Operations Engineering Analysis of Samsung Electronics Company

This comprehensive operations engineering report provides a detailed analysis of Samsung Electronics. It begins with an executive summary and an introduction to Samsung's operations, followed by a case study exploring the design of a new product using De Bono's Six Hat Thinking Model. The report delves into the design of operations, including waste forms, floor plans, and JIT production. It then examines supply chain elements, planning, purchasing, and distribution, along with inventory reorder points, safety stock, and EOQ calculations. Furthermore, the report covers OEE calculations, improvement strategies, performance metrics, and root cause analysis, culminating in a discussion of the theory of constraints. The analysis includes calculations and interpretations of various operational metrics, providing a holistic view of Samsung's operational strategies and challenges.

Operations Engineering 1
OPERATIONS ENGINEERING
By (Student Name)
(Name of the Class) - Course
Tutor: Insert Name of tutor here
University
Department of
02/10/2018

Operations Engineering 2
Executive summary
This report examines the case study of Samsung Electronics Company with a view to exploring
the operations of the company. It investigates the customers, suppliers, and distributors of the
company with a view to understanding the global business dynamics. The report inquires De
Bono’s Six hat model and designs a product using the same. It delves into the VSM model and
critically examines the role of JIT maintaining healthy supply chain networks.
In addition, the report explores the need to compute inventory reorder levels by calculating and
interpreting the role of inventory to reorder point, safety stock, and economic order quantity.
Other computations covered in the report include OEE with recommendations drawn on how to
improve OEE. The report examines the yield defective, yield defect and RTY. Finally, a
fictitious constraint has been examined and the role of root cause analysis interrogated.

Operations Engineering 3
TABLE OF CONTENT
Executive summary.........................................................................................................................2
1.0 Introduction................................................................................................................................4
2.0 Designing a new product using De Bono’s Six Hat Thinking Model...................................5
2.1 Developing a new product.....................................................................................................5
2.2 Design Review checklist........................................................................................................7
2.3 Design Review outcome........................................................................................................8
3.0 Design the Operations............................................................................................................9
3.2 Different Waste Forms........................................................................................................10
3.3 Production (layout) Floor Plan............................................................................................11
3.4 JIT production flow based on a Kanban Pull system..........................................................12
4.0 Manage the operations.........................................................................................................13
4.1 Elements of a supply chain..................................................................................................13
4.1.1 Supply chain integration...............................................................................................13
4.1.2 Planning of operations..................................................................................................13
4.1.3 Purchasing.....................................................................................................................13
4.1.4 Distribution management..............................................................................................14
4.1.5 Quality management.....................................................................................................14
4.2 Reorder point safety stock and EOQ...................................................................................14
4.2.1 Inventory Reorder Point...............................................................................................15
4.2.2 Safety stock...................................................................................................................15
4.2.3 Economic order quantity...............................................................................................15
4.2.4 Interpretation of the inventory calculations..................................................................16
4.2.5 Determining reliability given a fictitious MTBF..........................................................16

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5.0 Improve the operations........................................................................................................17
5.1 Calculation of the OEE........................................................................................................17
5.2 How to improve the OEE....................................................................................................18
5.3 Performance metric Yield....................................................................................................18
5.4 Interpretation of the obtained results...................................................................................19
5.5 Root cause analysis..............................................................................................................19
5.6 Theory of constraints - Overcoming Constraints.................................................................20
Conclusion.....................................................................................................................................21
References......................................................................................................................................22

