1. Explain the differences between x-bar and R-charts. How can they be used together and why would it be important to use them together?
2. Explain the use of p-charts and c-charts. When would you use one rather than the other? Give examples of measurements for both p-charts and c-charts.

Scharadin Hotels

Scharadin Hotels are a national hotel chain started in 1957 by Milo Scharadin. What started as one upscale hotel in New York City turned into a highly reputable national hotel chain. Today Scharadin Hotels serve over 100 1ocations and are recognized for their customer service and quality. Scharadin Hotels are typically located in large metropolitan areas close to convention centers and centers of commerce. They cater to both business and non-business customers and offer a wide array of services. Maintaining high customer service has been considered a priority for the hotel chain.

A Problem with Quality

The Scharadin Hotel in San Antonio, Texas, had recently been experiencing a large number of guest complaints due to billing errors. The complaints seem to center around guests disputing charges on their final hotel bill. Guest complaints ranged from extra charges, such as meals or services that were not purchased, to confusion for not being charged at all. Most hotel guests use express checkout on their day of departure. With express checkout the hotel bill is left under the guest’s door in the early morning hours and, if all is in order, does not require any additional action on the guest’s part. Express checkout is a welcome service by busy travelers who are free to depart the hotel at their convenience. However, the increased number of billing errors began creating unnecessary delays and frustration for the guests who
unexpectedly needed to settle their bill with the front desk. The hotel staff often had to calm frustrated guests who were rushing to the airport and were aggravated that they were getting charged for items they had not purchased.

Identifying the Source of the Problem

Larraine Scharadin, Milo Scharadin’s niece, had recently been appointed to run the San Antonio hotel. A recent business school graduate, Larraine had grown up in the hotel business. She was poised and confident, and understood the importance
of high quality for the hotel. When she became aware of the billing problem, she immediately called a staff meeting to uncover the source of the problem.
During the staff meeting discussion quickly turned to problems with the new computer system and software that had been put in place. Tim Coleman, head of MIS, defended the system, stating that the system was sound and the problems were exaggerated.
Tim claimed that a few hotel guests made an issue of a few random problems. Scott Schultz, head of operations, was not so sure. Scott said that he noticed that the number of complaints seem to have significantly increased since the new system was installed. He said that he had asked his team to perform an audit of 50 random bills per day over the past 30 days. Scott showed the following numbers to Larraine, Tim, and the other staff members

Number of
Incorrect Bills Day
2 1
2 2
1 3
2 4
2 5
3 6
2 7
2 8
1 9
2 10
1 11
2 12
3 13
3 14
2 15
3 16
2 17
2 18
1 19
3 20
3 21
3 22
3 23
4 24
5 25
5 26
6 27
5 28
5 29
5 30

Everyone looked at the data that had been presented. Then Tim exclaimed: “Notice that the number of errors increases in the last third of the month. The computer system had been in place for the entire month so that can’t be the problem. Scott, it is probably the new employees you have on staff that are not entering the data properly.” Scott quickly retaliated: “The employees are trained properly! Everyone knows the problem is the computer system!” The argument between Tim and Scott become heated, and Larraine decided to step in. She said, “Scott, I think it is best if
you perform some statistical analysis of that data and send us your findings. You know that we want a high-quality standard. We can’t be Motorola with six-sigma quantity, but let’s try for three-sigma. Would you develop some control charts
with the data and let us know if you think the process is in control?”

Case Questions

1. Set up three-sigma control limits with the given data.
2. Is the process in control? Why?
3. Based on your analysis do you think the problem is the
New computer system or something else?
4. What advice would you give to Larraine based on the
Information that you have?