Design experiments to test cause-and-effect relationships in business processes, business & finance homework help

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"One-factor-at-a-time (OFAAT) and Design of Experiment (DOE)"

  • Per the textbook, trying to understand factors that impact the outcomes of business process is an important aspect of improving business operations. Conventional wisdom plans experiment one-factor-at-a-time (OFAAT). Compare and contrast the main advantages and disadvantages of OFAAT and DOE and select the approach (e.g., OFAAT or DOE) that you would use in order to obtain effective business process. Provide a rationale for your response.

Case Study 2: Improving E-Mail Marketing Response

Due Sunday

A company wishes to improve its e-mail marketing process, as measured by an increase in the response rate to e-mail advertisements. The company has decided to study the process by evaluating all combinations of two (2) options of the three (3) key factors: E-Mail Heading (Detailed, Generic); Email Open (No, Yes); and E-Mail Body (Text, HTML). Each of the combinations in the design was repeated on two (2) different occasions. The factors studied and the measured response rates are summarized in the following table.

 Table: Improving E-Mail Response Rate  Run	Heading	Email Open   Body	           Replicate           Response Rate 1	Generic		No	         Text		1	            46 2	Detailed	No	         Text		1	            34 3	Generic		Yes	         Text		1	            56 4	Detailed	Yes	         Text		1	            68 5	Generic		No	         HTML		1	            25 6	Detailed	No	         HTML		1	            22 7	Generic		Yes	         HTML		1	            21 8	Detailed	Yes	         HTML		1	            19 1	Generic		No	         Text		2	            38 2	Detailed	No	         Text		2	            38 3	Generic		Yes	         Text		2	            59 4	Detailed	Yes	         Text		2	            80 5	Generic		No	         HTML		2	            27 6	Detailed	No	         HTML		2	           32 7	Generic		Yes	         HTML		2	           23 8	Detailed	Yes	         HTML		2	           33

Write a two to three (2-3) page paper in which you:

  1. Use the data shown in the table to conduct a design of experiment (DOE) in order to test cause-and-effect relationships in business processes for the company.
  2. Determine the graphical display tool (e.g., Interaction Effects Chart, Scatter Chart, etc.) that you would use to present the results of the DOE that you conducted in Question 1. Provide a rationale for your response.
  3. Recommend the main actions that the company could take in order to increase the response rate of its e-mail advertising. Provide a rationale for your response.
  4. Propose one (1) overall strategy for developing a process model for this company that will increase the response rate of its e-mail advertising and obtain effective business process. Provide a rationale for your response.

Your assignment must follow these formatting requirements:

  • Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
  • Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

The specific course learning outcomes associated with this assignment are:

  • Build regression models for improving business processes.
  • Design experiments to test cause-and-effect relationships in business processes.
  • Use technology and information resources to research issues in business process improvement.
  • Write clearly and concisely about business process improvement using proper writing mechanics.

Homework Assignment 7

Due Sunday

The experiment data in below table was to evaluate the effects of three variables on invoice errors for a company. Invoice errors had been a major contributor to lengthening the time that customers took to pay their invoices and increasing the accounts receivables for a major chemical company. It was conjectured that the errors might be due to the size of the customer (larger customers have more complex orders), the customer location (foreign orders are more complicated), and the type of product. A subset of the data is summarized in the following Table.

Table: Invoice Experiment Error Customer Size	Customer Location	Product Type	Number of Errors -	-	-	15 +	-	-	18 -	+	-	6 +	+	-	2 -	-	+	19 +	-	+	23 -	+	+	16 +	+	+	21 Customer Size: Small (-), Large (+) Customer Location: Foreign (-), Domestic (+) Product Type: Commodity (-), Specialty (=)

Reference: Moen, Nolan, and Provost (R. D. Moen, T. W. Nolan and L. P. Provost. Improving Quality through Planned Experimentation. New York: McGraw-Hill, 1991)

Use the date in table above and answer the following questions in the space provided below:

  1. What is the nature of the effects of the factors studied in this experiment?
  2. What strategy would you use to reduce invoice errors, given the results of this experiment?

