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Vastupal Vashisth

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    Vastupal Vashisth
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    Honda Cars India Ltd. Taukara Rajsthan

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  1. Before Analyzing The NPV calculator, let us first understand what NPV is all about: NPV stands for Net Present Value which is one of Discounted Cash Flow Techniques which were developed to take account the time value of money and to improve the accuracy of cash project evaluations. in simple words we can say that NPV is the difference of present value of cash ouflow and future value of cash inflow over a period of time. NPV consists of: finding the present value (PV) of each cash flow, discounted at an appropriate percentage rate. finding the NPV by adding the discounted net cash flow to determine whether the project is acceptable or not. If two or more projects having positive NPV then the one which is of higher NPV is a more likely choice. NPV can be positive, negative or zero. Projects with Positive NPV have more return or cash flow or in other words we can say that projects with positive NPV are profitable to the organization but projects with negative or zero NPV is loss to the organizations but it does not mean that we can not go with projects with negative or zero NPV. This will be explained further. Lets understand the calculator with the given values in the question: Future Cash Flow: Amount given is 50000 which is an estimated value when the investment done for the project. Cash flow is the amount which is the increase or decrease in the amount of money for any business. or in other words its the company's ability to create value for shareholders which is determined by its ability to generate positive cash flow. For any organization its very important to have good Cash Flow, Profit and Return of Investment(ROI). Any organization can survive with less profit and ROI but it cant go with poor cash flow or if there is no cash flow then it may close down the business in future. Rate of interest of discount rate: it is the expected rate of interest to compute the present value which is 8 % in above example. discount rate is company specific because its related to how the company gets its funds. It is the rate of return that the company expect. Time Period: this is the time period after which the cash flow is expected. In above example this is of 2 years. Initial Investment: This is the amount which is invested initially that is expected to generate future cash flow. in above example this is 42867. in above example when we put all values in calculator we see that NPV comes zero. but it does not means that zero NPV indicate no value zero NPV means that investment earns a rate of return equal to discount rate. Because NPV is the measure of wealth creation relative to the discount rate. In above example we should go with this project as this project gives a huge increase in employee satisfaction scores and corporate responsibility visibility for this company. in above example we have good cash flow which is very good for the organization but has zero NPV. Sometimes we select projects even negative NPV for example when we are going to buy a new car then we know that after so many years residual value will be less when we sell it. but still we buy because things like bus or any cab fairs that we are not going to pay now after buying a car and now we can drive anywhere ,we can go anywhere , there will no need to wait over stations or bus stands so time also saving, so we buy new car when we consider all factors although we know that residual value of car is less. Another example is that Facebook bought what's app and Instagram yet both are not still profitable because they know if they don't then Google might buy both and get more users on What's App and Instagram. So Facebook has to pay to avoid the user churn. Another example is of safety equipment used in industries, they all have almost negative NPV but still are used because they are important to ensure people are not getting injured or killed. Similarly we can select project with Zero NPV because: Zero NPV increase revenues despite not increasing profits. because shareholders look to revenue growth as an indicator of financial growth. It may involve social benefits that will increase brand value of the organization. it may be a part of legal or regulatory requirements. it may change in the economic cycle which will lead to project to a positive one. As stated in the example it may give a huge increase in employee satisfaction scores and corporate responsibility visibility for this company.
