The accounts receivable department at M. B. Manufacturing has been having difficulty in getting customers to pay the full amount of their bills. Many customers complain that the bills are not correct and do not reflect the materials that arrived at their receiving docks. The department has decided to implement SPC in its billing process. In order to set up control charts, 10 samples of 50 bills each were taken over a month's time and the items on the bills checked against the bill of lading sent by the company's shipping department to determine the number of bills that were not correct. The results are 6, 5, 11, 4, 0, 5, 3, 4, 7, and 2.
a) Determine upper and lower control limits for the process, using a 99.73% confidence level. Is this process in control? Why?
b) How might you use the statistical process control tools to determine the source of the billing defects and where you might start your improvement efforts to eliminate the causes? Explain.