Kilgore Manufacturing Case Report | | |

Kilgore Manufacturing, Inc Case

Background – Kilgore Manufacturing, Inc.:
Kilgore Manufacturing, Inc. is a small manufacturing company based out of St. Louis area that is looking to expand their business. They operate within the aerospace industries that are currently bidding on new contracts related to the strategic defense initiative. Currently, they are betting against three different companies for a contract to produce R-7 relay switches. Whoever has the highest bid while producing over the limit amount of switches will win the bid. If awarded the contract a quota of 600 switches must be met each day, if not a $5000 penalty will be accessed. The companies’ usual profit margin is $3.80 per relay switch.
KMI’s goal is to determine whether they should implement the new or the old R-7 production process. Additionally, what is the minimum daily production level needed to produce a profit $1000 per day.
Analysis:
Recently, based on a suggestion from a plant worker Kilgore manufacturing changed their production process. The original method produced an average of 635 units with a standard deviation of 40. Their lowest production in a day was 494 and highest was 768. They did a 60 day trial run using the new method to determine if indeed it was a more efficient process.
See Figure 1 below with the daily results of the 60 day trial:

New Method Figure 1

As predicted the new method did start off slow due to the steep learning curve but starting month 2 (last 30 days) the production numbers were higher with a lower standard deviation.
See actual results below (Figure 2) for full 60 day cycle:
Figure 2: New Method – 60 day period
Mean – 634.9
Standard Deviation – 49.28

In the above histogram we can see the spread of the unit production from the new method. Also, we noticed the mean was almost identical