Gary Kapanowski, Master Black Belt Sean Paul, Environmental Health and Safety Officer

MOELLER MANUFACTURING3/10/20142014

Scrap Metal COPQ Analysis LEAN SIX SIGMA BLACK BELT PROJECT FOR LAWRENCE TECHNOLOGICAL UNIVERSITY

In the analysis performed by an employee of scrap metrics and environmental

compliance measurements, customer supplied detail of scrap metal sales didn’t

agree with internal purchases. Further investigation by the employee indicated

inconsistent pricing of scrap metal. Combining these factors, the critical to quality

factor was developed utilizing a third party audit of the measurement process and

identifying the sigma level. Finally, improvement processes were implemented

with control features to optimize the process and scrap metal sales. This resulted

in surpassing yearly goals for scrap dollar sales but not achieving quality goal

standards due to the extrapolation from the sample was not representative of the

2013 population. The increase in cross contamination was due to the

implemented improved measurement procedures. Management

recommendations for lean process improvements will improve overall scrap metal

sales, sigma level for cross contamination of scrap metal, and operational

production efficiency though problem solving issues utilizing scrap metal metric

indicators.

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EXECUTIVE SUMMARY

By performing the Lean Black Belt study on scrap metal sales, the organization was able to realize an

increase in scrap metal sales even with an abnormally high level of scrap metal cross contamination. In

the fiscal year of 2013, the organization increased scrap metal sales by $182,021.84 or 47.2% from the

previous year. This exceeded the yearly goal of $87,972.16 or 22.8%, derived from a sample 3 rd party

audit of a single scrap metal delivery. The yearly results could have been higher due to the devaluation

of overall metal prices in 2013 from 2012.

The Cost of Poor Quality (COPQ) represented in the cross contamination of the scrap metal proved

harder to improve. From the 3rd party audit of the scrap metal process, the estimated range of the cost

of cross contaminated metals was from $13,494 to $31,919. The actual level of cross contaminated

metal in 2013 was $23,941. Even though the value of the COPQ was within the range of the estimate,

improved measurement of defects in 2013 indicated a higher defect level of 1.5 Sigma. Thus, the scrap

metal sample audit was not a true representative of the entire population signifying an opportunity for

future improvement.

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MOELLER MANUFACTURING

Established in 1953, Moeller Manufacturing Company is an advanced manufacturing facility specializing

in machined parts for the gas turbine aircraft engine and power generation industries that encompasses

a majority of commercial and military aircraft operated in the United States and numerous fleets

worldwide. The product line includes small items such as specialized self-locking fasteners to complex

brackets, housings, manifolds, blade, and vane manufacturing. To generate the products, the

organization has over 165,000 square feet of overall production space for over 650 employees. The

measurable commitment to quality is shown as an approved supplier to most major aerospace OEMs,

certified to ISO 9001, ISO 14001 and AS-9100, and accreditation under NADCAP.

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DATA COMPILATION

Yearly accounting of the scrap metal volume by metal type is required by the EPA for environmental

compliance (TRI Report). The reporting by the scrap metal purchaser provides to the government and

selling organization the type and quantity of scrap metal provided for sale. Upon review by the Moeller

Manufacturing Environmental Health and Safety Officer (Sean Paul, EH&S), the scrap metal purchaser

during 2010-12 provided total and segmented scrap metal volumes that didn’t match internal detail or

responses by the scrap metal purchaser. The EH&S officer launched a detailed analysis to verify the

data to the EPA (See Appendix regarding Early Scrap Metal Problem Identification, Calculation,

and Cross Contamination Letter). The detailed spreadsheet indicated the overall scrap metal cross

contamination at a level exceeding 50%, pricing the metal at low value steel. The spreadsheet was

verified by the Master Black Belt (Gary Kapanowski). The next step was to visually inspect the

production floor to see if this cross contamination level is actually occurring.

GEMBA WALKS

Project team visually reviewed production floor operations and procedures to verify the external

vendors reporting of the scrap metal sales. Upon three different review opportunities, the team didn’t

experience excessive levels of cross contamination. The findings resulted in zero cross contamination

defects and validated the current processes. Defects were noted in the internal manual shipping log.

The process audit on the manual shipping log indicated an employee issue for the defects. A change in

both the manual shipping log and employee was instituted in 2013 for process improvement and

improved measurement data.

THIRD PARTY AUDIT TEST

The goal for the third party audit test was to verify the discrepancy of the scrap mix and total weight

represented by internal and external metrics as seen in the EPA environmental compliance reports (TRI

Reports). The project team met with a new vendor (East Side Metals / RJ Torching) to perform the audit

of one scrap metal shipment on 12/20/12 before the original vendor receives the shipment. The new

vendor will report and validate the scrap metal volume mix, internal processes, and the value of the

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scrap metal. The scrap metal shipment was returned sealed and released to the original vendor for

accurate comparison. See the Appendix section for Audit procedures and detailed results.

The audit indicated the shipment value exceeded the original vendor’s value by $1,496.66 or 22.8%. The

Project team requested additional testing to validate the 22.8% metric. Management decided the

metric was acceptable for this project to continue and use as the goal for 2013.

PROJECT CHARTER

The project team successfully completed a project charter authorized by management as the sponsor.

The following are the key details agreed to execute the project charter into operations:

Project Description: To maximize the value for scrap metal throughout the organization.

Business Case: By not following basic operational procedures, the scrap metal barrels

experience cross contamination which cost an average $13,494 to $31,919 per year.

Problem Statement: Per third party audit of the scrap metal process on 12/18/12 and historical

data as background information, the Cost of Poor Quality (COPQ) for scrap metal is in the range

of $13,494 to $31,919 in cross contamination per year due to poor internal processes and

adherence to current procedures. Overall scrap metal sales increase by audit representative

percentage of 22.8% or $87,972.16.

GOALS:

o 0 barrels of cross contamination per week

o 2% overall AVG of cross contamination per barrel

o 3% overall AVG of liquid weight

o 2013 scrap metal sales $473,814.96

Expected Business Results:

o Increase in scrap value through reduction in cross contamination: $13,494 to $31,919

per year

o Increase in scrap value though improved scrap metal pricing: $87,972.16

o Lower average % of cross contamination per barrel: Lower than 3%

o Lower per barrel defect in cross contamination: Zero per year

o Lower machine maintenance cost per year

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o Improved production efficiency per year

o Reduction in scrap units per year

o Improved production problem solving using the symptom of scrap metal from barrels to

indicate inefficiencies at specific machines

Expected Customer Benefits:

o Improved delivery time through improved production efficiency and quality due to

reduction in scrap units and improved problem solving tools

CRITICAL TO SUCCESS FACTOR

The project team determined quality was the critical to success factor for this project. Due to the EPA

environmental compliance issue, proper reporting of scrap metal is vital to comply with the

organization’s mission statement authorized by management and reviewed by the AS9100 and

ISO14001 internal and external auditors.