  2. Before analyzing the Takt Time calculator let us understand first what Takt Time is all about. Takt Time: This is the rate in time per unit at which the process must complete units in order to achieve the customer demandime . It may computes as take Time = Time available/Number of units to be produced Takt time is basically a time based measure which is sometimes confused with cycle time. Cycle time is total time taken to complete the work. for any work task at a station cycle time must be less than or equal to takt time. Available time does not include luches, breakdown, and planned downtime. So to meet the demand takt time can be reduced if there is any breakdown or downtime. for example in car manufacturing industry , lets assume daily car production target is 500 in two shifts of 960 minutes. Lets not include of lunch, break so we have 900 minutes to produce 500 cars. SO takt time is : 900/500 = 1.8 minutes or 108 sec which means in every 108 seconds one car must be out form shop floor. lets assume demand is increased to 800 cars in a day in festive seasons then takt time will be reduced , revised takt time is now = 900/800 = 1.12 minutes or almost 68 sec. we have seen that takt time has been reduced as demand increased , so in every 68 sec car must be out form shop floor and any activity at a particular station which is defined must be completed before takt time. or in other words cycle time at every station should be equal or less than takt time to meet the requirement. it may be possible that we have to deploy extra manpower, processes to reduce the cycle time at station to meet our takt time. Similarly example can be seen in any industry like, foods, beverages , air conditioning, their demands fluctuates throughout the year so on forecasting bases takt itme can be increased or decreased and planning of manpower and other item can be done in advance which will be helpful in cost saving for the organization also. For example demand is not there and organization has maintained its takt time of 68 sec to deliver cars by investing on extra machines, overtime, extra manpower which is a waste for the organization as it leads to high inventory of finished good for which organization needs more space which is also a wasteful activity and loss to the organization. Lets understand with calculator: 1. Total customer: this is the daily customer demand which changes from industry to industry like automobile, four wheeler, two wheeler, heavy commercial vehicle, daily consumer goods industry, . this is a foretasted demand which is derived from its yearly plan which is based on its previous history and its upcoming plan to the market as per the market. it may vary throughout the year eg in case of icecream which is more consumed in summer time than the winter time. Same is with automobile industry where demand is more in case of festive seasons. For example we have a demand of 1000 bikes in a day. 2. Production Time : this is the time available for production for example if any industry operates in 2 shifts then it will be 2*8*60 = 960 minutes and in case of 3 shifts then it will be 3*8*60 = 1440 minutes. For above example lets suppose we have two shifts of total time is 960 minutes. 3. Break time: this time is break time for lunch, tea in shifts and to calculate Takt Time, this time excluded from production time so we assume our total break time for lunch & in two shift is 90 minutes then we have available time is only 960-90= 870 minutes. means we have only 870 minutes to produce 1000 bikes as per our example so our takt time will be : 870/1000 = 0.87 minutes or 52 sec. as now we have available time is 870 minutes. 4. Down time: this may be planned or unplanned and to calculate takt time , down time must be excluded as during this time is not used for production. So if we exclude downtime then our takt time will be reduced. Suppose our total downtime is 70 minutes so now total available time is 870 - 70 = 800 minutes to produce 1000 bikes. so revised takt time is : 800/100 = 0.8 minutes or 48 sec which is less than before , so to meet this target we have to deploy extra manpower of increase speed of line and reduce cycle time at every station to finish the defined work to match the demand. takt time changes with demand and total time availability. it is a very simple concept which gives us production stability by limiting overproduction and stabilizes the system. As we have seen in our example also it prevent us to build up inventory which is an unnecessary waste for any organization.