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1.0 Introduction
Background to Samsung Operations
Samsung is a multinational company dealing with a variety of products and services.
Established in 1938 with its headquarters in South Korea, it has become one of the most
innovative companies globally (Dudovskiy 2017). It is by far the largest company in South
Korea contributing to almost a quarter of the country's total exports. The company has grown
tremendously from cottage industry to a global leader employing over 300,000 workers across
the world (Jurevicius 2018).
According to Christopher (2016) Samsung is involved in multiple businesses in the
manufacturing and construction, and service sector. These are grouped under four strategic
global business units to take full advantage of different business opportunities. The Hansol
business unit, the CJ unit, and the Shinsegae unit collectively deal with chemical manufacturing,
supply chain, and logistics, manufacturing of paper, advertisement and insurance among other
business interests (Nisen 2013).
For the purposes of this report, the focus will be on the Samsung Electronics group which
is the most successful of the business units. It deals with the manufacture of mobile phones,
tablets, personal computers, televisions, display screens, fridges, headphones, microwaves,
freezers among other home appliances (Reuters 2016).
Samsung customers are spread out across the world. The company has different packages
for their different customers. To begin with, it supplies other original equipment manufacturers
(OEMs) with display screens (Weng, Wei & Fujimura 2012) Secondly, they supply the aviation
sector firms with circuits and display equipment. Governments are also part of their customers
ordering telecommunication equipment. Other customers include firms in the hospitality industry
and individual customers. Samsung has segmented their customers according to their location
and social-economic aspects (Wilson 2015). On the smartphones market, for instance, the
segments include high-end customers the midrange customers and the feature phone customers.

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Due to the array of products that Samsung sells, the company has different sale
approaches. It has stores in all major markets in North America, Europe, Asia-Pacific, Africa,
and South America. In parts where stores are unavailable, it has agents, franchises and
subsidiaries to sell their electronics (Sai 2018). Lastly, the company has embraced online
marketing where customers can order their devices. Damaged or defective devices are replaced if
covered by warrants (Peng 2017).
Samsung is now the biggest Smartphone maker in the world after overtaking Nokia
Corporation in 2012 (Azmeh 2014). Its sales as of 2017 averaged 175 billion USD. Its net profit
was in the same year was in the neighborhood of 20 billion and asset base of a quarter billion US
dollars. Its electronics are manufactured mainly in South Korea and shipped to the rest of the
world.
2.0 Designing a new product using De Bono’s Six Hat Thinking Model
2.1 Developing a new product
In this illustration, the assumption is that Samsung needs to develop a gaming console
since they do not have this offering in their product line-up. Since the gaming console is mostly
used by young people (Morris 2009; Debano 2017). Samsung believes that it can pull up sales by
introducing the product into the market.
Table 1: The six hat model
Hat Detail

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White Hat (Information)
1. There is an adequate market. This is from the fact that there
are close to 2 billion young people on the planet who enjoy
using gaming consoles.
2. Disposable income for young people in Europe and North
America ranges between 3000-6000 US dollars. This income
encourages youth to spend on luxury products like gaming
consoles (Tilley & Rosenblatt 2017).
3. Asian markets present great market potential because the
region hosts 59% of the population that is growing an appetite
for luxury products (Curtis & Corbhan 2013).
4. The economic growth rate in the Asia-Pacific region has been
growing steadily at between 6.4% in the Philippines and 8.1%
in the Republic of Myanmar with many other countries
recording an average of 7%. This presents a huge market for
the gaming consoles (Azmeh 2014).
5. Millennials are spending huge proportions of their time on
entertainment and the gaming console offers a good alternative
to other forms of entertainment (Kaur 2017).
Green hat (New Idea)
1. Instead of manufacturing the products in South Korea where
the cost of production is increasing, new labour markets
should be explored in China, India or Africa (Cao 2014).
2. Some features of the smartphones can be merged with the
gaming console to appeal to the market already possessing the
smartphones.
3. Mass production of the consoles can lower the total cost of
production.
4. Recycling of waste electronic products can provide the raw
material for the production of consoles

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Blue Hat (Processing)
1. The production process should take no longer than 8 months to
avoid other players from accessing the markets first.
2. What benefits will accrue from using the existing distribution
networks?
3. Additional time (2 months) should be allocated to conduct
market research.
4. Using artificial intelligence during production may shorten the
lead-time and hence production cost
Red Hat (Emotions)
1. The consoles should be released to the market to coincide with
Christmas festivities as people love to play games this period.
2. A red colour variation on the consoles will appeal to the
customers
3. Customers may not buy this console since it is the first model
that the company is distributing
4. The company has not adequately performed quality audits and
risks recalling the consoles from the market
Black Hat (What can go
wrong)
1. There are other consoles in the market and this will not sell
2. The company lacks adequate resources for the production of
the console
3. Governments may enact new laws to restrict the sale of the
consoles
4. Customers will not like the first experience using the consoles