LEAN SIX SIGMA STUDY

The team followed the six sigma steps for DMAIC as described by the LEAN SIX SIGMA POCKET

TOOLBOOK (George, Rowlands, Price, & Maxey). This section will review the detail behind each step to

implement process improvement to reach the metric goals. The team performed a Lean Six Sigma A3

presentation to clearly identify the DMAIC process.

DEFINE

The project charter was approved with measureable goals as described in the PROJECT CHARTER section

above. This included validating the problem statement, goals, and financial benefits. A process map

and SIPOC diagram was completed to assist with the identification of critical to success factors.

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MEASURE

The current and future state process maps were completed by the team to identify the critical issues

needed for success. The team agreed the measurement system was poor due to the manual nature of

the process and lack of detail as viewed during the GEMBA WALKS. The team obtained approval from

the sponsor to perform a third party audit of a sample scrap metal volume and mix along with a review

of the process. The audit validated the need for a new measurement system and developed a baseline

used in the project charter for the project goals. The details on the audit are listed below:

52 barrels containing a total of 6,699 lbs. with 4,971 lbs. for scrap metal

Average estimate 3% of cross contamination per barrel

The individual barrel weight ranged from 17 lbs. - 280 lbs., avg. of 96 lbs.

One barrel was 45% cross contaminated

63% of sample is under the 3% avg. for cross contamination per barrel

AUDIT STATE: 2.5 Sigma DPMO 19,231 Yield 98.08%

CURRENT STATE: 2.0 Sigma DPMO 45,400 Yield 95.46%

FUTURE STATE: 3.0 Sigma DPMO 2,700 Yield 99.73%

Due to the limited availability of accurate measurable data or additional audit samples, the capability of

the scrap metal sales process couldn’t be identified at this time. After a full year of data with the

improved data measurement process installed, this capability of the process will be identified to

advance the process improvement of the scrap metal sales. A cause-and-effect diagram (Ishikawa

diagram) was completed at this time to verify if other inputs were necessary to validate other than the

measurement system (See Appendix). The identification of cross contamination, collecting of the scrap

metal data, and pricing of scrap metal were considered as a priority in testing for Analyze.

Several Lean initiatives were identified and implemented during this process since there was no risk to

the project or other processes. The team changed the internal reporting from manual to an electronic

format to error proof (poka yoke) the data entry process. The team also implemented an employee

change to expedite change.

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ANALYZE

The team reviewed the audit results and determined the scrap metal vendor was the main cause for the

Cost of Poor Quality (COPQ). This was identified through the process of completing the problem solving

report utilizing the cause-and-effect diagram (See Appendix). The 5Whys was used to determine the

root cause of the problem was the cross contamination of scrap metal, either internal and/or external.

The third party audit identified the cross contamination defects were originating from the scrap metal

vendor. This analysis allowed for the team to pass on additional statistical analysis and implement a

change scrap metal vendor to start in January 2013.

Although the third party audit sample indicated a 2.5 Sigma (1 barrel per week or 52 barrels per year),

the real current state is 2 Sigma (2 barrels of contamination per week or 123 barrels per year) based on

overall risk assessment and a single audit sample for analysis. By implementing changes in procedures,

the scrap metal Cost of Poor Quality (COPQ) will fall to 3, 7 barrels per year.

Several of the audit results were reviewed in detail, see below:

There were eight barrels with average of cross contamination exceeding 3% representing 18% of

the sample size weight

o ALUMINUM P13D4 5% (defect)

o A286 P12D3 1%

o INCO 718 P3D4 1%

o INCO 718 P3D4 1%

o SAW MIX P13D2 3%

o TI P10D4 2%

o TI P13D3 2%

o UNKNOWN P12D1 2%

o UNKNOWN P7D2 2%

To complete the root cause and significant cause-and-effect relationship for the potential causes, the

team used brainstorming, Cause & Effect matrix, and Pareto charts validate the search drivers (See

Appendix).

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A failure mode and effect analysis (FEMA) was completed to identify and mitigate risks. Each input was

validated with at least one selection in the FEMA. Of significant note, the risk of achieving future gains

in scrap metal sales still reside in implementing the lean initiatives as described in the FUTURE

IMPLEMENTATION IDEAS section. Each initiative will improve the process of collecting Scrap Metal,

Identifying Cross Contamination, and improve the recording of Scrap Metal.

The project team completed the Project Risk Assessment to determine the overall project risk at a low

level. This indicates to the project team that there are several factors that are not in their control that

could affect the successful outcome of the project. Monitoring and providing proactive adjustments to

the project will mitigate the risks. The project team also successfully completed a Project Check Sheet

and Project Check List indicating all necessary aspects to complete a Lean Six Sigma project was

addressed (See Appendix).

IMPROVE

As seen in the ANALYZE phase, the implementation of the new scrap metal vendor was launched in

January 2013. This was clear to the project team since the old scrap vendor was involved in every failure

mode identified in the analysis. Addressing the three inputs selected in the analysis section will assist in

achieving the project goals. By adding new procedures for collecting scrap metal, the organization can

reduce the overall defect rate for cross contamination and increase the scrap sales at the optimum level.

Some procedures were implemented to address this issue but the main issue of replacing barrels when

the metal of the operation is still in process. Identification of cross contamination is the second

improvement identified in the analysis section. Since this is sometimes difficult to identify different

metals, new procedures and equipment are necessary to validate scrap metal types which will identify

potential cross contamination. The third input for improvement is the pricing of the scrap metal. After

the new vendor is implemented, the procedure for the review of the scrap metal prices was

implemented to validate the prices used per the sales calculation. This will eliminate any defect in

pricing and allow for a more transparent business relationship.