  3. Cost of poor quality includes any cost that would not be expended if quality were perfect. Total quality cost includes below all four cost: 1. Prevention Cost: cost incurred to prevent the occurrence of Non conformance in the future. for example: marketing, purchasing, operations 2. Appraisal Cost: cost incurred in measuring and controlling current production to ensure conformance to requirement, for example purchasing appraisal cost, operation appraisal cost 3. Internal failure cost: cost generated before a product is delivered to as a result of NC to requirements. for example rework, repair, reinspection, scrap. 4. External failure cost: cost generated after a product is delivered as a result if NC to requirements. for example: return goods, warranty claims, recall cost, penalties, lost sales. now lets see the example in the cost calculator: 1. No of defects identified internally : 20 2. Avg rework cost per defect is : 50 so total internal failure cost will be : 50*20 = 1000 3. No of defects identified externally : 10 4. Avg rework cost per defect is : 100 5. Recall cost is : 5000 so the total external failure cost will be : 10*100+5000 = 6000 So total cost of the poor quality will be sum of both internal and external failure that is 1000+6000 = 7000. No lets understand the problem with the example in automobile industry. Toyota & Lexus recalled around 1.7 million cars with deadly Takata Air bags that could explode. so for Takata total failure cost will be the sum of internal and external failure. internal failure cost is to reinspect all air bags before supply to Toyota and solve the problem and eliminate the root cause of the problem of deadly airbags. on the other hand external cost includes penalties by Toyota. Similarly cost of poor quality for Toyota is internal and external both. Internal failure cost includes rework, reinspection for all air bags and scrap in case of faulty. external cost is recall cost of all 1.7 million cars to recheck and recheck the faulty air bags. The most expensive quality costs are from non conformance detected by customer. In addition repair, replacement cost loss, any company loses the customer goodwill and their reputation is damaged when the customer relates his experience to others.
  4. A Toll Gate review, as the name suggests itself that its a check point in a DMAIC/DMADV or any six sigma project at which various team members organise a meeting and determine whether the work has been completed or as per plan and whether we have achieved our objective or not. Toll gate reviews are generally carried out at the end of each phase in DMAIC /DMADV project to check all defined objectives for the project to succeed. Toll gate review is a well.planned and standardized series of reviews at the end of each phase in which we have a set of questions and check points to proceed further. Without achieving our defined criteria we are not allowed to move to next phase. There are various tools which are used to carry out toll gate review: 1. Check sheet 2. list of Milestones 3. Project deliverable documents The toll gate review process includes a set of questions which is to be answered at the end of each phase. Following are the objectives to complete a Toll gate review : 1. Standardized evaluation of each phase before proceeding further in next phase. 2. To verify if the project reaches the expected output, whether it is completed or not 3. To validate whether the planning is good enough to face the next phase and to work as per defined standard. 4.to limit the business and project to risk 5. To make future phases easier by verifying information 6.to find out whether they have fulfilled all criteria which are defined in previous phase to go forward in next phase. 7. To give recommendations to the dicision maker whether the project can step forward or not. 8. To find out the projects output for the organisation 9. To discuss and document all the knowledge areas 10. To give awareness to the team and the organisation regarding importance of investing time and resources in a well defined planning. 11. To access the deliverables performed during the phase. 12. To give the decision makes a set of information that has a known degree of uncertainty 13. To reduce the final investment risk. This review is basically performed by a master black belt or quality council. It should also be attended by Green belt, black belt and project champion and sponsor or other member as per requirement.
  5. Regression Analysis is a technique that typically uses continuous predictor variable to predict the variation in a continuous response variable. R - Square or co-efficient of determination is used to find out how well our model fits the data points or in other words it is used to explain how good our model when compared to base model. Range of R - square varies form 0 to 1 where values closer to 0 means poor fit and values closer to 1 means perfect fit. Adjusted R - Square is used to find out how important is a particular feature to our model and to overcome the limitation of R- square as R - square can be increased artificially. it is used with multiple regression because unlike R - square , the adjusted co-efficient will increase For example: we are comparing a five independent variable model to one variable model and the five variable model has a higher r - squared. just compare adjusted R - square values to find out whether this model with five variable actually a better model or not Variable R - Square Value Adjusted R - Square 1. 70.1 71.2 2. 73.5 72.6 3. 79.5 78.5 4. 82.6 71.9 5. 85.7 70.8 In the example we have seen that Adjusted R - Squared value increases upto a certain point when the new term improves the model fit and decreases with each and every additional independent variable when the term does not improve the model fit by a sufficient amount. so we can use only three independent variable rather than five as adjusted R - square value starts decreasing after that so there will be no use to add further
  6. Nowadays artificial intelligence is on boom in every industry from automotive to service. It can affect business outcomes and can do more work in short time with accuracy than that work done manually with the help of workforce. For example in trading, share market calculations are calculated and forecasted within fraction of seconds, it will take some time if all goes manually. Similarly it can impact in automotive sector, manufacturing sector, food processing. Machine can handle more workload than humans and can deliver fast than humans if they starts to behave like humans then lot of workforce will be displaced and outcome of the business will be increased day by day and any organisation can deliver more products in market with the help of machines than manuals. Cost saving will be huge if work done by using artificial intelligence although there is need to spend more money initially to start work with artificial intelligence. Business outcome will be more accurate and precise. For example a machine is used to produce engine parts which is having many operation to. Finish the job, so by the programming in the machine, it is changing all tools automatically after every operation and a finished part with more accuracy and precision within short period of time comes out which is not possible manually. Another example in food industry of biscuits packing, sensor are there in packaging line, if there is any broken biscuit it will be sense by sensor and automatically thrown out from the packing line and ultimately customer will recieve good quality and if customers are satisfied with your quality then automatically your business will grow day by day.