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Yellow Hat (The benefits)
1. Our sales and distribution channels are well experienced in the
market and will, therefore, increase company sales.
2. Selling the consoles will open new frontiers for company
growth
3. The company will diversify on its products, therefore, reduce
the risk of total failure if other products stall in future
4. The company will make it harder for other entities to venture
the market hence gaining competitive advantage
2.2 Design Review Checklist
Table 2: Design review checklist
Aspect Question Answer Comments
Product packaging (1) Is the console packaging
aesthetic?
Yes Samsung packaging have
done trials with positive
results
(2) Is the packaging
environmentally friendly?
Yes The materials used by
Samsung are recyclable
(3) Does the packaging bear the
console information?
Yes All information on Samsung
products is printed on the
package and a manual
included
(4) Is the packaging safe? Yes The package is made of a
safe bio-degradable material
Product Quality (5) Does the company produce
defective products?
No All products are made from
high-quality raw materials
(6) Does the product undergo
quality tests at the company?
Yes The product is well tested
before leaving the company.
(7) Does the product bear a
quality mark from ISO?
Yes The console bears the ISO
9001 mark of quality.
(8) Does the product have a
warranty
Yes The product comes with a
limited warranty.
Legal /Regulatory (9) Does the console comply Yes The console has been

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Compliance with government regulations? checked by government
agencies for compliance
(10) Does the product meet the
international safety SAR?
Yes The product bears the SAR
marking for compliance
(11) Does the console bear a
shelf-life
No However, some components
such as batteries should be
replaced when worn out
(12) Does the console meet the
industry standards for
electronics?
Yes The product is tested in all
localities to comply with set
standards
Promotion (13) Is there any material to
inform consumers of the
product?
Yes There are brochures and
banners showing the product
(14) Is the product information
understandable?
Yes The information is written in
multiple languages
(15) Is there any online presence
of the product?
Yes The company website and
affiliate portals have the
product information?
(16) Is there a discount for
early purchasers?
No The pricing set is standard to
all consumers. The company
may, however, offer gifts to
heavy purchasers.
(17) Does the advertising
appeal to the target market
Yes Images and information
contained appeal to the
intended market
Pricing (18) Is there a price list for the
different product offering?
Yes The pricing is determined by
the product specifications
(19) Is the pricing similar in
all localities?
No The pricing is influenced by
the government tariffs,
distribution costs among
other factors

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(20) Can the customers’ order
the product online?
Yes The consoles can be ordered
online using the prevailing
currency exchange rates
(21) Will I pay for extra for
repairs and upgrades
No Unless the product damage
is outside the scope of the
warranty
Product
identification/security
(22) Does the product have any
security measures
Yes The product has geo-
location tag and a product
key to
(23) Does the product include
warnings to the user?
Yes The product specifies the
correct way to be handled
(24) Does the product include
traceability function in case it
is lost or stolen?
Yes The product contains
biometric data that can only
be activated by the user
(25) Does the product contain
maintenance information
Yes Maintenance information is
included in the user manual
guide.
2.3 Design Review outcome
Samsung console is a product that is designed to fill the market gap in the supply of
quality and affordable gaming alternatives to the prevailing competition (Porter 2008). It is built
using high quality and environmentally friendly materials. In terms of packaging, the console
provides the specifications, safety measures while using the device warning and the correct
disposal mechanism for the packaging. The console has also met all the legal and regulatory
requirements to ensure that the user safety is guaranteed always.
The console has been advertised in the news and print media. For any additional
information, the product specifications can be accessed online at the company's portal and
affiliated distributors’ links. The pricing has been well specified and varies with the features of
the product.

