do the project charter

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ABC Manufacturing ltd. has been one of the leading manufacturers of spindle shafts for aerospace industry. The company produces different line of spindle shafts for various customers. The company scorecard shows that ABC has been on “AB” ranking from Jan 2016 till June and B ranking on July and August 2016. (The rankings are as follows: A, AB, B, C, and D which A is the highest ranking). The company is allowed internally to have 5% defective which communicated with customers upon signing the contracts. In the last management review meeting, it was brought up that the 5% defective rate could be a negative point for the company and could be one of the reasons that sales department has not been able to sign any new contract with customers in the past 5 months which costs the company $150,000 annual revenue loss per each customer (Average new customer per month is 4). On the other hand, quality department believes that the company has been recently producing more defective parts greater than allowable 5% and refers to recent quality issues that have occurred at customer location to prove its theory. Quality Manager insists that this is a serious problem and company has to target to get back to below 5% defective rate but 5% defective rate is very good and should not be changed. Further to this, to prove his point, he collected 200 samples and inspected them and 9 defective parts were identified. A quick benchmark on some competitors, show that the proportion defective allowed for them is significantly lower than ABC but also they have lower production rate and capacity. Top management requires to establish a team to investigate this and report to him in 2 months.

You have been assigned to initiate a Six Sigma project to resolve the issue and improve the situation;

1. Create a business case that explains the issue

2. Develop a project charter to clearly identify the primary and secondary metrics