  7. Lean is basically eliminating waste from your organisation. There are various tools which encourage very good scope of almost unending customization and improvements. Some of them are give below 1. Improve 5 S 2. Reduce 7 waste or reduce DOWNTIME which is a short form of 7 waste or Muda in the organisation. 3. Value Stream Mapping. 4. Work standardization 5. Heijunka 6. Kanban Pull system 7. SMED 8.Problem Solving /PDCA/PDSA 9. FMEA
  8. Control plan is a quality document which is part of PPAP and its a method for documenting all the functional elements in the process to assure quality standards are met for the desired product or output of that process. The best way to create a control plan is its development by the cross functional team, that has the understanding of the process which we are going to execute or controll. With the help of CFT, we can identify opportunities for improvement. Control plan is more than just a document, it is that plan which is created by or developed by the CFT team to control the process form input to output and ensure that the process produces quality output/products that meet the customer requirement. CFT team should consider observation/output/know-how from following to create a good control plan. We should consider process flow diagram to consider each step involved in the process to control it Consider the output and previous know -how from DFMEA Consider the output and previous know how-how from PFMEA Consider quick learning form previous similar parts, processes Do design review Knowledge of the team about the process and part or output Consider special characteristics Control plan must be living document because all the information and problem history changes throughout the life cycle of the process. We should continuously update control plan as per input form any process step or something new happened which was not there earlier.
  9. FMEA is a very effective risk analysis method and stands for Failure Modes Effects and Analysis and is a live document. FMEA is of following types: Design FMEA Process FMEA System FMEA Service Delivery FMEA This methodology is designed to identify the potential failure modes of a product or process before the problems occur or to assess the risk. FMEA can be conducted in design phase as well as existing products or services and can be updated at any point of time of analysis and that is why it is live document. The FMEA team determines the potential failure modes and then their potential effect of failure and potential cause of failure and identify single failure point which is crucial by giving rank to each failure with the help of RPN ( Risk Priority Number) RPN is calculated by multiplying of severity, occurrence and detection. On the other hand FMECA is FMEA with Criticality Analysis, and is of two types: Quantitative Qualitative To use FMECA, team must define the reliability/unreliability for each item at a given operating time identify the item's unreliability which is contributing to each potential failure mode Rate of probability of loss or severity calculate criticality for each failure mode by multiplying Item unreliability, Mode ration of unreliability and Probability of loss. Compare failure mode via a criticality matrix FMECA is supposed to be used in following conditions: to improve design of products or processes for Upping the reliability Better Quality Enhanced Safety to improve customer satisfaction for cost saving by decreasing development and design cost by decreasing warranty cost by reducing waste NVA to contribute to development of control plans, testing requirement, reliability growth analysis FMECA adds some value to the company if that company is already using FMEA. We can see that FMEA provides only qualitative information and is used in industries as " what if" method. but in this case we are not able to identify that how critical that product or process is? FMECA fulfill this as it provides quantitative information. FMECA is extension of FMEA and provides a level of criticality to the failure modes, which can be carried out in two phases, first do FMEA and then do Criticality Analysis. FMEA identifies the failure mode of a product or a process and their effects while CA ranks those failure modes in order of importance, according to severity and failure rate. FMECA does nothing but adds reliability to the failure modes. it is more suitable for hazardous control. By doing FMECA, Designer gets helps to identify the criticality of potential failure and the areas of the design that need the most attention.With the help of Criticality Matrix, we can compare each failure mode to all other failure modes with severity.