Other potential solutions were evaluated and selected to optimize the operations. The “Future State”

process map was utilized as the optimization of the process. Each solution was tested as attainable and

didn’t incorporate “scope creep” since they reflected the project goals and organization’s goals. The list

of the additional solutions is presented below:

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Lean Continuous Improvement Initiatives

o Barrels need to be cleaned before use in scrap area

o Each machine needs to be cleaned before change of metal or usage

o Increase number of barrels for scrap metal

o Number barrels with machine

o Weight of barrel indication

o Adequate baseline for metrics

o Enhance reporting documents for scrap metal

o Fluid weight issue to fully understand the scope for our activity

Optimize operations by utilizing new metrics

o Obtain baseline metrics for cross contamination and fluid weight

o Identifying the symptom downstream will indicate the problem upstream

o Analyze fluid weight for improvement in effectiveness and efficiency

o Prepare team members for change, measure results to see where future issues can be

resolved

Obtain industry baseline standards for fluid weight issue to properly measure our results and

maximize value throughout the system

CONTROL

Starting on 1/1/2013, updated procedures were installed to monitor and control the scrap metal sales

process. The operational procedures were transferred from maintenance into quality with the project

team member Sean Paul, EH&S Officer and the responsibility center. The accounting and management

communication of the process was transferred from Accounting into the project team leader, Gary

Kapanowski, Master Black Belt. Updated electronic processes and reports provide error-proofing of the

data. Monthly reporting of the project and metrics communicated to management and the sponsor.

Two-way communication with the new scrap metal sales vendor provided full transparency of the scrap

detail and a formal process to resolve problems (See Appendix for monthly control charts for COPQ and

Final A3 charts). After the fiscal year is complete and metrics obtained, the operational control will

return to Accounting.

The control measures and metrics used for this project are as follows:

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Increase in scrap value: $13,494 to $31,919 per year

Cost in scrap metal per barrel is on average $259.50

Lower average % of cross contamination below 3% per barrel

Lower per barrel defect in cross contamination: Zero per year

Lower machine maintenance cost per year

Improved production efficiency per year

Reduction in scrap units per year

Improved production problem solving using the symptom of scrap metal from barrels to indicate

inefficiencies at specific machines

LEAN SIX SIGMA FINAL RESULTS

The results were mixed during the first year of implementation ending in the fiscal year 2013. The listing

below will indicate the year end metrics:

Lower per barrel defect didn’t achieve the goal of 0 barrels

o Cost of cross contaminated equated to $23,941

o Cost per cross contaminated barrel equated to $81.71, favorable to goal of $259.50

Lower overall 3% of average of cross contamination per barrel across production operations

didn’t achieve the goal

o Number of barrels with cross contaminated at 293 or 9.2%

o The DPMO equates to 90,818, yield of 90.8% or a 1.5 Sigma level

Obtain industry standards on fluid weight with a goal of 3%

o Improvement to reduce fluid in scrap metal delayed by sponsor due to capital

investment outside of the scope of the project

Overall yearly scrap sales yearly goal increase of $87,972.16 or 22.8% attained

o Year-to-year increase in 2013 at 182,021.84 or 47.2%

Lower machine maintenance cost year-to-year achieved with a 36.3% reduction

Improved production efficiency year-to-year achieved with a 28.7% gross margin improvement

Reduction of scrap units year-to-year achieved : 2.67% reduction

Improved production problem solving using symptom of scrap metal implemented in Top 30

part cost reduction team

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Customer scorecard regarding delivery time and quality indicates above standard or baseline

achievement in 2013

RISKS OR CONSTRAINTS

The scrap metal price volatility and volume mix provides an overall risk to the levels of scrap sales. Also,

the organization is not formed to generate scrap sales but making good parts - to customers - on time.

Thus, since the scrap metal mix profile is always changing and focusing on the organization’s goal, any

micro-managing to optimize the scrap metal sales beyond the company’s vision and mission will lead to

inaccurate direction and results for the organization.

LESSON LEARNED

Implementation of Lean Six Sigma initiatives can be instituted and exceed stated goals within one fiscal

year.

FUTURE IMPLEMENTATION IDEAS

One Lean Six Sigma initiative not implemented due to the sponsor determination the issue was outside

of the project scope was to obtain industry baseline standards for fluid weight to properly measure our

results and maximize scrap metal value throughout the system. The equipment investment cost is

$20,995 with a return on investment of 24 months. The project team re-affirms the incorporation of this

initiative purely on a cost benefit ratio (See Appendix on Return on Investment).

Improvement of the cross contamination of scrap metal can be fixed by using more barrels. By

swapping barrels for each production operation of different metals will eliminate the issue by definition.

The organization can obtain additional scrap metal barrels without cost though the vendor. The project

team re-affirms the incorporation of this initiative purely on a cost benefit ratio.

Using the scrap metric by specific equipment will indicate if the operation is in control with measurable

data. This is the next step in problem solving in operational management for the organization.

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APPENDIXPG 13 Environmental Health and Safety Officer Sean Paul’s Early Scrap Metal

Problem Identification

PG 13 Environmental Health and Safety Officer Sean Paul’s Early Scrap Metal Problem Calculation

PG 14 Regal Recycling’s letter explaining Cross Contamination at Moeller Manufacturing

PG 15-18 Third part audit process and results

PG 19-20 DEFINE Project Charter

PG 21 DEFINE Process Map: Current & Future States

PG 22 DEFINE SIPOC

PG 23 MEASURE Cause-and-effect diagram (Ishikawa diagram)

PG 24 ANALYZE Problem Solving Report

PG 25 ANALYZE Cause-and-effect matrix

PG 26 ANALYZE Pareto Chart

PG 27-28 ANALYZE Failure Modes and Effects Analysis (FEMA)

PG 29 ANALYZE Project Risk Assessment

PG 30 ANALYZE Project Check Sheet

PG 31 ANALYZE Project Check List

PG 32 IMPROVE Implement Pilot program to replace Regal Recycling with RJ Torching

PG 33 CONTROL Cost of poor quality (COPQ) metric

PG 34-35 CONTROL A3 for Scrap Metal Project

PG 36 Return on Investment: Fluid weight equipment

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Environmental Health and Safety Officer Sean Paul’s Early Scrap Metal Problem Identification:

The scrap metal project was started from analysis required of metal sent off site for recycling. This is an EPA requirement. While summing the receipts from our scrap metal recycler, I noticed that the recycler was claiming that we were sending him huge amounts of steel and not the alloys we machine. An example would be we would send 8 barrels of a valuable super nickel alloy, the receipt would only show 2 barrels of super nickel alloy and 6 barrels of steel. The recycler kept claiming a 40% or more cross contamination rate was “forcing” them to devalue huge portions of our recycled metals.

I spent the next year adding up every receipt from the metal recycler and compared with the current market values listed from recognized sources like the London Metal Exchange (LME) and the current market pricing for options and futures. By the end of the first month of analysis I was absolutely convinced the recycler was not acting in an honest manner.

Environmental Health and Safety Officer Sean Paul’s Early Scrap Metal Problem Calculation:

Per the analysis of the historical data and assumption of the level of cross contamination equates to 1 in 5 drums or 20%, per claim by the original scrap metal vendor, Regal Recycling, the estimated increase in scrap metal value for 2013 is $165,213. Other assumptions used to estimate the cost of the misclassification of metals include stable production levels year to year.

