MGT 3332 SPC case analysis: Americo Drilling Supplies� Fall 2015
This assignment provides an SPC case analysis for Americo Drilling Supplies, covering quality control methods.
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SPC CASE ANALYSIS: AMERICO DRILLING SUPPLIES
MGT 3332 – Fall 2015
Dr. Nayebpour
In November 2013, John Adams, a customer service representative of Americo
Drilling Supplies (ADS), was summoned to the Houston warehouse of Drilling
Contractors, Inc. (DCI), to inspect three boxcars of mud-treating agents that ADS
had shipped to the Houston firm. DCI had filed a complaint that the 50 Pound bags
of treating agents that it had just received from ADS were short-weight by
approximately 5%.
The light-weight bags were initially detected by one of DCI’s receiving clerks, who
noticed that the rail road side scale tickets indicated that the net weights were
significantly less on all three of the boxcars than those of identical shipments
received on October 25, 2013. ADS’s traffic department was called to determine if
lighter-weight dunnage or pallets were used on the shipments. (This might explain
the lighter weights.) ADS indicated, however, that no changes had been made in the
loading or palletizing procedures. Hence, DCI randomly checked 50 of the bags and
discovered that the average net weight was 47.51 pounds. They noted from past
shipments that the bag net weights averaged exactly 50.0 pounds, with an
acceptable standard deviation of 1.2 pounds. Consequently, they concluded that the
sample indicated a significance short-weight. ADS, was then contacted, and Adams
was sent to investigate the complaint and to issue a 5% credit to DCI.
DCI, however, was not completely satisfied with only the issuance of credit for the
short shipment. The charts followed by their mud engineers on the drilling platforms
were based on 50-pound bags of treating agents. Lighter-weight bags might result in
poor chemical control during the drilling operation and might adversely affect drilling
efficiency. (Mud-treating agents are used to control the pH and other chemical
properties of the open during drilling operations.) This could cause severe economic
consequences because of the extremely high cost of oil and natural gas well-drilling
operations. Consequently, special use instructions had to accompany the delivery of
these shipments to the drilling platforms. Moreover, the light-weight shipments had
SPC CASE ANALYSIS: AMERICO DRILLING SUPPLIES
MGT 3332 – Fall 2015
Dr. Nayebpour
In November 2013, John Adams, a customer service representative of Americo
Drilling Supplies (ADS), was summoned to the Houston warehouse of Drilling
Contractors, Inc. (DCI), to inspect three boxcars of mud-treating agents that ADS
had shipped to the Houston firm. DCI had filed a complaint that the 50 Pound bags
of treating agents that it had just received from ADS were short-weight by
approximately 5%.
The light-weight bags were initially detected by one of DCI’s receiving clerks, who
noticed that the rail road side scale tickets indicated that the net weights were
significantly less on all three of the boxcars than those of identical shipments
received on October 25, 2013. ADS’s traffic department was called to determine if
lighter-weight dunnage or pallets were used on the shipments. (This might explain
the lighter weights.) ADS indicated, however, that no changes had been made in the
loading or palletizing procedures. Hence, DCI randomly checked 50 of the bags and
discovered that the average net weight was 47.51 pounds. They noted from past
shipments that the bag net weights averaged exactly 50.0 pounds, with an
acceptable standard deviation of 1.2 pounds. Consequently, they concluded that the
sample indicated a significance short-weight. ADS, was then contacted, and Adams
was sent to investigate the complaint and to issue a 5% credit to DCI.
DCI, however, was not completely satisfied with only the issuance of credit for the
short shipment. The charts followed by their mud engineers on the drilling platforms
were based on 50-pound bags of treating agents. Lighter-weight bags might result in
poor chemical control during the drilling operation and might adversely affect drilling
efficiency. (Mud-treating agents are used to control the pH and other chemical
properties of the open during drilling operations.) This could cause severe economic
consequences because of the extremely high cost of oil and natural gas well-drilling
operations. Consequently, special use instructions had to accompany the delivery of
these shipments to the drilling platforms. Moreover, the light-weight shipments had
2
to be isolated in DCI warehouse, causing extra handling and poor space utilization.
Hence, Adams was informed that CDI might seek a new supplier of mud-treating
agents if in the future it received bags that deviated significantly below 50 pounds.
The quality control department at ADS suspected that the light-weight bags may
have resulted from “growing pains” at the Orange plant. Because of the earlier energy
crises, oil and natural gas exploration activity had greatly increased. This increased
activity, in turn, created increased demand for products produced by related
industries, including drilling muds. Consequently, ADS had to expand from one shift
(6 A.M. to 2 P.M.) to a two-shift (2 P.M. to 10 P.M.) operation in Mid 2011s, and
finally to a three-shift operation (24 hours per day) in September of 2013.
The additional night shift bagging crew was staffed entirely by new employees. The
most experienced foremen were temporarily assigned to supervise the night shift.
Most emphasis was placed on increasing the output of bags to meet the ever-
increasing demand. It was suspected that only occasional reminders were made to
double-check the bag weight feeder. (A double check is performed by systematically
weighting a bag on a scale to determine if the proper weight is being loaded by the
weight-feeder. If there is significant deviation from 50 pounds, corrective
adjustments are made to the weight-release mechanism.)
To verify this expectation, the quantity control staff at ADS randomly sampled the
bag output and prepared the following table. Six bags were sampled and weighted
each hour.
to be isolated in DCI warehouse, causing extra handling and poor space utilization.
Hence, Adams was informed that CDI might seek a new supplier of mud-treating
agents if in the future it received bags that deviated significantly below 50 pounds.
The quality control department at ADS suspected that the light-weight bags may
have resulted from “growing pains” at the Orange plant. Because of the earlier energy
crises, oil and natural gas exploration activity had greatly increased. This increased
activity, in turn, created increased demand for products produced by related
industries, including drilling muds. Consequently, ADS had to expand from one shift
(6 A.M. to 2 P.M.) to a two-shift (2 P.M. to 10 P.M.) operation in Mid 2011s, and
finally to a three-shift operation (24 hours per day) in September of 2013.
The additional night shift bagging crew was staffed entirely by new employees. The
most experienced foremen were temporarily assigned to supervise the night shift.
Most emphasis was placed on increasing the output of bags to meet the ever-
increasing demand. It was suspected that only occasional reminders were made to
double-check the bag weight feeder. (A double check is performed by systematically
weighting a bag on a scale to determine if the proper weight is being loaded by the
weight-feeder. If there is significant deviation from 50 pounds, corrective
adjustments are made to the weight-release mechanism.)
To verify this expectation, the quantity control staff at ADS randomly sampled the
bag output and prepared the following table. Six bags were sampled and weighted
each hour.
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Document Details
University
University of Houston
Subject
Business Management