  10. Point of Use inventory, as the name itself suggests that it is the storage of raw materials/consumables at the work stations where they are used and it is one of most useful Lean Concept.With this system, we used to deliver the quantity of products you need, where you need it and when you need it. All materials and information are stored near workstation so they can be accessed more quickly by the workforce. It is one of the most efficient and economical system giving us a clarity about our raw materials/consumable which we are using is matching to our inventory or not. POUS help us reduce classic lean wastage. In our Lean Journey, we see that there are seven types of waste which are identified as TIMWOOD, Transporation, Inventory, Motion, Waiting, Over-processing, Over-production, Defects. To start the process of standardization of work at a work center first we need to address material storage locations and we should be able to quickly the benefits of POUS. Biggest waste in TIMWOOD is Transportation and Motion which is eliminated and reduced by using the concept of POUS. Transportation is a type of waste which does not add any value because it does not contribute to transforming the final products. POUS technique helps to minimize the transportation waste. Motion is also reduced by the technique of POUS. it involves the double handling, reaching of parts and stacking of parts In any factory, we can reduce non value adding activity, excess movement of material from one place to other by using technique of POUS.
  11. As the question says Y = F(x), that we need to improve inputs and improve the process to get better outputs than what got earlier. It is not possible to to let one of the two remain at a below industry average level( input or process) and focus heavily on the other one to generate excellent results. in previous question we have already seen that there can more than one x which is impacting outcome. Lets see some examples to understand that why is it not possible to let one of the two remain at below industry or standard level and focus heavily on other to get better output. Body Building in Gym: Some one has started to go Gym, no win this case outcome is a good physique and maintaining of his/her body. So this is Y in this case and to get this Y there are so many inputs and processes like diet plan, protein intake daily, exercise schedule, punctuality, not to eat fast food, Exercise start finish time, weight training. SO if he or she is having focus on only exercise schedule and timing of exercise and giving full time as per exercise plan and weight training but not having focus on inputs like not following diet plan, not proper protein as per daily requirement and having fast food, so after some time there will no proper result as desired because inputs are not taken properly although exercise schedule followed. Construction of a building: in this case our Y is the final building as per design given to the contractor. so here inputs are raw material like steel, cement, concrete, plywood, plaster, clay, paint, plastic, adobe, glass, fibre and much more, on the other hand there is a process to finish the building construction from starting of basement to final paint. in this example suppose we have focused heavily on inputs or raw materials but we are not focusing on the process how to construct the building, not seeing how the concrete is being made, how the raw material is used, how to proceed to finish the building. if we do not focus on process first impact that we will not get our desired building as per design within time except the wastage of time and raw material. Production of a Car: in this example our Y is final product of a designed car as per design and standard. Inputs are raw material like tyre, Engine, body frame, plastic parts, head light, handle, dashboard, floor mat, doors, glass, power-train etc. to produce a car with all input raw material there is process defined at every section and department. each department has its own process to process production of car from welding of body frame to paint to final assembly of child parts. for example we do focus on input and its quality material used to produce a car but following poor performance processes and not following exact process so at the end after using good quality parts we will not be able to produce a good quality car as per designed standard. Farming: it is growing of crops by people for food and raw material. in this case our Y is thew final crop which is used as either food or other raw materials like flowers, nursery plants manure etc. It is part of agriculture. in this case our inputs are