Unformatted Attachment Preview

1 2 3 4 5 6 7 8 Heading (x1) Generic(-) Detailed(+) Generic(-) Detailed(+) Generic (-) Detailed(+) Generic(-) Detailed(+) sum+ sumave + aveeffect 163 147.5 40.75 36.875 3.875 Run b0 = b1= b2= b3= b4= b5 = b6= b7= Email Open(x2) No(-) No(-) Yes(+) Yes(+) No(-) No(-) Yes(+) Yes(+) 179.5 131 44.875 32.75 12.125 Body(x3) Text(-) Text(-) Text(-) Text(-) HTML(+) HTML(+) HTML(+) HTML(+) x1 x2 + + + + x1x3 + + + + 101 168 152.5 209.5 143 158 25.25 42 38.13 52.375 35.6 39.5 -27.125 6.38 -1.38 x2x3 + + + + R Rate R Rate x1x2x3 1 2 Ave RR SD RR 46 38 42 5.656854 + 34 38 36 2.828427 + 56 59 57.5 2.12132 68 80 74 8.485281 + 25 27 26 1.414214 22 32 27 7.071068 21 23 22 1.414214 + 19 33 26 9.899495 126 185 31.5 46.1 -15 145.5 165 36.375 41.25 -4.875 77.625 1.9375 6.0625 -13.5625 3.1875 -0.6875 -7.3125 -2.4375 Regression Model is y = b0 + b1x1 + b2x2 + b3x3 + b4x1x2 + b5x1x3 + b6x2x3 + b7 x1 x2 x3 y = 77.625 + 1.9375 x1 + 6.0625 X2 -13.5625 x3 + 3.1875 x1 x2 -0.6875x1x3 -7.3125 x2x3 - 2.4375 x1 x3 x3 Graphical Analysis Most highest response is detailed, open email, and text. WEEK 8 HOMEWORK Table: Invoice Experiment Error Customer Size + + + + Customer Location + + + + Product Type + + + + Number of Errors 15 18 6 2 19 23 16 21 Customer Size: Small (-), Large (+) Customer Location: Foreign (-), Domestic (+) Product Type: Commodity (-), Specialty (+) Customer Size effect 2 Customer Location effect 7,5 Product Type 9,5 Size x Location Effect average errors (large) 16 average errors (small) 14 average errors (Foreign) 18,75 average errors (domestic) 11,25 average error (Commodity) average error (specialty) 10,25 19,75 + + + + 1,5 Interactions Size x Product Effect + + + + 2,5 Product x Location Effect + + + + 5 WEEK 8 - LECTURE NOTES USING PROCESS EXPERIMENTATION TO BUILD MODELS I. STATISTICAL DESIGN OF EXPERIMENTS A) ONE-FACTOR-AT-A-TIME EXPERIMENTATION 1) In this approach each process variable is studied individually by varying that factor and measuring the response, while holding all other variables constant. This is repeated for each variable. 2) A key assumption is that the process variables function independently of each other. In reality, significant interactions are often found and are what make some process effective. As a result, this method performs poorly in the presence of interacting variables. 3) Another limitation is that it takes a long time to test all the variables when you test them one at a time. B) THE STATISTICAL APPROACH 1) Statistical models are developed by quantitatively measuring the relationship between one or more process variables and the process responses. This is more effective than testing one factor at a time and it minimizes the number of tests required. 2) Some of the reasons for the success of this approach: a) Increases the chance of identifying key drivers b) Provides a systematic approach to testing c) Enables collection of quality data d) Evaluates a large number of variables e) Controls nuisance variables f) Produces quantitative estimates of effects g) Identifies interaction effects h) Measures experimental uncertainty i) Enables effective and efficient use of data C) EXAMPLES OF TEST STUDIES 1) Chocolate Milk Study a) Test Design To find the optimum combinations of chocolate cream and thickness, a 2X2X2 factorial design was use (See page 275) b) A total of three experiments were run, with middle levels being the starting point. c) The results are indicated in the table on page 275. 2) Plastic Parts Case Study a) The defect rate of molded plastic parts was running around 1.7% and needed to be reduced. b) Four experiments were run. Each run consisted of a 3X3 factorial design for temperature and pressure. Each of the four experiments involved a different combination Raw material (A or B) and Process (Old or New). c) The results are indicated in the tables on pages 278 and 279. d) Three key points resulted from these experiments: i) The iterative nature of experimentation is evident. ii) It illustrates the power of the factorial design iii) The factorial design does an effective job of of sampling the experimental region. II. REVISED STATISTICAL APPROACH TO EXPERIMENTATION A) NEW STATISTICAL APPROACH - an iterative approach Hypothesis A Design A Data A Analysis A Hypothesis B B) THREE MAJOR EXPERIMENTAL ENVIRONMENTS 1) Screening - This is the early stage of the design, with many potential variables to study. a) Which variables have the largest effects? 2) Characterization - We are working with fewer variables which had the largest effects from the screening stage. 3) Optimization - We are working with 2 to 6 variables to create s prediction equation to help identify the optimum operating conditions. (See pages 280 and 281) C) PLANNING TEST PROGRAMS 1) The first step is to obtain a clear statement of the problem. This includes the problem, questions needing answers, available resources and the time frame 2) Design the program based on the information provided 3) Plan and conduct the experiment 4) Analysis of the results of the experiment 5) Reporting and discussing results D) DESIGNING THE EXPERIMENT 1) The first step is to agree on overall objective 2) Identify the responses (y values) or measures of performance 3) Identify the process variables (x values) that appear to have the greatest effects on the results. Usually 2 or 3 levels of the variables are sufficient. 4) The size of the experiment depends on amount of desired replication and the time and resources available for experimentation. 5) The degree of randomization is important (See page 286) 6) Determine the method of data collection. What software to be used? III. CASE STUDIES A) TWO-FACTOR EXPERIMENT (Page 287) 1) This is a two-level factorial design with 5 replicates per group. 2) The concept of interaction effects is very important (See page 290) 3) Regression analysis (See Table 7.8 page 290 and 292) The analysis of factor effects and the regression analysis give identical results. Regression analysis is more useful when the factors are continuous quantitive measures such as time and temperature. B) THREE FACTOR EXPERIMENT (Page 293) 1) This is a 3 factor factorial design with 2 levels for each factor and 2 replicates for each group. (See page 297 for details of the process) 2) As the number of factors or number of levels increases, the total size of the experiment increases exponentially. As a result, when the number of factor levels is large the number of factors studied tends to be small, and vice-versa. IV. BLOCKING, RANDOMIZATION AND CENTER POINTS A) BLOCKING 1) Experiments are conducted in blocks to eliminate the effect of extraneous variables such as time effects (hour, day, week or season), and location effects (different sites, different machines) 2) The effect of the blocking variable is of little interest, but it must be taken into account for the results of the experiment to be valid. (See discussion on page 301) B) RANDOMIZATION 1) If we know the factors that might cause extraneous variation, we can remove their effects by blocking. To protect ourselves against other extraneous factors that are unknown, we use randomization. 2) There are two main types of randomization: complete and restricted. Complete randomization is the preferred method when practical. (See page 302) C) CENTER POINTS 1) Center points are used in response surface experiments when it is of interest to detect and quantify curved response functions, by using 3 or more levels. 1 2 3 4 5 6 7 8 effect Avg 1 2 no = yes = + Gen = 1 NO = 1 text = 1 head open body A B C 1 1 1 2 1 1 1 2 1 2 2 1 1 1 2 2 1 2 1 2 2 2 2 2 -37 -48.5 108.5 -18.5 -24.25 54.25 det yes text 131 209.5 179.5 101 AxB 1 2 2 1 1 2 2 1 25.5 12.75 1 2 3 4 effect Avg. regress. script train A B NO NO Yes NO NO Yes Yes Yes 25.6 36.4 12.8 18.2 6.4 9.1 A x B int. yes no no yes Results 10.8 15.2 20.6 41.8 16.8 8.4 4.2 AxC 1 2 1 2 2 1 2 1 -5.5 -2.75 BxC 1 1 2 2 2 2 1 1 -58.5 -29.25 126 184.5 AxBxC 1 2 2 1 2 1 1 2 19.5 9.75 Avg. 42 36 57.5 74 26 27 22 26 rep. 1 46 34 56 68 25 22 21 19 rep. 2 38 38 59 80 27 32 23 33
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SURNAME 1