The actual difference in scrap metal sales proved to be close to the estimate. With the actual sales difference of $182,021.00, the difference from estimate is only 10.17%. The actual contamination rate was less than 10%, while my original estimate was very conservative at a 20% contamination rate. If we take the values of my estimate and utilize the actual rate of 10%, the overall difference is minor.

A good example would be Inconel (Inco) 718 which is one of the highest volume metals we processed in both 2012 and 2013.

2012: Scale tickets from Regal stated we shipped 54,306 pounds of Inco 718. I estimated that even if we contaminated 20% of the barrels that we should have sent another 37,920 pounds of Inco 718 for recycling. This would have been a total of 92,226 total pounds of Inco 718 for calendar year 2012.

2013: The scale tickets from RJ Torching show we shipped 96,333 pounds of Inco 718, a 4.3% variation from the estimates that were established in the analysis 2012. This is a true representative of the amount since 2013 production reduced by 1.6% from prior year.

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REGAL RECYCLING’S LETTER EXPLAINING CROSS CONTAMINATION AT MOELLER MANUFACTURING:

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THIRD PART AUDIT PROCESS AND RESULTS: 12/20/12

AUDIT STEPS UTILIZED IN THE 3RD PARTY AUDIT

1. Normal pickup on the 20th for Regal Recycling, original vendor

2. Bring RJ Torching representatives on site 12/18 and 12/19

3. Run the third party truck on 12/19 to the nearest state police scale; contact freight to find nearest state police scale and time that they are available.

4. One sample for RJ Torching to work on the sample without interruption.

5. Talk with internal supervisors to prevent any tool steel drums from the sample. This eliminates any inclusion of steel in the sample size.

6. Identify number and operators of the fork truck drivers in case of errors or communication to Regal Recycling, original vendor.

7. Log and mark each drum for metal and cross contamination.

8. Lock the trailer when the audit is complete to prevent addition or deletion of any drums from the sample.

8. Report any observation by RJ Torching’s to better improve the process and controlling scrap metal.

NOTES FROM THIRD PARTY AUDIT OF SCRAP METAL

Met with East Side Metals to provide an audit of the scrap metal process and results for the 12/20/12 pick-up from Regal

Objectives of the meeting:o Obtain approval for audit of metal and weighing of audit scrap metal before Regal pick-

upo Validate our processes is in controlo Validate the value of the scrap metal

The audit process will satisfy the following action steps:o Test next shipment’s weight through 3rd party vendor – approved by Managemento Test validity of each barrel content through increased testing (on 1/3 to 1/4 filled basis)

– waiting for procedure update approval Obtain approval by management for the added resources

o Test individual barrel weight though added weighing procedure and documentationo Test calibration of gages and weight measurement procedures to validate audit

measurementso Test valuation of metal prices with a 3rd party vendor

Validate all 2011 and 2012 prices

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Compare with current vendor priceso Test shipment with a 3rd party group for both weight and pricing

Have 3rd party vendor to a check on a shipment before current vendor receives shipment to validate measurement of the following:

Total weight of the shipment Individual weight of each type of metal Validation of any cross contamination of metals Pricing of each metal in the overall population

DETAIL PER SCRAP AUDIT: 12/18/12

1. A third party documented a sample size of 52 barrels containing a total of 6,699 lbs. of which 4,971 lbs. was for scrap metal; the difference is in barrel weight.

2. The average estimate % of cross contamination per barrel within the sample size was 3%a. This average level of cross contamination is not a concern for the value chain per third

party auditors3. The individual barrel weight ranged from 17 lbs. to 280 lbs. with an average of 96 lbs.

a. Per past experiences and review of the audit sample of barrel label of metal and the audited four staged verification of the contents, contamination occurrences are most likely for heavier barrel weights due to barrel use in multiple operations increases with weight.

b. For our calculations, we will limit the exposure to the TOP 15 barrel weights from this sample as the extrapolation for the COPQ calculation (173 lbs.).

4. One barrel was 45% cross contaminated and considered as null value and a quality defecta. This represents 1.92% of the sample population (1/52) or about a 2.5 Sigma level

5. A review of the metal segment groups indicate that 63% of the metal segment group weight is under the 3% average for cross contamination

6. The metal segment groups with an average of cross contamination exceeding 3% are the following, represented as a % of the sample size weight:

Aluminum: 9% A286: 1% TI: 14% UNKNOWN: 13% TOTAL: 37% of the sample size weight

7. There were eight barrels with average of cross contamination exceeding 3%a. This representing 15.4% of the sample size in quantity (8/52) and 18% of the sample size

weight8. Based on individual barrels with an average of cross contamination exceeding 3% are the

following, represented as a % of the sample size weight: ALUMINUM P13D4 5% - indicated as a quality defect per

third party auditors A286 P12D3 1%

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INCO 718 P3D4 1% SAW MIX P13D2 3% TI P10D4 2% TI P13D3 2% UNKNOWN P12D1 2% UNKNOWN P7D2 2% TOTAL: 18% of the sample size weight

9. Cost of Poor Quality (COPQ) for cross contamination of barrels for the sample size was calculated

a. The barrel with 45% cross contaminated was of Aluminum, Drum# P13D4, priced at $0.50 per lbs.

b. Resell the cross contaminated barrel at $0.06 per lbs.c. The difference of $0.44 is used for pricing calculationsd. The weight of the metal was 257 lbs. for the cross contaminated barrel, Drum# P13D4e. This calculates into $113.08 per cross contaminated barrel using the audit as the

baseline, Aluminum pricingf. Risk Analysis:

i. There is a risk to the analysis if the scrap metal is not always Aluminumii. There is a risk to the analysis if the scrap metal weight per barrel is not always

257 lbs. (top end of the audit sample size)iii. Aluminum represents only 9% of the sample size: thus, there is 91% available in

other scrap metaliv. Price for Aluminum is $0.50 per lbs.v. Average price for all 2012 scrap metals used in the shop is $1.56 per lbs.

vi. The price for INCO, most used scrap metal at 15% of sample size, ranges from $1.90 to $6.40 per lbs.

g. Metrics for COPQ utilizing the Audit Sample data with risk analysis inputi. Overall metrics for Cost of Poor Quality (COPQ) for scrap metal value per barrel

is the following:1. Price Aluminum: $76.122. Price 2012 Scrap Metal AVG of $1.56: $259.503. Price INCO - Low is $1.90: $318.324. Price INCO - AVG is $3.46: $588.205. Price INCO - High is $6.40: $1,096.82

ii. Overall Sigma Level and State financial impact for Cost of Poor Quality (COPQ) for scrap metal value:

