Service Management: Operations, Strategy, Information Technology 8th Edition by James Fitzsimmons,Mona Fitzsimmons,Sanjeev Bordoloi

Exercise 12

The Long Life Insurance Company receives applications to buy insurance from its salespeople, who are specially trained in selling insurance to new customers. After the applications are received, they are processed through a computer. The computer is programmed so that it prints messages whenever it runs across an item that is not consistent with company policies. The company is concerned with the accuracy of the training that its salespeople receive, and it contemplates recalling them for more training if the quality of their performance is below certain limits. Five samples of 20 applications received from specific market areas were collected and inspected with the following results:

a. Determine the upper and lower control limits for a p -chart using a sample size of 20.
b. After the control limits were established, a sample was taken and four applications were found to have mistakes. What can we conclude from this?