Starlight Homes Inc. is a building contractor specializing in upscale homes in t
ID: 461224 • Letter: S
Question
Starlight Homes Inc. is a building contractor specializing in upscale homes in the Southwest. Before each new home is sold, Starlight conducts a final inspection of the home and repairs any defects. In addition, Starlight receives a “punch list” of defects (to be corrected) compiled by the buyers following the sale. Ricardo Alvarez, Starlight’s lead supervisor, has concluded that even if it should cost more to do the work right in the first place, it will be a lot cheaper than going back later to fix the defects. In an effort to reduce costs, improve the quality of Starlight’s homes, and reduce the number of complaints after the sale, Ricardo has assembled data from his final inspections and the punch lists for the last 20 homes sold. These data are listed in the following chart:
Defect Type
Occurrences
Defect Type
Occurrences
Damaged Walls
13
Doors
14
Exterior Paint
5
HVAC
11
Plumbing
33
Roof
3
Caulking
28
Masonry
2
Electrical
25
Interior Paint
61
Cabinetry
12
Landscaping
16
Woodwork
46
Fixtures
7
Construct a Pareto chart to illustrate the defect types by number of defects. Which two defect types appear to be the most significant? Should Ricardo focus his attention on these two categories of defects? Ricardo decided to stratify the Pareto chart by cost before making any decision. His bookkeeper developed the average cost per repair event per category. The data are shown here: ( / 5).
Average Cost per Repair Event
Defect Type
Average Cost
Defect Type
Average Cost
Damaged Walls
$126
Doors
$11
Exterior Paint
25
HVAC
110
Plumbing
78
Roof
72
Caulking
7
Masonry
290
Electrical
74
Interior Paint
4
Cabinetry
88
Landscaping
34
Woodwork
5
Fixtures
31
The second-level chart developed from these numbers should show Ricardo which two or three defect types are the most significant in terms of cost, enabling him to put his efforts where they will do the most good. What are they? Was Ricardo justified in going to the second level (of stratification) before making a decision on where to focus his efforts? Why? ( / 5).
Defect Type
Occurrences
Defect Type
Occurrences
Damaged Walls
13
Doors
14
Exterior Paint
5
HVAC
11
Plumbing
33
Roof
3
Caulking
28
Masonry
2
Electrical
25
Interior Paint
61
Cabinetry
12
Landscaping
16
Woodwork
46
Fixtures
7
Explanation / Answer
Rearranging the data in the decreasing order of number of occurrences for Pareto chart is as follows:
Top most defects are interior paint and woodwork
Total cost for each type of defects are calculated as follows:
Now the top most defects on the basis of total costs are Plumbing and Electricals. Pareto diagram is as follows:
Keeping into view the cost aspects it is justified to have second analysis and concentrate on plumbing, electrical and damaged walls that in turns take care of other defects of interior paint and woodwork as identied earlier.
Defect Type Occurrences Comulative count Comulative % Interior Paint 61 61 22.10 Woodwork 46 107 38.77 Plumbing 33 140 50.72 Caulking 28 168 60.87 Electrical 25 193 69.93 Landscaping 16 209 75.72 Doors 14 223 80.80 Damaged Walls 13 236 85.51 Cabinetry 12 248 89.86 HVAC 11 259 93.84 Fixtures 7 266 96.38 Exterior Paint 5 271 98.19 Roof 3 274 99.28 Masonry 2 276 100.00Related Questions
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