision rule is not to reject H0 if the value of t is less than 2.602. Step 5: Make a decision and interpret the result Data from the step 3, t value is calculated using formula (1).  = -8.032 The calculated t value is lesser than the critical value, therefore null hypothesis is not rejected. It indicates that there is no improvement in raw material arrival time. Six Sigma Six Sigma is an ideal and useful program that will help Riordan manufacturing industry to deliver customer’s order to them quickly in a timely and efficient manner. Currently Riordan manufacturing is trying to continue to provide excellent customer satisfaction in terms of meeting the commitment ship dates. Riordan at one time in the past decided to ship a small order by air freight to meet one of their major customer’s emergency need, instead of shipping the order by normal process and having the shipment arrive late. Six Sigma DMAIC /Methodology would be perfect in this type of situation so as to save cost. According to Schafer (2007) “DMAIC phase objective is to identify and finding improvement opportunity, document the business processes, define critical requirements, and to prepare the team to be effective throughout the process” (para. 3). The implementation of DMAIC Six Sigma involves everybody in the Riordan manufacturing to participate to enable serving customers on time by introducing Just –In -Time in supply and delivery of customer’s good. Challenges of Validity and Reliability There exist some potential challenges to the validity and reliability of the research question, process, data, and analysis. Validity is the extent to which a test measures exactly what needs to be measured (Cooper-Schindler, 2008, p. 289). Reliability is concerned with estimates of the degree to which a measurement is free of random or unstable error (Cooper-Schindler, 2008, p. 293). The biggest problem with validity and reliability lies in data. If the data is not collected correctly or cannot be repeated, then it not only affects the validity and reliability of the data but also the research question, process, and analysis. Potential challenges with the data include the validity and reliability of how it was collected or received. For example, if a survey was done to collect data, did the participant answer truthfully or did they choose to skim through the survey to spend less time on it. If the participant is forced to choose an option, this may be a challenge to prove the reliability. If the questions in the survey do not measure what needs to be measures for the purpose of the research question, then this is a challenge to validity. Potential challenges with the research question include the validity if the researcher fails to have a sufficient understanding of the problem. The research question should be clearly defined without raising doubts. Potential challenges with the process include the reliability and validity of how the data is collected and can this process be repeated. If another researcher wanted to attempt to repeat the process to verify the validity of the research, can the research repeat the process exactly how the previous researcher accomplished it. If for any reason, there is any secrecy to how the data was collected or who gave the data then include as much data as possible because without that information, it is hard to verify the validity and reliability of the data. Potential challenges with the analysis mostly the validity and reliability of the data. In order for a researcher to make a conclusion they must review the data collected and if there is any discrepancy to the validity or reliability of the data, then the analysis may also have discrepancies. Steps Needed to Minimize the Challenges Riordan manufacturing should take the following steps so as to minimize the challenges of implementing Six Sigma program and to carry out the operation successfully. One of the steps to take is to provide a clear and complete definition of gate requirements. The management of Riordan should align the business objectives with the Six Sigma program by providing a clear and complete definition of what they are trying to get out of each phases of the development. Creveling, (2007) stated that another important step to take is to link major tasks to balanced sets of tools, methods, and best practices. This approach will add value similar to lean DMAIC Six Sigma projects (p. 40). Lean Six Sigma approach will enable Riordan manufacturing to improve their customer satisfaction by proving Just In Time delivery, and be able to maximize profit when the process of data and statistics controlling, and measuring has been aligned with business goal. Presentation of data Ranking scales is based on determining order and making comparisons among two or more objects or properties. Riordan will not be ranking data for example by what is best or what is preferred so the ranking scale will not be used. Sorting requires that participants sort cards into piles using criteria established by the researcher (Akbar, 2009). Riordan will not be sorting data by specific raw data such as ink or mold release agents so the sorting scale will not be used. This also goes for categorization; Riordan will not be categorizing data in groups or categories. So the format that data will be presented in is the rating scale. Rating scales have several response categories used to elicit response with regard to the event, object, or person studied (Akbar, 2009). The rating scales are used to judge properties of objects without referencing another object. Business Process Analysis and Process Improvement Recommendations The recommendation of system change is to address any inefficiency within the process and make the necessary corrections to improving it. At Riordan the changes will allow them to eliminate the inefficiency in raw material receiving process and minimize the raw material processing cost. At the same time, it will also help with improving customer satisfaction by taking advantage of the technology available to change the current process. In turn this will improve the accuracy and timeliness of the inventory management. The raw materials are received from the suppliers at the receiving areas as raw materials needed. The supervisor verifies the shipment when it arrives to make sure it matches with order. After the shipment is verified, the raw material is moved into manufacturing unit for further process. The inventory clerk updates the inventory system at the end of each day. The inventory system shows several inefficiencies, which include the manual verification of the orders upon arrival, disposing the information to the clerk to the inventory and the time taken by the inventory system to show the recent updates . The current inventory system is adequate but not as efficient to meet the goals of the Riordan. The number of flaws and failures discovered in the current inventory system has produced inaccurate inventory. Addressing these flaws and failures can vastly improve the inventory system and provide a more accurate inventory system. To rectify the problem with the inventory system, the dock workers should be trained to account accurately for every inventory received. Supervisor should take responsibility of updating the inventory system in timely manner. This ensures that the inventory is entered the same time it is received and eliminate problem with paper getting lost while transferring from supervisor to clerk. This would allow business to access the inventory system at real-time and would eliminate the repetitive task. References Akbar, S. (2009). Measurement Scaling. Retrieved from http://www.authorstream.com/Presentation/shafaqz-174492-measurement-scaling-brm-final-education-ppt-powerpoint/ Cooper, D.R. & Schindler, P.S. (2008). Business Research Methods (10th ed.). New York, NY: McGraw-Hill/Irwin. Creveling, M. C. (2007). Six Sigma for Technical Processes: An Overview for R&D Executives, Technical Leaders and Engineering Managers. Upper Saddle River,  New Jersey: Pearson-Prentice Hall. Lind-Marchal-Wathen (2008). Statistical Techniques in Business and Economics:One sample tests of hypothesis, 13th edition. The McGraw-Hill Companies Schafer, Steve. (2007) Six Sigma: How Much Do You Know' Industrial Maintenance & Plant Operation. 68(11) 38. Retrieved from http://ehis.ebscohost.com/ehost/detail'vid=3&hid=3&sid=404074a5-5b1e-4cd8-9ace56ef523bd338%40sessionmgr4&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=27493057#db=bth&AN=27493057