1. 2 Sigma - Probable Statea. Price Aluminum: $9,362.76b. Price 2012 Scrap Metal AVG of $1.56: $31,918.50c. Price INCO - Low is $1.90: $39,153.36d. Price INCO - AVG is $3.46: $72,348.60e. Price INCO - High is $6.40: $134,908.86

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2. Moeller 2.5 Sigma - Current Statea. Price Aluminum: $3,958.24b. Price 2012 Scrap Metal AVG of $1.56: $13,494.00c. Price INCO - Low is $1.90: $16,552.64d. Price INCO - AVG is $3.46: $30,586.40e. Price INCO - High is $6.40: $57,034.64

3. 3 Sigma - Future Statea. Price Aluminum: $532.84b. Price 2012 Scrap Metal AVG of $1.56: $1,816.50c. Price INCO - Low is $1.90: $2,228.24d. Price INCO - AVG is $3.46: $4,117.40e. Price INCO - High is $6.40: $7,677.74

4. 6 Sigma - Ideal Statea. All scenarios are at $0.00 cost

h. Conclusioni. Due to the overall sigma level, scrap mix, and scrap production processes, the

risk assessment indicates the following:1. Current State is realistically at 2 barrels of heavy contamination per

week or 2 Sigma Level; there is a chance the one barrel per week which will be accounted for in the range

2. Overall weekly quantity of 52 barrels is on the low end of the average per known data for 2012. Thus, the adjustment from the one time audit sample of one contaminated barrel to two is not out of the statistical average for the sample size

3. The price of the 2012 scrap metal average is the most appropriate value for the study since the overall scrap distribution isn’t heavily concentrated in a few metals

4. By implementing changes in procedures, the scrap metal Cost of Poor Quality (COPQ) will fall to 3 Sigma Level

ii. Current State impact of scrap metal Cost of Poor Quality (COPQ)1. Upper Control Limit: $31,918.502. Lower Control Limit: $13,494.00

iii. Future State impact of scrap metal Cost of Poor Quality (COPQ)1. Upper Control Limit: $1,816.502. Lower Control Limit: $0.00

iv. Metric per barrel for scrap metal Cost of Poor Quality (COPQ) 1. $259.50

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DEFINE

Project Charter

Black Belt Project Charter

Project Name Scrap Metal COPQ Analysis Business / Location Wixom Associates Sean Paul Telephone Number X406 Project Participant Telephone Number Champion Gary Kapanowski Telephone Number X334 Start Date: 9/5/12 Target End Date: 6/1/13

Project Details

Project Description

To maximize the value for scrap metal throughout the organization.

Business Case By not following basic operational procedures, the scrap metal barrels experience cross contamination which cost an average $13,494 to $31,919 per year.

Problem Statement

Per 3rd party audit of the scrap metal process on 12/18/12 and historical data as background information, the Cost of Poor Quality (COPQ) for scrap metal is in the range of $13,494 to $31,919 in cross contamination per year due to poor internal processes and adherence to current procedures. Overall scrap metal sales increase by audit representative percentage of 22.8% or $87,972.16

Process & Owner Finance

Scope Start: Stop: Includes: Excludes:

Once scrap metal is produced from operations Payment for scrap metal by 3rd party Operations through payment cycle Nothing

Project Goals Metric Baseline Current Goal Theoretical Max.

Maximize scrap value through continuous improvements

Cost per cross contaminated

barrel = $259.50

1 barrel of cross

contamination per week

2 barrels of cross

contamination per week

0 barrels of cross

contamination per week

0 barrels of cross

contamination per week

Optimize operations

Lower overall 3% AVG of cross contamination

per barrel

3% overall AVG of cross contamination

3% overall AVG of cross contamination

2% overall AVG of cross contamination

0% overall AVG of cross contamination

Obtain industry standards on fluid weight

Lower overall 17% AVG of liquid weight

17% overall AVG of liquid

weight

17% overall AVG of liquid

weight

3% overall AVG of liquid

weight

0% overall AVG of liquid

weight Increase in scrap metal sales

Scrap metal sales increase 22.8% yr-to-yr

2012 scrap metal sales $385,842.80

2013 scrap metal sales $567,864.64

2013 scrap metal sales $473,814.96

2013 scrap metal sales

est. $700,000

20

DEFINE

Project Charter

Expected Business Results

Increase in scrap value through reduction in cross contamination: $13,494 to $31,919 per year

Increase in scrap value though improved scrap metal pricing: $87,972.16 Lower average % of cross contamination: Lower than 3% per barrel Lower per barrel defect in cross contamination: Zero per year Lower machine maintenance cost per year Improved production efficiency per year Reduction in scrap units per year Improved production problem solving using the symptom of scrap metal

from barrels to indicate inefficiencies at specific machines Expected Customer Benefits

Improved delivery time through improved production efficiency and quality due to reduction in scrap units and improved problem solving tools

Team members Gary Kapanowski Sean Paul

Support Required

Management to approve process to implement continuous improvement processes and procedures

Risks or Constraints

Mix of scrap can lead to different values of scrap value Weight per barrel has a wide range Increase in production can lead to increase in potential value and different

sigma levels

21

DEFINE

Process map

22

DEFINE

SIPOC diagram

23

MEASURE

Cause-and-effect diagram (Ishikawa diagram)

24

ANALYZE

Problem Solving Report

Author:Report No: Date:

ShiftWhy?Scrap metal mix per 3rd party provider not matching with purchasingwhy ?More steel metal scrap than purchased in one yearwhy?Mix of scrap - cross contamination levels indicate process problem > 1σ

why?We cannot account for the sigma level of scrap processwhy?Never audit or reviewed scrap process to know level of problem

at least 2σstart of operationweekly

Who Date Follow-up Who Date Follow-up

SP 6/1/2013 GK 1/31/14 SP 6/1/2013 GK 1/31/14

SP 6/1/2013 GK 1/31/14 GK 6/1/2013 GK 1/31/14

SP 6/1/2013 GK 1/31/14 GK 6/1/2013 GK 1/31/14GK 6/1/2013 GK 1/31/14 SP 6/1/2013 GK 1/31/14

Signatures

Title : Scrap Metal COPQ Analysis Project1/2/20131 / 2 / 3 / All Root cause Analysis (enter each of the 1st why from the fish bone

diagram)

Containment (Short term C/M, Band-Aid) Short term (C/M, Band-Aid) & Long-Term C/M

Problem Description: Per 3rd party audit of the scrap metal process on 12/18/12 and historical data as background information, the Cost of Poor Quality (COPQ) for scrap metal is in the range of $13,494 to $31,919 in cross contamination per year due to poor internal processes and adherence to current procedures. Overall scrap metal sales increase by audit representative percentage of 22.8% or $87,972.16.

