Ethics in Engineering Introduction - A production line engineer, Shane, checks e

Question

Ethics in Engineering

Introduction - A production line engineer, Shane, checks every chip for quality control. His workers find errors approximately every 150 chips. Either the defective chips must be sent back for repair or they must be axed (thrown away). The manager, Rob, has mandated that workers must axe all defective chips. Rob walks over to Shane's line and declares, "Why some lines sink more dollars into a chip thats failed, I dont understand. We only make 25 cents off of each chip anyway! Spending an additional $2.00 per chip will only be more money down the drain. Shane, in our line of work we cant afford to flush money down the toilet."

The following afternoon, Rob calls a meeting in his office. Rob informs Shane, that Shane's line is axing to many chips. "One chip every hundred and fifty is unacceptable! This is becoming a substantial cost to the company. I believe that it would be more beneficial be more beneficial to allow defective chips to go out the door." Shane asks, "What about the defective chips? Won't customers complain?" Rob replies, "yeah, yeah, but thats not your problem, the compnay has a return department that will replace them as customers complain." Rob futher estimates that allowing defective chips on the market will yield a $416,000 profit for the company.

Facts

The line produces 100,000 chips per year, every chip is purchased, chips cost about $9.00 to produce, chip testing costs about $4.00 per chip, chip repair (manpower and material) is about $2.00 per chip, this repair cost includes re-testing, profit eper chip is $0.25 after testing, there are fifteen full-time employees working under Shane, two part-time employees work under Shane's supervision

Shane's manger, Rob, has been with the company for about 7 years, Shane has been working under the same manager for several years and has had relatively good relations with Rob.

Addition information regarding the Shane's line:

The engineer's line consists of the final inspection between the bond wires, which attach the chips to the prongs and spot plots (the prongs that protrude from the final product), just before the chips are encased in molding compound for final packaging. You may assume that all defects are caused by faulty bond wire attachment and not by any problem with the chip itself; because the chips are tested in the preceding phase before the bond wires were attached.

Questions on Ethics and Professionalism

1. What issues are involved in following Rob's recommedation?

2. Is it acceptable to follow Rob's suggested course of action?

3. If Shane has a differing opinion, how could he present his case to Rob?

Please give a detailed explanation for each part and utilizing numbers where they may apply. Thank you!

Explanation / Answer

1. The issues involved in following Rob's recommendation are:

a) Customer Trust:By knowinkly selling defective chips, Rob is decreasing customer trust in firm's offering. This could have a riplle effect as one bad customer review can put off many potential customers in not going with their purchase. Also, existing customers would feel cheated which would also keep them away from the firm.

b) Brand Failure:This could seriously decrease firm's other offerings,if any, with other customers.They would get to know about this issue which would lead to search of alternatives.

c) Safety:By using these chips, customers could have bigger problems as they believe of brand reputation. Sometimes, this could loss of huge financial/Human loss.

2.Rob's suggestion is considering economict cost. Presently, firm is barely able to remain in profit due to its stringent quality control. However, economic cost always contradicts with welfare cost.Firms while increasing their revenue forget that they live in society. Hence a respectable firm should prioritize welfare over financial cost.

3. Shane has to decide between financial & welfare cost. If possible, he should find a creative middle way in which these competing obligations can be satisfied. He could say:

a) Manager's estimates of the profits resulting from shipping out the defective chips were for a bestcase
scenario.

"Best Case" - no returns of defective chips
Not test any chips: 100,000 x $4.25 = $425,000

Therefore, it can be asserted that actual profits should be less.

b) By repairing the chips, the loss is significantly minimized in comparison to discarding chips: the line is still profitable and the company's reputation for quality could help increase the overall corporate value. So a creative middle way would be for the engineer to suggest repairing all chips, and present his calculations to his boss to justify this suggestion.

"Worst Case" - all defective chips are returned
To find the number of chips which actually generate profit:
100,000 - 667 returns = 99,333 - 667 replacements = 98,666 chips to generate dollars
Profit from "satisfied" customers: 98,666 x $4.25 = $419,330.5
Original profit on the 667 returned chips: 667 x $4.25 = $2,834.75
Profit from replacement chips: 667 x -$9.00 = -$6,003
Net profit: $419,330.5 + $2,834.75 - $6,003 = $416,162.25

This solves the problem of the lines losing money, turns a reasonable profit.

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