sensitive label waste
We plan on implementing a system which will minimize the waste
per order and increase revenue on each order according to the quantity
and the depth of the label. We have discussed in detail with the
management of Kieran Label Co. [KLC] what areas of production can
be improved in order to minimize waste. In addition to touring the
manufacturing facility we were able to witness various hands on
demonstrations and a variety of processes in order to help us gain
further knowledge of the tasks on hand. This process of meeting
with management led to several discoveries of operational processes
at KLC which could use improving. We have focused our attention
on the overrun for the labels at the time of production.
Noticing the effect wasted material has on the profit margin,
either overrun or shortage, we have devised a simple yet effective
formula driven charting system to help estimate the amount of overrun
necessary for each customer order. The process of creating this
charting system consisted of gathering information from management,
in particular the shop floor manager, who was instrumental in the
placement and organization of the chart itself.
The current policy is to overrun 10 percent of the placed order
plus an additional 2 percent to account for any unusable labels
and to account for errors committed by the rewinding machine operators.
We paid close attention to the rewinding machines. These machines
are a valuable resource and need to be operated by a trained professional
skilled and strategic. These machines save the company thousands
of dollars per year by reducing the amount of production time and
increase accuracy for every order rewound. It is at this part of
the process where the operator must pay close attention to the numerous
tasks on hand, our system requires these operators to be trained
because they are implementing one additional task.
The rewinding machine operator receives the job ticket with the
master rolls from the press operator, who, along with the equipment,
is located at the other side shop floor. The job ticket will include
the customer specifications for the order along with the requested
amount to be on each roll. This is the basis for our methodology
and how we calculated our formula. Due to the close relationship
between the number of rolls and the waste, the company is losing
money on a per order basis when they implementing the current policy
which is to produce 2 percent over requested. This current policy
has proven to be sufficient, however, not cost effective. With the
current training provided the rewinding machine operators are able
to stay well within the 2 percent of allowable overrun. Our goal
is to use a chart which will customize each orders overage amount,
instead of using an arbitrary 2 percent allotment for overage.
Our research has shown that the month of May is an average month
for order receipts and to remain consistent in proving our results
we have continued to use averages as a basis of calculation. In
an industry which uses global standards and policies, we are confident
in using averages for our statistics. We have created a confidence
interval for a random sample of orders in the month of May. Our
findings are consistent with our initial assumption that if Kieran
Label Co. implements our new charting system they can save between
[$$$$$$-$$$$$$] with 99.7 percent confidence. See appendix for specific
data related to this information.
The sample was generated by randomly selecting orders using simply
the quantity and the depth of label in an average month. By using
Excel to create standard deviation and the sample mean we were able
to plug them into the aforementioned formula and say with 99.7 percent
confidence [ z-value at 3] that the company on average will spend
[$$$$$] compared with [$$$$$$] using their old policies and procedures.
Kieran Label Co. has decided to implement our new procedure and
has begun testing it on several smaller jobs, in doing so they have
noticed that with smaller jobs the old policy of 2 percent overage
was the same as the new procedure proposed. Due mainly to the fact
that smaller jobs are harder for the rewind machine operators to
be more exact in application of their process. As mentioned before,
the smaller job sizes are lighter and are more likely to be rewound
with more overages on each roll than if it were a larger order size.
We recommend that Kieran Label Co. implements our new procedure;
however, it is most cost effective to stay within the range listed
in our confidence interval. This way they will be 99.7 percent confident
that they will be reducing the amount of waste per order required
We conducted a random sample of fifty orders received in May. Our
data analysis has the following statistics:
Random Sample of Orders [May 04]
Standard Error 110,173
Standard Deviation 779,039
Sample Variance 606,902,303,367
Skew ness 5
Confidence Level(99.7%) 344,108
Confidence interval Equation
Y ± z × s/vn =
Y = the sample mean 
Z = 3 [ z-value is determined by the confidence interval, 99.7%
on the table]
S = sample standard deviation 
n = sample size 
263100 ± 3 × 779039/v50
The WT-25LC features a highly refined photoelectric counting system.
This makes it ideally suited to the pharmaceutical roll label printing
and packaging industries where label count reconciliation is required.
For simple operations, the counting system can be set to operate
in the length counting mode.
1. Bill Walker, president of Kieran Label Company
2. Heizer, Jay; Render, Barry. Principals of Operations Management.
Fifth Edition. Pearson Prentice Hall. 2004
3. Lou, Sheldon. Statistics 123. Pearson Custom Publishing. 2003
4. Web Techniques. http://members.primary.net/webteq/index.html
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