Sketch:

Problem Definition: To maximize the value for scrap metal throughout the organization.

Where was the defect found ? In one barrel during scrap audit

Point of Cause: By 3rd party audit team

Gary Kapanowski

Cost in scrap metal per barrel is on average $259.50

Increase in scrap value: $13,494 to $31,919 per year

Root Cause : Cross contamination of scrap metal in barrels

Standard :Deviation :Problem since:How often : (vh / shift)

Low er average % of cross contamination: Low er than 3%

Low er machine maintenance cost per year

Low er per barrel defect in cross contamination: Zero per year

Improved production eff iciency per year

Reduction in scrap units per year

Similar Areas where this might Apply: Maintenance

Follow-up & Evaluation: Apply metrics and lean improvement processes

Issue Not Resolved : (state further follow-up activities)Lower average % of cross contamination: Lower than 3%.

Lower per barrel defect in cross contamination: Zero per year.

Increase in scrap value: $13,494 to $31,919 per year.

Improved production efficiency per year.

Reduction in scrap units per year

Issue Resolved:Cost in scrap metal per barrel is on average $259.50.

Improved production problem solving.

Lower machine maintenance cost per year.

Implement Lean Initiatives for 2014.

Test direct Cause

? cross out

Improved production problem solving

Direct Cause Analysis:(1) Indicate possible causes, (2) Circle most likely causes

GARY KAPANOWSKI 2/16/2014

True Cause Possible Cause Not a Cause

25

ANALYZE

Cause-and-effect matrix

Rating of Importance to Customer 9 5 5 9

1 2 3 4

Max

imiz

e sc

rap

valu

e th

roug

h co

ntin

uous

im

prov

emen

ts

Opt

imiz

e op

erat

ions

Obt

ain

indu

stry

st

anda

rds

on

fluid

wei

ght

Incr

ease

in

scra

p m

etal

sa

les

Total

Process Step Process Input

5 Collecting of Scrap Metal 9 9 7 9 242

6 Identification of Cross Contamination 9 9 7 9 242

8 Pricing of Scrap metal 9 9 7 9 242

9 Forms used to record scrap metal 9 9 3 3 168

4 Recording of Scrap Metal 7 7 5 3 150

2 Maintenance 3 9 9 3 144

7 3rd Party Provider detail 7 3 3 5 138

3 Finance 5 3 3 5 120

1 Quality - Safety 3 7 3 3 104

What degree of effect does the input have on the output?

Rating Scale: 3, 5, 7, & 9.

Cause and Effect MatrixScrap Metal COPQ Analysis Project

26

ANALYZE

Pareto Chart

27

ANALYZE

Failure Modes and Effects Analysis (FEMA)

Process or Product Name:

Responsible:

Item/Function SEV

OCC

DET

RPN

Collecting of Scrap Metal 9 9 9 512

Identification of Cross Contamination

9 7 9 384

Recording of Scrap Metal 7 7 7 216

Quality - Safety 7 7 7 216

Maintenance 7 5 5 175

Pricing of Scrap metal 9 3 3 81

3rd Party Provider detail 9 3 3 81

Forms used to record scrap metal 7 3 3 63

Finance 7 3 3 63

Scrap Metal COPQ Analysis Project

Gary Kapanowski

SUMMARY: Failure Modes and Effects Analysis (FEMA)

28

ANALYZE

Failure Modes and Effects Analysis (FEMA)

Process or Product Name:

Scrap Metal COPQ Analysis Project Prepared by: GK Page 1 of 1

Responsible: Gary Kapanowski FMEA Date (Orig) ___8/20/13_____ (Rev) __12/20/12___________

Item/FunctionPotential Failure

Mode(s)Potential Effect(s) of

Failure Sev

Potential Cause(s)/Mechanism(s)

of Failure Occ

Current Design Controls Det

RP

N Recommended Action(s)

Responsibility & Target Completion

Date Actions Taken

SEV

OCC

DET

RPN

What are the process steps?

In what ways can the process step go wrong?

What is the impact of the Failure Mode on the customer?

How

sev

ere

is th

e ef

fect

on

the

cust

omer

? What are the causes of the Failure Mode?

How

ofte

n do

es th

e C

ause

or F

ailu

re M

ode What are the existing

controls and procedures that prevent the Cause or Failure Mode?

How

wel

l can

you

det

ect

the

Cau

se o

r Fai

lure

Cal

cula

ted What are the

actions for reducing the occurrence, decreasing severity or improving detection?

Who is responsible for the recommended action?

What are the completed actions?

Rate each and recalculate the RPN after action has

been taken.

Collecting of Scrap Metal

Mixing of metals creating contamination

Reduction of scrap metal value 9

Production operators not changing barrels for change of metals in operations

9 None 9 729

New procedures to exchange barrels when metals in operation changes

VP Production

Project updated processes 8 8 8 512

Identification of Cross Contamination

Non-recognition of change in metals in barrels

Reduction of scrap metal value 9 Not noticing different

metals in barrels 7 None 9 567

New procedures & equipment to validate review of scrap metal before placing in storage

VP Production

Project updated processes 8 6 8 384

Recording of Scrap Metal

Current system cannot scan for metal type without equipment

Cannot validate type on metal causing inaccurate scrap identification

7 Lack of equipment 7 None 7 343

Additional equipment for recording scrap metal

Compliance Officer

Project updated processes 6 6 6 216

Quality - SafetyNot using quality metrics to validate scrap metal trends

Not validating relationships between metrics and goals

7 Lack of procedures 7 None 7 343New procedures to list connections of metrics

CFO Project updated processes 6 6 6 216

MaintenanceNot providing clean barrels causing contamination

Cross Contamination 7 Lack of identification of non-clean barrels 5 None 5 175

New procedures to include cleaning of scrap barrels

VP Production None 7 5 5 175

Pricing of Scrap metal

Non-recognition of different metal prices when calculating scrap sales

Reduction of scrap metal value 9

Not reviewing 3rd party prices for different scrap metals

7 None 9 567

Update accounting procedures to include pricing validation step

ControllerNew accounting procedures installed on 8/1/13

9 3 3 81

3rd Party Provider detail

Not providing transparent data

Reduced scrap metal sales 9

Not reviewing differences from internal vs. external reports

5 None 9 405New procedures to review scrap metal detail

Controller

New procedures to review scrap metal detail installed 8/1/13

9 3 3 81

Forms used to record scrap metal

Manual form cannot be read / inaccurate

Cannot validate scrap metal sales report from vendor

7

Operator causing error in manual recording of the scrap metal: type & weight

5 None 7 245Electronic form to eliminate operator errors

Compliance Officer

New electronic form implemented in 1/15/13

7 3 3 63

FinanceNot providing proper review of scrap metal sales

Not reviewing monthly payment cycle and overall monitoring scrap metal sales

7 Lack of procedures 7 None 7 343

New procedures to review scrap metal detail monthly

CFO

New procedures to review scrap metal detail installed 8/1/13

7 3 3 63

Failure Modes and Effects Analysis(FMEA)