seeds, pesticides, fertilizers, water. to get a better output for example 50 metric tons of wheat there is a process that should be followed. on what time water to be given, what time plantation of seeds to be done, at what time pesticides and fertilizers to be used, crop rotation or we are cultivating same crop of wheat again and again . so even if we use good quality of all inputs like, seeds, fertilizers, water etc but do not follow exact process of giving water, plantation of seeds and time to give fertilizers we will not get desired output of 50 metric tons of wheat. So from above examples, we can say that we have to focus on improvement of both input and process. we cant not ignore anyone of them to get better output
  12. DMAIC approach six sigma methodology provides a systematic approach to solve problems. This approach consist of proven tools and methods which applied correctly helps us to determine a desired outcome. during this approach the concept of Y= F(x) plays a very important role and it has different role phase by phase. The term Y= F(x) , means Y is function of x illustrates that output Y is result of drivers x in process. let us see phase by phase importance and role of this concept Y = F(x) Define Phase: in define phase we focus on Y, the outcome or our project Y and how to measure it . Various tolls are used in define phase to get a clear understanding of the project Y. main outcome in this phase is Project Charter which defines exactly what the business problem is . To get Y in this phase we use following tools as our input which clearly relates the project Y. Some of the tools are: 1. VOC 2. SIPOC 3. CTQ's Tree 4. AS-IS Process mapping 5. Kano Model 6. Stake Holder Analysis Measure Phase: in this phase we also focus on Y and main outcome is Current or Baseline performance. We measure X's and Y and prioritize potential X's. There are various tools which are used to prioritize potential X's and establish a relationship between X's and Y's. Some of them are given below: Fishbone Analysis Correlation data collection plan Gage R 7 R study FMEA Histogram MSA Probability Distribution Pareto Analysis Process Sigma Control Charts Regression Analysis ANALYSE Phase: This tool is simple and is used to test relationship between X's and Y's and to validate root cause to identify Critical X's. By using some tools we get to know the critical X's which are mostly impacting Y's. an some of the tools used in this phase are below; hypothesis Testing Regression Process capability Analysis Scatter Diagram Reliability modelling Design of experiments IMPROVE Phase: in this phase we focus on addressing important X's to improve our Y. Some of tools are given below which are used in this phase: Design of experiment PERT technique Fault Tree Analysis Design of experiment MSA Risk Analysis Taguchi Design Value stream mapping Control Phase : in this phase we monitor Y and important X's over a period of time. some of the tools are given below which are used in this phase to monitor : 1. SPC 2. MSA 3. SOP's 4. Run Charts 5. Control Plan
  13. SWAG is a part of terminology. its a consensus driven guess which is based on small amount of factual evidence.In any organization at some point of time we rely on SWAG's in decision making process which is actually a gut feeling and based on past experience but not all evidence. Its a risk taking decision but not avoidable because now a days hard deadlines are their to finish any project or any work. Normally during planning phase people have sufficient time for problem solving as they have proper time for data collection and its analysis and based on analysis they give decision regarding any problem or any solution to work upon. A decision based on SWAG and a reasonable decision both lies on same line. There is very thin line which is blurry to differentiate them on the same line. Because all these decisions are based on imperfect decision and gut feeling of decision makers. as per their experience they used to take decision to work for better result. for example in a tier 1 or tier 2 company which are small scale in which people wants to transfer products from one machine to another to eliminate wastage of time and increase productivity of line but they dont have any method to transfer except manually and for automation needs lot of money to spend which is out of budget . so decision makers decided to design and make a system which works according to gravitational effect and with the help of rollers they designed some trolley which transfer products automatically from one machine to another so by taking this decision it was not well planned but worked well to eliminate their losses.