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3.0 Design the Operations
In terms of security and traceability in the event the device is lost or stolen, Samsung has
invested in biometric technology to ensure that the device is traceable. In addition, the console is
packed with various warning and maintenance directions to ensure maximum utility and comfort
(Cudney 2011).
3.1 Value Stream Map for Samsung Gaming Console
Samsung Electronics Inc.
Customers
Suppliers
Order Shipping
Department
Warehousing
Department
Production
Department
Raw materials
Section
Flow of information
Console Production Department

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Figure 1: Value Stream map for Samsung Console
3.2 Different Waste Forms
Table 3: The waste forms from the operation activities
Type of waste Example Root-cause Recommendation
Waste from
transportation
activities
 Spillage of raw
materials when
offloading from
suppliers
 Damage to
consoles when
shipping to
customers
 Breakage of
consoles during
 Defective motor
vehicles
 The accidental
falling of consoles
during
transportation
 Move the production
facility near the
customers
 Secure raw materials and
finished products during
transportation

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transport
Manufacturing defects  Damaged circuit
boards
 Overheating
consoles
 Poor quality
control during
manufacturing
 Substandard raw
materials
 Automate production
process using artificial
intelligence
 Quality control checks
during the delivery of
raw materials
Storage/warehousing
waste
 Falling of
consoles from
pallets
 Damage by
natural elements
such as storm
 Faulty shelves and
pallets at the
warehouses
 Ravaged
warehouse
 Repair the shelves and
pallets
 Repair of damaged
warehouses
Excessive production
of consoles
 Manufacturing
beyond customer
orders
 Disregard for
Enterprise
Resource planning
system(ERP)
 Employ Just-In-Time
Production
 Efficient Use of ERP
Time wastage  Occasioned by
standby times lost
while waiting for
suppliers, storage
and shipment
 Shipment delays
 The production
facility is very far
from the raw
materials
 The company does
not have its own
shipping
arrangements
 Move the plant closer to
the raw materials
 Forward integration into
shipping transport

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3.3 Production (layout) Floor Plan
Raw Material
Supply
Company
Reception
Manufactured Console
Warehouse
Quality Inspection/control
Production/Engineering
Game console Assembly
Testing of Raw
Material
Finished
Console
Shipping Yard

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Figure 2: The production(Layout) floor plan
JIT Production flow influence by the Kanban pull
3.4 JIT production flow based on a Kanban Pull system
Customers Suppliers
Production/EngineeringFinished products
Storage
Raw Material
Reception
Kanban signal Flow

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Figure 3: JIT and Kanban pull system
The JIT method of inventory control was introduced by Toyota Motor Company after
suffering many instances of resource wastage coupled with poor space management. The system
is based on the premise that Re-order levels for inventory are dictated by customer orders
(Hirano 2009; Adamu 2017). As depicted in the diagram, there is no production of consoles
unless customer orders trigger the process. This implies that the company only keeps inventory
and finished products commensurate with the orders placed by the customers (Stevenson 2012).
For this reason, there is never an instance where there are excessive or shortage of raw
materials in the storage. On the same breath, a there is never a case of overproduction of finished
products waiting in the warehouse for distribution (Hamrol 2017).
In the case of Samsung manufacturing Consoles, once a customer places an order, the
company system picks the order immediately and produces finished consoles from the optimal
raw materials kept in the storage. This, in turn, minimizes material wastage, space wastage and
in the long run, helps to keep the cost of production low. Other companies such as Amazon and
eBay have borrowed a leaf from Toyota’s JIT system and are reporting innumerable success
(Crouch 2008)
4.0 Manage the operations
4.1 Elements of a supply chain

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In order for Samsung to manage their operations, there are concerted efforts at ensuring
optimal management of customer orders while at the same time ensuring smooth flow of raw
materials from their suppliers. This is made possible through managing supply chain functions
such as supply chain integration, planning of operations, managing their purchasing, demand and
supply planning and lastly through ensuring effective distribution networks (Khurum &
Gorschek 2014).
4.1.1 Supply chain integration
During the production of gaming consoles, Samsung has to ensure that the
communication lines between the suppliers, the production team are well managed. The
integration of all the parties involved from demand forecasting, inventory control, the production
team, and the budgeting team has to be in sync (Giri & Sharma 2015).
To ensure that gaming consoles are produced on the time specified and that the products
are of high quality, Samsung has adopted demand forecasting as one avenue to be able to predict
future needs of the customers. In addition, the company has a very robust research and
development department that keeps adding value to its products which in turn keeps customers
interested in their products. This helps the company to maintain a sustainable competitive
advantage (Porter 2008).
4.1.2 Planning of operations
Samsung has to effectively manage their processes to ensure that there is minimal
wastage hence leading to low cost of production of their gaming consoles. Moreover, the
company conducts regular market forecasting to be able to predict future demands hence
maintaining optimal inventory. Lastly, Samsung has leveraged their broad marketing networks to
ensure that new demands in the market are pursued by having handy supplies of raw materials
when needed (Daft 2015).
4.1.3 Purchasing

