Yangon University of Economics

Third Year Section (3)

Group (9)
Group Members _ 1. Ma Hsu Thadar San San (IIIcomm-168)

2. Ma Thondary Soe (IIIcomm-188)

3. Ma Tha Dar Aung (IIIcomm-207)

4. Ma Swe Zin Hnin Wai (IIIcomm-146)

5. Mg Thuta Soe (IIIcomm-194)

Frito-Lay’s Quality-Controlled Potato Chips
Frito-Lay, the multi-billion-dollar snack food giant, produces billions of pounds of
product every year at its dozens of U.S and Canadian plants. From the farming of
potatoes in Florida, North Carolina, and Michigan to factory and to retail stores,
the ingredients and final product of Lay’s chip, for example, are inspected at least
11 times; in the field, before unloading at the plant, after washing and peeling, at
the sizing station, at the fryer, after seasoning, when bagged (for weight), at
cartoon filling, in the warehouse, and as they are placed on the store shelf by
Frito-Lay personnel. Similar inspections take place for its other famous products,
including Cheetos, Fritos, Ruffles, and Tostitos.

In addition to these employee inspections the firm uses proprietary vision

systems to look for defective potato chips. Chips are pulled off the high-speed line
and checked twice if the vision system senses them to be too brown.

The company follows the very stricts standards of the American Institute of
Baking (AIB), standards that are much tougher than those of the U.S Food and
Drug Administration. Two unannounced AIB site visits per year keep Frito-Lay’s
plants on their toes.Scores, consistently in the “excellent” range, are posted, and
every employee knows exactly how the plant is doing.

There are two key metrics in Frito-Lay’s continuous improvement quality

program; (1) total customer complaints (measured on a complaints per million
bag basis) and (2) hourly or daily statistical process control scores (for oil,
moisture, seasoning, and salt continent, for chip thickness, for fryer temperature,
and for weight).

In the Florida plant, Angela McCormack, who holds engineering and MBA degrees,
oversees a 15-member quality assurance staff. They watch all aspects of quality,
including training employees on the factory floor, monitoring automated
processing equipment, and developing and updating statistical process control
(SPC) charts. The upper and lower control limits for one check point, salt content
in Lay’s chips, are 2.22% and 1.98%, respectively. To see exactly how these limits
are created using SPC, watch the video that accompanies this case.

Discussion Questions*
1. Angela is now going to evaluate a new salt process delivery system and
wants to know if the upper and lower control limits at 3 standard
deviations for the new system will meet the upper and lower control
specifications noted above.

The data (in percent) from the initial trial samples are:

Sample 1: 1.98, 2.11, 2.15, 2.06

Sample 2: 1.99, 2.0, 2.08, 1.99

Sample 3: 2.20, 2.10, 2.20, 2.05

Sample 4: 2.18, 2.01, 2.23, 1.98

Sample 5: 2.01, 2.08, 2.14, 2.16

Provide the report to Angela.

2. What are the advantage and disadvantages of Frito-Lay drivers stocking

their customers’ shelves?
3. Why is quality a critical function at Frito-Lay?
Answers*
1. The video shows how the UCL 2.22% x and the LCL 1.98% x are
developed for salt content of Lay’s Chips. The population standard
deviation, from the video, is = .07, which we will use on the new data.
The five sample means are 2.075, 2.015, 2.1375, 2.1, and 2.0975 for
samples 1-5, respectively. X n 2.085 . 4

UCL 2.085 3.07 / 4 2.085 3.035 2.19%

LCL 2.085 3.07 / 4 2.085 3.035 1.98%
These new limits will be acceptable as they are even tighter than the
original delivery process for salt content.
LO S6.3: Build x-bar charts and R-charts
AACSB: Analytical thinking
2. Frito-Lay drivers deliver and stock supermarket shelves.
Advantages: (a) Control over shelf appearance_ they always straighten
all bags/displays with every visit; (b) immediate sales feedback; (c)
awareness of competition; and (d) always in stock_ no lost sales.

Disadvantages: (a) Expensive and time_ consuming for drivers to act as

store clerks.
LO S6.3: Build x-bar charts and R-charts
AACSB: Application of knowledge
3. Quality drives this consumer product. The taste of each chip or other
snack must be the same every bite. The bags must be identical in weight
and appearance. The product must be fresh. Every step in production_
from farm to factory_ needs to meet specifications. Quality is measured
on dozens of measures and monitored throughout the plant with SPC
charts and computer process controls.
LO S6.3: Build x-bar charts and R-charts
AACSB: Application of knowledge.