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Process Capability (Cpk and Cp) The operations manager of an insurance claims- processing department wants to determine the claims-processing capability of the department. Claims usually take a minimum of four days to handle. The company has a commitment to handle all claims within 10 days. On the average, claims are processed in eight days and processing has a standard deviation of one day.
a. Compute Cp and Cpk for the claims-processing department. Based on these computations, should the claims department improve its process?
b. Using the same data, recompute Cpk, but use an average claims-processing time of seven days instead of eight days.
c. Using the original data, recompute Cpk, but use a standard deviation of 2/3 of a day. Which change made the most improvement—the change in mean in part b or the change in standard deviation? Can you explain the results?
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