Natalie is a teacher and holds an MA in English Education and is in progress on her PhD in psychology.
It's important for companies to understand how elements of their business change over time. One way to do that is to construct a control chart. Watch this lesson to find out more about control charts for variables and how they can be used.
Variables in Business
Roma is a hospital administrator. It's her job to make sure that the business side of the hospital runs efficiently. As part of her duties, Roma needs to evaluate how well her hospital's emergency room, or ER, is performing.
To evaluate her ER, Roma can look at several different variables. Variables are things that change value. In Roma's business, variables could include things like the average time it takes to see a doctor after coming to the ER, the number of repeat visitors, the accuracy of diagnosis and treatment, or another factor that might represent how well the ER is running.
In other businesses, variables might include things like the durability of a product, the cost to manufacture a product, or the profit of a company, among others. Businesses often evaluate variables using control charts. To help Roma with her investigation of her ER, let's take a closer look at control charts and how they can be used in business.
Roma wants to know how her ER is doing. She knows that she's going to look at a couple of variables, such as the average wait time for people to see a doctor in the ER and the percentage of repeat visitors to the ER. But, how can she look at that data? Seeing the numbers on a spreadsheet doesn't really give her a good idea of what's going on; it just makes her head swim!
A control chart is a visual representation of information across time. For example, Roma could make a chart with the data showing the average wait time (in minutes) to see a doctor in the ER over a one month period. The chart could show her if that number is going up, down, or staying the same over time.
Control charts can show distribution of data and/or trends in data. If Roma wants to look at how much variation there is in the different wait times of patients, she will want to make a control chart that shows the distribution of the data. But if she looks at whether the wait time is changing or staying the same, she's looking for trends in the data.
Okay, Roma understands what a control chart is and how it can help her look at the distribution or trends in her data, but how can she use control charts to help her hospital?
There are three main uses for control charts in business:
1. Monitor a situation.
The first use is to simply monitor a situation. For example, Roma can create a control chart from the data about how many ER patients have been to the ER in the past month. This information on repeat visitors can help her make sure that the number of repeat patients is not increasing. If it is, there could be a problem with the treatment the patients are receiving.
2. Understand when to take action and what action to take.
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Let's say that Roma's control chart gives her information about repeat visitors to the ER that is disturbing to her. Perhaps the average number of people who return to the ER is very high. This will tell Roma that she needs to take action to reduce the number of patients who return to the ER. On the other hand, if she notices that the number is decreasing, she might not want to take action.
The action Roma decides to take will be based on the information in the control charts. For example, if she has a chart showing that most of the repeat visitors to the ER are coming because of problems that could be addressed with preventative treatment, then she might implement a plan for the ER doctors and nurses to inform the patients about what they can do to prevent future ER visits, such as taking certain medications or avoiding certain foods.
3. Determine whether implemented changes are working as expected.
The third major role of control charts is to help assess the outcome of changes that have been implemented. For example, a control chart could show Roma whether the number of repeat visitors to the ER decreases after the plan to inform about preventative medicine is put into place. If the chart shows the number decreasing, then the plan has worked. But if it shows that the number is increasing or staying the same, Roma will likely want to implement a new plan.
Variables are things that change value. In business, variables could include things like the durability of a product, the cost to manufacture a product, or the profit of a company, among others. Businesses often evaluate variables using control charts, or visual representations of information across time. Control charts can show distribution of data and/or trends in data. There are three main uses for control charts in business: to monitor a situation, to understand when to take action and what action to take, and to determine whether implemented changes are working as expected.
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