29

ANALYZE

Project Risk Assessment

Project Name: Scrap Metal COPQ Analysis ProjectProject Sponsor: Gary KapanowskiBusiness Name: Moeller ManufacturingDate: 1/3/2013People RisksProject has a full-time functional and technical project manager with appropriate experience. 1Project has senior executive support and a suitable steering group. 1Roles, responsibilities, and decision authorities for the project team have been outlined and documented 1Appropriate resources, including qualified project team, firmly committed by all stakeholders for the entirety of the project. 1People Risks Total 4Business RisksThis entire project is fully funded and, if already commenced, on budget. 1Project is currently on schedule. 1Project cost, benefits, and scheduling agreed to by all stakeholders. 1Committed project spend can be accurately tracked. 0Breakeven return on investment calculated... and is both realistic and acceptable. 1Project Timeline and Cost Benefit Analyses include plan for legacy system shut down. 1Business Risks Total 5Adoption RisksCommunication plans span project cycle, both intra-team (internal) and extra-team (users/stakeholders). 1This system DOES NOT impact multiple business functions or locations. 0Change Management strategy has been defined and implemented. 1Business process transformation (including elimination of parallel processes) affirmed by project sponsor and user community. 1Control plan addresses functional ownership of data input quality and ongoing data management/clean-up. 1Adoption Risks Total 4Process RisksProject follows a defined project management process 1Strict rhythm of reviews by sponsor and functional / technical leaders, including all tollgates. 1Key milestone dates set/agreed to by both the project team and stakeholders. 0Periodic outside, independent reviews of this project, with a report out to the functional sponsor. 1Clear procedure used for escalation and approval of project scope change. 1Process Risks Total 4Technical RisksDesign requirements, driven by user inputs, are clearly documented, prioritized, and frozen. 1All environments (e.g., staging, development, testing) and tools are already in place for the team's use. 1Make vs. Buy assessment has been performed. 0This is a NOT new or pre-production release of a technology. 1Project will NOT require heavy customization of packaged software. 1This project digitizes a simple process, and requires few interfaces to other systems. 1Technical Risks Total 5External RisksThis project DOES Not involve working with multiple vendors. 1Application approved by legal for security and privacy 1Supplier viability is strong has successfully worked with the selected vendor(s) before. 0Success of this project DOES NOT depend on outcome of other parallel projects at business. 1External Risks Total 3

Overall Total 25

0 - If false and 1 if True or Not applicable0-15 - High Project Success Risk16-25 - Medium Project Risk>25 Low Project Risk

30

ANALYZE

Project Check Sheet

Location (Plant): Moeller Manufacturing - Wixom

Project Name: Scrap Metal COPQ Analysis Project Blackbelt/ Greenbelt: Gary Kapanowski

STEP DELIVERABLE REQUIREMENTS MEETS DOES NOT MEET

COMMENTS

1 Problem Statement Should include a complete, detailed description of problem (what is the y?), the current level of performance, and why this is important to Lear and/or the customerMust not contain causes, solutions, or any information not supported by data - there must not be an assumed solution

X

1 Defect Definition Includes a clear description of what the defect is, how it is measured, the units of measure, and how many opportunities per partMust refer to the same problem (the y) as defined in the problem statement. DPMO and Z score are measured from the defect defined

X

1 Objective Must be in terms of % reduction in defect rate for the (y) defined in the problem statement and defect definitionGuideline is 50% reduction if over 3 sigma, 90% if under 3 sigma, unless an acceptable reason to have another goal is defined

X

1 Customer and CTS's Only include customers and CTS's affected by the y being addressed X1 Team Selection A list of team members and their job function X1 SigmaTrac/Project

Authorization SheetAll fields filled out, all required signatures obtained. Project should be linked to a key plant metric. X

1 Initial Financial Estimate Must show supporting documentation and how calculated. X1 Project Timeline Use the 12 Step Checklist format X1 Process Map Must be completed to the appropriate level

Must include all of the following: value added or not, inputs and outputs at each step, controllable or noise, data collection points and what data is collected

X

2 Spec for Output Variable Must define the specification for the defect (y) being studiedUnits and number of opportunities per part must be defined Spec should be clear and concise

X

3 Successful Measurement System Analysis

Must document a description of the measurement system and gage R&R processThe gage for the defect (y) must pass a variable or attribute gage study. The key GR&R metrics must be presented. If MSA initially fails, must document improvements and complete follow up acceptable study. If an "other" type of study was used, then the method must be clearly defined.

X

4 Initial Process Capability Analysis

Process capability for the defect (y) must be completed DPMO and Z score must be presentedSpec used should match that defined in step 2Project direction should be discussed based on capability results (is project focused on variation or centering, or both?)

X Reliable detail to properly calculate not available at this time

5 Refined Problem Statement, Defect Definition, and Objective

Project Authorization form should be updated with new findings. Objective should be defined as a % reduction in DPMO on the y as calculated in step 4Guideline is 50% reduction if over 3 sigma, 90% if under 3 sigma, unless an acceptable reason to have another goal is definedMust finalize problem statement and defect definition, and document any revisions from step 1

X

5 Revised Financial Estimate Required if project definition or scope has changed since initial estimateMust show supporting documentation and how calculated. COPQ findings must be added to the financial estimate.