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The market is always demanding consoles of high quality without compromising on pricing. To
maintain this balance the Samsung purchasing department is well trained in managing cost-
effective supplies while at the same time making sure that the materials supplied adhere to the
quality standards set by the company(Antony 2011).
4.1.4 Distribution management
Customers always look out for companies that keep their word in delivering ordered products.
To this end, Samsung has established many networks including partnerships with other
businesses, maintaining an online market for their products and establishing franchises to make
sure their console products and other electronics reach as many customers as possible within the
delivery timelines specified(Lewis 2008).
4.1.5 Quality management
Samsung has enrolled its staff on intensive training on quality management programs such as
lean sigma. This ensures that the employees are able to maintain demand from the customers by
providing high-quality devices (Mrugalska & Tytyk 2015).
4.2 Reorder point safety stock and EOQ
This part of the report analysis specific inventory management controls to ensure smooth
operations of a company by computing a desirable outcome given a set of constraints like is the
case in the real business environment (Mercado 2008). The calculations desired include
Inventory reordering point which is basically the stock a company should have at the very least
to order inventory given certain market demand (Sharma 2010). The computation will also cover
safety stock and Economic order quantity.
Inventory Reorder point, safety stock, and economic order quantity
The parameters given are:
Demand (D) per week = (500,000 to 1,000,000 per week)
Lead Time during replenishment (L/T) = a number between 1 and 2 weeks

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Standard Deviation of demand during replenishment (SD) = 15%.
Carrying cost (H) per week = a number between $1and $5
The fixed cost of the order (S) = a number between $100 and $200
Service Level = a number between 80% and 95%
4.2.1 Inventory Reorder Point
Chosen service level = 90%
Z score = 1.30 for 90% service level
Request Variation σ = D*SD = 500,000*1.5= 75,000
Demand variation during replenishment = σ L/T= σ* LT =75,000* √2 = 106,066 for a lead time
of 2 weeks
Since ROP=DL/T + Z σ L/T
Then ROP= 500,000*2 + 1.3*106,066
ROP= 1000, 000+ 137885 =1,137,885 Items
4.2.2 Safety stock
σ LT =106,066
Safety Stock = Z σ L/T
Hence Safety stock = 1.3*106,066
Safety Stock= 137, 885 Items

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4.2.3 Economic order quantity
Annual Demand= 500,000 * 52.1429 = 26,071,450
Annual Carrying cost H= 5* 52.1429 = 260.71
Since the Fixed cost S per order= a number between $100 and $200
200 is chosen as the fixed cost
EOQ = √2D*S/H
Therefore EOQ = √2 *500,000* 260.71/200= 1141.73 units
4.2.4 Interpretation of the inventory calculations
From the calculations, it is evident that the demand that must be met by Samsung at any
given week is at the very least 500,000 units. However, since the EOQ has been found to be
1141 units it shows that Samsung is running on a shortfall supply to be able to meet the market
demands. For this reason, it is advised that the company should make better purchasing decisions
to ensure that market demand is met to keep customers satisfied.
From the computed safety stock of 137, 885 items, it is evident that Samsung can run
well on the current inventory of 500,000 per week up until the inventory reaches 362,115 items.
At this point, Samsung can replenish their stock to keep the operations optimal.
4.2.5 Determining reliability given a fictitious MTBF
The reliability of a given machine is the ability to continue working up to such a point
when the manufacturer predicts, based on tests, that without servicing, the machine will continue
working. Reliability of the console gaming equipment produced by Samsung to fail may also be
computed from the average time that the machine will continue working after it has been
serviced after failing (Meudt Metten ich & Abele Uzulans 2016).

