Lorex Pharmacueticals

Crater Blakely, manager of quality assurance for the manufacturing division of Lorex Pharmaceuticals, elated by the progress of the company’s newest product, Linatol, was preparing for its launch. Linatol was a medicine prepared for the treatment of high blood pressure and Lorex had also patented it. The U.S. FDA approved the product after rigorous testing and clinical studies of the product.

As Carter, along with its team continues with the progress of the launch preparations, the main decision that had to be made doing this, was to decide the target amount to which the medicine bottles of 10-ounce each were to be filled. The company were using the 10-ounce bottles for packaging, being bundled into 12 bottles each case, and rated each case at $186 per case as the wholesale price.

In order to decide what amount should be filled in each 10-ounce bottle, the company decided on doing a Filling-Line Test, which was first to be done with an inexpensive liquid having similar physical properties as Linatol and then with Linatol itself. The test was done by filling 144 bottles of Linatol with 10.2 ounce to be filled in each decided as an arbitrary value.

Using the one standard deviation rule to fill the bottles in the Filling-Line test, they tried to pick a target one standard deviation above the required amount. This rule however showed the results to be statistically correct, getting a grand average of 10.20 for the 144 bottles and a standard deviation of 0.16 as shown in Exhibit 2, but seeing it economically, it was very much uncertain, as the number of bottles that got rejected due to under filling got so huge that it clogged the buffer storage area, temporarily stopping the entire filling line. Thus, it still remained a question on deciding the target filling amount for the Linatol bottles due to the statistical and economic uncertainty faced.