Student’s Name
Professor
Course
Date

Date One-factor-at-a-time (OFAAT) and Design of Experiment (DOE)

The Design of Experiment (DOE) proactively experiments the whole process to obtain
high-quality data. DOE examines the ideas about cause-and-effect relationships. It defines how
the experiments should be done, the necessary changes to be made, the data should be collected
and how to analyze data in order to build the model. The main advantage of the DOE analysis is
that it provides a solution and information about the space around the solution. This helps
improve the design of the process or change some part so as to improve the entire process. On
the other hand, DOE analysis results need to be examined to make sure that the results are
correct. If they are incorrect, the range of input variables needs to be changed, and then rerun the
experiment (McDaniel, William and Bruce Ankenman 64-138).

With OFAAT, each process variable is studied separately by varying the variable, x, and
measuring the response, y, while holding all other variables constant. The main advantage of
OFAAT analysis is that once you find the factor that causes variances, you can alter the
procedure of that factor instead of the whole process. The main disadvantage is that it takes a
long time to test each variable, it makes multiple assumptions about the relationship between x
and y and also assumes one is dependent on the other which in reality might not be true, they

SURNAME 2

could be completely independent of each other (McDaniel, William and Bruce Ankenman 64138).

After the analysis of both OFAAT and DOE, I would prefer to use DOE in order to
obtain effective business processes. One can learn a lot from the results of the DOE even if they
are incorrect. If there is an error, you can just adjust the range and run the analysis again. In
addition, the results not only provide a solution, but also it contains information surrounding the
solution, this helps in deciding on the changes to make to a process (McDaniel, William and
Bruce Ankenman 64-138).

SURNAME 3

Work cited
McDaniel, William R., and Bruce E. Ankenman. "Comparing experimental design strategies for
quality improvement with min...


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