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If for instance, Samsung stated that their console units will work for 5 years without any failure
for 12 hours every day, then the calculations based on this assumption would be as follows.
As per the console machine specifications, it can work 12 hours straight continuously for 5 years.
Assuming that the console is working every day of the week, it will endure 365 days for five
years providing unbridled utility to the owner.
Time (T) when the machine is expected to be in use= 8000 hours
MTBF = 12* 365* 5= 26280 Hours
From this figure Failure rate= 1/MTBF
Therefore Failure rate = 1/26280 hours = 0.0000380517
Equating variable (t) to the likelihood of failure
after 8000 the failure rate of the console will be
T= 0.0000380517 * 8000 = 0.3044136
T= 1- t(8000)
T= 1 - 0.3044136
T= 0.6955864
From this computation, the likelihood of the console to fail after 8000 hours is 69.5%.
However, as with other machines, the probability of failure here is exacerbated by the intensity
of using the console. In all likelihood, using the console for fewer hours every day would reduce
the wear and tear effect.
5.0 Improve the operations
5.1 Calculation of the OEE
The overall equipment effectiveness (OEE) is the ratio of the availability of a machine during
production to the work that has been designed for the machine to perform. The most reliable way
of calculating OEE is using this formula
OEE= Availability * Performance * Quality

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Assuming the following data was received from a machine and we were required to calculate the
OEE of that machine
The shift length at work= 490 minutes
Breaks taken at work= 80 minutes
Downtime at work= 55 minutes
Machine cycle time = 1 second
Total production by the machine= 18200
Total defective products from the machine= 425
Using the above figures from the machine, the following computations can be made
Computing the planned production time = shift length - break time = 490 min- 80 min = 410 min
Computing the runtime = 410 min - 55 min = 355 min
Good production = total production - defective products 19200 - 425 =17775
Availability= scheduled run time/planned production time
Availability= 355/410= 0.865
Performance= (machine cycle time * total production)/ ideal runtime
= (1sec * 18200)/ 355 min* 60 sec = 0.8544 = (85.44%)
Quality = good production/total production =17775/18200 =0.9766 = (97.66%)
Calculating the OEE
OEE= Availability * Performance * Quality
OEE= 0.865 * 0.8544 * 0.9766 = 0.7217 = 72.17%
5.2 How to improve the OEE
Prioritizing the manufacturing assets. Some of the most critical equipment in
manufacturing may fail result in big loses within the company. By giving these machines utmost
priority you avoid total loses and improve OEE.

Operations Engineering 24
Maximizing the OEE formula. In the company, all the machines should be handled
according to the contribution they bring to the company such that high-performance machines
are handled with more concern.
Training of the employees. Well trained employees are a big asset to the company where
they increase productivity while minimizing downtime. Employee motivation should also be
given priority as employees who feel valued cannot leave their work unattended.
Proper care and maintenance of the company machinery and equipment. Performing
predictive or preventive maintenance will ensure that the machines serve the company without
downtimes.
Lastly, the OEE can be improved tremendously by taking care of the machine operating
environment. This can be in form of housekeeping to remove dust, trapped moisture and, fumes
which may hinder the functioning of the machine (Dugan 2012).
5.3 Performance metric Yield
In this section, the production of gaming consoles will be considered as the final products. As the
consoles are produced, each stage presents product defects as discussed.
Stage 1. Assembling console CPUs
The total number of items produced= 800,000
Defective items = 80
Total defects in production= 100
Stage 2 Assembling Console Power supplies
Total items produced = 799,920
Defective items = 200
Total defects during production = 250

