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Clerks at Lotsa Data Systems key in thousands of insurance records each day for a variety of client firms. The process is in control but CEO Donna Lotsa wants to be sure that at least 99.73% of the random variation in the data entry process is included in its control charts' control limits. Samples of the work of 20 clerks are shown in the table below. Lotsa examines 100 records entered by each clerk and counts the number of errors. She also computes the fraction defective in each sample.
Sample Number
Number of Errors
1
6
11
2
5
12
3
0
13
8
4
14
7
15
16
17
18
9
19
10
20
TOTAL
80
a. What is the appropriate number of standard deviations to include in calculating the upper and lower control limits?
b. What are the upper and lower control limits?
c. Illustrate/state whether the process is in statistical control or not.
What is the method of monitoring and reviewing in risk management?
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