Amore Frozen Foods Essay Example

z=(x-m)/STD/SQRT (5) or (8-8. 2)/0. 22/SQRT (5)=-2.24 If z=-2. 24 p=0. 0125 or probability of a batch to be less than 8oz is 1, 25%. This could give an annual impact of 9,000 dozens or 108,000 pies. As the FDA charge is $ 15 for an underweight batch less than 7. 50 oz we can find what is the probability to have such pie.

z=(x-m)/STD/SQRT (5) or (7. 50-8. 22)/0. 22/SQRT (5)=-7. 32 which means that this is more than 6 STD of the mean and probability to have a pie with weight less than 7. 50 oz is less than 4 per million pies or less than 35 pies for the whole year manufacturing.

From practical purposes the risk for such package could be considered as a “0”. Given the potential of 108,000 pies to be less than 8 oz and capacity of the thrift store of approx 240*12(dozens)*12(months) = 34,560 packages where the cost will be recovered the company can experience a loss of 73,440 pies or 73,444*$3= $220,320. This is half of the benefits that could be gained lowering the fill target to 8. 22oz.

After further analyses we would recommend to Mr. Jenkins to hire two more Quality Inspectors for control of the process.This will add $ 49,920 additional cost but will decrease the inspection process to 1/3 of a time. Once this implemented the potential annual impact would be 36,000 pies and 34,560 could be sold through the thrift store. The new Quality Inspectors could be utilized in some other product lines when macaroni and cheese line is not running and help resolving other quality issues.

Based on the use of these two employees

the company would benefit at least $ 359,968 additional cots savings. Based on the data above we would recommend the fill target to be reduced to 8,22 oz.