  14. Time Series is a sequence of measurements of some quantity taken at different time or at equally spaced intervals. Time series models have following components: 1. Long term trend. 2. Cyclical effect 3. Seasonal Effect 4. Residual or error effect Time series is of high relevance and has two goals which are given below: 1. Identifying the nature of phenomenon which is represented by the observation 2. Forecasting means predicting the future values based on time series in present scenario the world is getting more and more connected, instrumented and smart intelligent and different sensor with latest technologies and other technical support which is collecting thousands of measurements every seconds thus leading to an enormous amount of data being produced on daily basis. In order to get best result from this data we should manipulate in an efficient manner. Time series analysis plays a very important role. it has so many application out of which some are below: Forecasting: To predict future values for the measure based on the previous data. for example just want to know sales of automotive vehicles in coming financial year based on previous sales data. Cross -Correlation: used to find out how changes on one time series with other time series behavior. for example effect on sales of ice cream, cold drinks as the temperature or summer increases, effect on stock value of two different companies. Auto - correlation: it is like cross -correlation where an input in a time series correlates it with itself at a different time to discover periodicity. for example accuracy of parts over a period of time at a particular location in fixture or temperature in a given location may be repeated many times in past. Similarity: it is used to measure distance between two or more time series. for example ECG waves chart: we can check if a 5 sec or 10 sec long shape already happened or not in past. Anomaly Detection: it is the ability to discover statistical anomalies automatically in the signal based on past vales. There is a need to smooth the data if there is any irregularity or any unwanted component found while recording the data from signal. and these unwanted components generally called' noise" , so it is necessary to separate 'noise' from 'signal'. Below is some common techniques to smooth the data: Moving average of size n Central moving average Weighted moving average Exponential moving average Some times we should not rely on time series analysis for forecasting. This is the case when there are some outlier or any seasonal pulse or any sequential set of outlier with almost same magnitude or same trend. all these are interrelated as A pulse is the difference of a step on the other hand a step is the difference of the time trend. these outliers are not well fitted in the available model. in these cases we must check the source of data that may be faulty or have any error in its accuracy. so if we go time series analysis of a inaccurate date then it might be not useful and we cant rely on its forecasted value so we must have accurate data otherwise we cant rely on time series analysis. we must adjust such points or occurrences as majority of forecast techniques are based on average and any arithmetic average is very sensitive to the outlier value so if there is any outlier it means average is shifted due to its sensitivity so we should not rely on that analysis .
  15. For any process or department we must know and highlight abnormal conditions which needs to to eliminated. And to recognize abnormal, it is must to understand what normal is. Nominal condition defines standard of process on which it s operating within acceptable limits. It is a very important concept and we have to understand better what nominal condition is. The first thing to define Nominal condition is to establish acceptance limits. For example, we know that parts are producing from different tools which have different rate of production or has different SPM(Strokes per minute), A part of high SPM of 12 will be produced 720 units in one hour on the other hand a part of low SPM of 8 will be produced 480 units only in one hour. SO we should define limit because at the end of that day we are knowing that we will achieve our target . other example for the same is rules change by government in Engines from BS4 to BS 6 before it was BS 3, every time they are giving some acceptable limits for emission control so that companies do modification accordingly and set their target and range accordingly during production. The second important key to define nominal condition is to be able to measure it in process metric. For example machine has a capacity to produce 4000 parts in eight hour and so every hour it should finish 500 parts, so if you are knowing that at particular time you are supposed to finish 2000 parts but you are behind that target it means you are out of your Nominal condition. One should be able ot measure the condition real time e.g. at the mid hour mark - what is the count which gives you the opportunity for correction. It is hard to correct when the measurement cannot be real time (or with lagging measurement) The most common challenge is to maintain it for a long time. Mostly people think that it is one time activity and left after achieving it, but actually it is day to day activity and there are chances of continuous improvement. Like Toyota has implemented it long time back but still they are continuously working on it to improve it further and to maintain it further. Mostly people think that this can be used in manufacturing facility only but it can be used in any department of the company. There may, however be a lot of resistance to such a change.
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