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Stage 1 Yield defective = 799,920/800,000 = 0.9999 and
Yield defects = 799,900/ 800000= 0.999875
For stage 2 , the computations are:
Yield defective =799,720/799,920 =0.9997
And the yield defects = 799670/799920 = 0.9996
Calculating the Rolled throughput Yield (RTY) we get the following:
RTY defective= 0.9999 * 0.9997= 0.9996
RTY defects = 0.999875 * 0.9996 = 0.99835
5.4 Interpretation of the obtained results
From the computation, the defective consoles used in the RTY analysis, imply those that
are damaged beyond any salvaging. In retrospect, the consoles with defects acquire them during
the manufacturing process and may be returned by quality control personnel to the production
manager to rectify the defects to make them fit to use.
The computation of yield defective shows that there is a likelihood that the
manufacturing process results in stage 1 results in 0.0001 defectives while in comparison stage 2
results in 0.0003 percent are defective which though minute shows that if close inspection is not
paid to the machinery the in production may be having minute damages.
The RTY defective on the other hand, shows that 0.0004 percent of consoles are ending up
defective which shows consistency and hence confirms that closer inspection of the
manufacturing processes through root cause analysis is necessary.
5.5 Root cause analysis
From the Yield defective and RTY defective, there is consistent deterioration of
manufacturing process which is resulting in defective consoles. If this is not identified early
enough it may lead to more disastrous defects. One way of identifying the problem is by

Operations Engineering 26
applying the root cause analysis to pinpoint the exact problem before an escalation of the
problem (Ali Naqvi & Fahad 2016).
The 80 defective Samsung consoles in stage one during CPU assembly may have resulted
from poor calibration of one or more of the assembly machines. The root cause analysis will seek
to dig deep to find which assembly machine it is and why it was poorly calibrated (Hubbard
2018)
An example of root cause analysis of the above calibration is as depicted
1. Why were 80 consoles defective during the processing stage?
Answer: Because the assembly machine was poorly calibrated
2. Why was the assembly machine poorly calibrated?
Answer: Because the technician fixing the machines left the company?
3. Why did the technician leave the company?
Answer: Because he got another job
4. Why wasn't there a replacement for his expertise?
Answer: because the training program to fix the machines was aborted
5. Why was the training program aborted?
Answer: because it clashed with a demanding operations schedule.
The root cause analysis depicts a lacuna in the technical department that needs to be fixed as well
as have someone on standby to rectify the assembly machines calibration issues at any given
time. The root cause analysis has identified is through training which needs to be followed up.
5.6 Theory of constraints - Overcoming Constraints
The TOC paradigm acknowledges that in every situation a company maneuvers, there are
limiting factors that inhibit the organization from achieving its full potential. In a manufacturing
firm, for instance, the constraint could be poor quality products that are being shunned by
customers. This limits the firm's growth and reputation (Barsabu 2014).
To overcome the poor quality constraint the firm may take the following steps

Operations Engineering 27
Identifying the constraint and effects of the constraint. As depicted the firm has identified
that poor quality is a constraint that needs to be addressed because it is causing loss of revenue
and much-needed growth (Duggan 2012).
Exploiting the constraint. In this case, the resources required to exploit poor quality
include trained staff in quality management, quality control department and effective equipment
to identify defective raw materials and processes within the firm. Once this is done, the resources
required can be mobilized to address poor quality.
Subordinating the constraint. This can be achieved by ensuring that all resources
mobilized in the exploration stage are streamlined to the critical areas of poor quality. The firm
can, for instance, include quality processes in every activity they undertake.
Elevating the constraint. In this step, all systems in the organization should be geared
towards eliminating poor quality. The firm may make a financial investment in training its
human resources and embracing change management to address remnant quality issues.
Repeating the steps through continuous improvement. This will serve to remind the
people in the organization that if not constantly addressed, poor quality issues may return back to
haunt the organization. Continuous improvement can be rekindled through program exchange
within departments in the firm and having routine audits to address poor quality issues as soon as
they crop up (Duggan 2012).

Operations Engineering 28
Conclusion
This report has focused on the Samsung case study where the company activities,
customers, operating localities and distribution channels were explored. Then, the report goes
further to design a fictitious console product using the De Bono's six hat model. The report
examines the VSM model and expounds the role of JIT in streamlining supply chain networks.
The report also explores the need to compute inventory reorder levels by calculating and
interpreting the role of inventory re-order point, safety stock, and economic order quantity. Other
computations covered in the report include OEE with recommendations drawn on how to
improve OEE. The report examines the yield defective, yield defect and RTY. Finally, a
fictitious constraint has been examined and the role of root cause analysis interrogated.

Operations Engineering 29
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