TABLE 3.6 | SAMPLE DATA FOR RED BARON AIRLINES Samples Number of Late Planes in Sample of 300 Arrivals and Departures 1-10 3 8. 11 7 12 1 8. 11-20 3 7 9. 12 5 4 13 4 21-30 12 10 6. 2 8 2. 4. 2.
Breakeven Analysis
Break Even Analysis is a term used in business, cost accounting and economics. It refers to a point where the total cost incurred becomes equal to the total revenue earned. Break Even Analysis determines the number of units to be sold to earn the revenue required to cover the total costs. Total cost is a sum total of fixed and variable costs.
Process analysis
The term process analysis can be defined as breakdown of production process into different phases that converts inputs into output. A series of routine activities are incorporated using organizational resources with a view to achieve operational excellence.
Red Baron Airlines serves hundreds of cities each day, but
competition is increasing from smaller companies affiliated
with major carriers. One of the key competitive priorities is
on-time arrivals and departures. Red Baron defines on time as any arrival or departure that takes place within 15 minutes
of the scheduled time. To stay on top of the market, man-
agement set the high standard of 98 percent on-time per-
formance. The operations department was put in charge of
monitoring the performance of the airline. Each week, a ran-
dom sample of 300 flight arrivals and departures was checked
for
of arrivals and departures over the last 30 weeks that did not
meet Red Baron’s definition of on-time service. Using three-
sigma control limits based on 98 percent on time arrivals
or departures, what can you tell the management about the
quality of service? Can you identify any nonrandom behavior
in the process? If so, what might cause the behavior?
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