X

6 Identification of All Potential X's

Must have been completed with the project team as a groupMust include documentation of all tools/information used to identify x's (i.e. fishbone diagram, pareto charts, etc)

X

6 Prioritization of X's to Pursue Must have been completed with input from the project team as a groupMust include documentation of all tools/information used to prioritize x's (i.e. C&E matrix, multi vari studies, etc)Documentation must include potential x matrix

X

7 Finalized List of KPIV's with Statistical Significance Evaluated

Must include a completed potential x matrix with all information filled outEach x investigated must have a p value to justify next stepsFor each hypothesis test used, must document the hypothesis being tested, the data collected, and the resultIf a DOE is used, documentation must include a DOE planning sheet, analysis of results (initial and reduced ANOVA model, appropriate graphical analysis, transfer equation, SSE analysis), and conclusions

X

8 Optimum Operating Levels for KPIV's

Must demonstrate use of the appropriate statistical tools to determine the optimum processIf a DOE is used, documentation must include a DOE planning sheet, analysis of results (initial and reduced ANOVA model, appropriate graphical analysis, transfer equation, SSE analysis), and conclusionsValidation of optimized process under production conditions must be completed and documented

X

9 Tolerances or Operating Ranges for KPIV's

Must set a tolerance for each variable KPIVCalculation and verification data for process settings must be documented X

10 Successful Measurement System Analysis for KPIV's

Must complete a successful MSA for all variable KPIV'sMust document a description of the measurement system and gage R&R processIf MSA initially fails, must document improvements and complete follow up acceptable study. If an "other" type of study was used, then the method must be clearly definedMust evaluate the need for re-validation of the measurement system for the (y) and document the study or the reason it was not required

X

11 Process Capability for all KPIV's

A long term capability study is required for each variable KPIV Must assess and provide explanation as to whether capability is acceptableUnacceptable capabilities must be improved to an acceptable level

X

11 Final Process Capability for Output

Must calculate improved process capability for the y in terms of long term DPMO and short term ZThe defect definition, unit of measure, and opportunity count must be consistent with that of step 4Results must achieve objective for improvement set in step 5

X

12 Controls for each KPIV A process control must have been implemented for each KPIV X12 Control Plan and FMEA

UpdatedMust update sections that are relevant to the projectMust use proper controlled documentation procedure X

12 Executive Summary Complete and attach to SigmaTrac X12 Sign off by Process Owner Complete and document closure process as required by individual plant X12 Update and Close Project in

SigmaTracAll fields filled out, project evaluated for shareability X

31

ANALYZE

Project Check List

Project:________________________Scrap Metal COPQ Analysis Project Black Belt: GKDEFINE PHASE

1 Title Page Optional x2 Time Line Required x3 Problem Definition - Scope & Strategy Required x4 Financial Summary Required x5 Team and Support Personnel Required x6 Evidence of Team Meetings Required x7 Process Flow Diagram Required x8 Process Flow Diagram - Generic Required x9 Line Layout - Generic Optional x

MEASURE PHASE1 Title Page Optional x2 Customer Specifications Required x3 Measurement System Analysis - Variable Required x4 Measurement System Analysis - Attribute Required x5 Measurement System Analysis - Failure Required x6 Historical Data Required x7 Process Capability - Process/Product Report Required na8 Process Capability - Six Pack Report Required na

ANALYZE PHASE1 Title Page Optional x2 Cause and Effects Matrix Required x3 Data Collection Plan - Rational Subgroups Required x4 Sampling Plan Required x5 Potential X Matrix Required x6 Graphical Analysis: Optional x

Pareto, Histogram, Run Chart, Box Plot7 Graphical Analysis: Optional na

Multi-Vari, Main Effects8 Hypothesis Testing Required x

IMPROVE PHASE1 Title Page Optional x2 Variation Flow Down Hypothesis Testing Required x3 Design of Experiments (DOE) When Applicable na4 Establishing Targets or Tolerances Required x5 Measurement System Analysis Required x6 Process Capability Required x

C0NTROL PHASE1 Title Page Optional x2 Process Control Required x3 Control Plan Required x4 Control Plan - Sign Off Sheet Required x5 FMEA - Project Risk Assessment Required x6 Process Benefits Required x

32

IMPROVE

Implement Pilot program to replace Regal Recycling with RJ Torching.

Other improvement initiatives:

New procedures to exchange barrels when metals in operation changes

New procedures and equipment to validate review of scrap metal before placing in storage

Update accounting procedures to include pricing validation step

Electronic form to eliminate operator errors

Additional equipment for recording of scrap metal

New procedures to include cleaning of scrap barrels

New procedures to review scrap metal detail monthly

New procedures to list connections of metrics

33

CONTROL

Cost of poor quality (COPQ) metric

34

CONTROL

A3 for Scrap Metal Project

35

CONTROL

A3 for the Scrap Metal Project

36

RETURN ON INVESTMENT: FLUID WEIGHT EQUIPMENT

Current Disposal Costs, $/ Gallon $0.30 HP of blower 0.50 Hrs of Oper./Mo. 431Plant Electric Cost $/KWhr $0.09 Cost of labor $/hr Days Operation/month 18.0Cost Of Gas $/Therm 0.80 System Rating, GPD 240 Fluid Reduction Factor 85%Volume of Waste Water Gal/Month 4,308 Burner Size BTU/Hr 118,750 Hauling Cost/GallonRating of Evaporator System GPH 10 Labor per Week Hrs 0.75

Year One Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Volume - Gallons/Month 4,308 4,308 4,308 4,308 4,308 4,308 4,308 4,308 4,308 4,308 4,308 4,308Cost to Haul $1,292 $1,292 $1,292 $1,292 $1,292 $1,292 $1,292 $1,292 $1,292 $1,292 $1,292 $1,292Total Disposal Cost/Mo. $1,292 $1,292 $1,292 $1,292 $1,292 $1,292 $1,292 $1,292 $1,292 $1,292 $1,292 $1,292

Cost of ENCON N33V1-10 $20,995Electricity $20 $20 $20 $20 $20 $20 $20 $20 $20 $20 $20 $20Cost of Fuel $409 $409 $409 $409 $409 $409 $409 $409 $409 $409 $409 $409Cost of Labor Cost to Haul ResidueTotal Cost of System/Per Mo $21,424 $429 $429 $429 $429 $429 $429 $429 $429 $429 $429 $429

Pay Back $20,132 $19,268 $18,405 $17,542 $16,678 $15,815 $14,952 $14,088 $13,225 $12,362 $11,498 $10,635

Year Two Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Estimated Gallons/Month 4,308 4,308 4,308 4,308 4,308 4,308 4,308 4,308 4,308 4,308 4,308 4,308Disposal Cost $1,292 $1,292 $1,292 $1,292 $1,292 $1,292 $1,292 $1,292 $1,292 $1,292 $1,292 $1,292

Electricity $20 $20 $20 $20 $20 $20 $20 $20 $20 $20 $20 $20Cost of Fuel $409 $409 $409 $409 $409 $409 $409 $409 $409 $409 $409 $409Cost of Labor Cost to Haul ResidueTotal Cost/Month $429 $429 $429 $429 $429 $429 $429 $429 $429 $429 $429 $429Pay Back $9,772 $8,908 $8,045 $7,182 $6,319 $5,455 $4,592 $3,729 $2,865 $2,002 $1,139 $275

RETURN ON INVESTMENT FOR MOELLER MANUFACTURINGSCENARIO #1 ENCO N N33V1-10 EVAPO RATOR