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How to solve Case Studies IV
Problem Analysis
By Christophe Mercier
The 4 types of Questions & their Patterns
of thinking
A.  What is going on?
1.  Situation Appraisal
C.  Which course of
action should we
take?
3.  Decision Analysis
(DA)
4.  Potential Problem
Analysis (PPA)
Problem Analysis
•  Problem Analysis provides the skills needed to
explain any situation in which an expected level of
performance is not being achieved and in which the
cause of the unaccepted performance is unknown
Cause & Effect Thinking
•  A problem is the visible effect of a cause that
resides somewhere in the past
•  We must relate the effect we observe to its exact
cause
•  Only then can we be sure of taking appropriate
corrective action (to correct the problem and keep it
from recurring)
The criteria that define a Problem
1.  An expected level of performance is not being
achieved
2.  The cause of the unacceptable performance is
unknown
Examples of Problems
– “From the day we introduced the computer,
we’ve had nothing but trouble in getting
inventories to balance. I just don’t understand it”
– “Chef Jones was referred to us as a great Chef,
but he certainly hasn’t fulfilled expectations in
this restaurant”
– “The beverage cost was kept under acceptable
limits (24-25%) for years. Then, since March, it
went up to 29-31% and we don’t have the
slightest idea of what happened”
The Structure of a Problem
Performance
SHOULD
CHANGE
DEVIATION
Performance
ACTUAL
Past
Present
The Structure of a Day ONE Problem
Performance
SHOULD
Some conditions required for
achievement of the SHOULD never
has existed OR never has functioned
correctly since day ONE
DEVIATION
Performance
ACTUAL
Past
Present
The Process of Problem Analysis
•  Problem Definition
•  Description of the problem in 4 dimensions
– Identity, Timing, Location & Magnitude
•  Extraction of key information in the 4 dimensions to
generate possible causes
•  Testing for the most probable causes
•  Verification of the true cause
May not be
possible in a
case…
Case Study
•  The attached Beverage Sales and Cost Report
shows a Month to Date beverage cost percentage
of 31.54%
•  You are a new Food and Beverage Manager in this
hotel.
•  The cost controller tells you that the beverage cost
is too high compared to the company’s standards
and that this concerns requires your immediate
attention…
Problem Definition (or deviation statement)
•  We must define a problem exactly before we can describe,
analyze and explain it.
•  We define it with the DEVIATION STATEMENT, or NAME
the problem
•  It is important to STATE this NAME precisely because all
the work that follow will be directed at correcting the
problem as it has been named !
•  Although this sounds obvious, failing to name a problem
often leads to inefficient and unproductive problem solving
In our example
•  The cost controller says: The beverage cost
percentage is too high (31.54%) compared to the
company’s standards.
•  What else is missing to have a clear Problem
Statement?
Description of the Problem in 4 Dimensions,
Identity, Location, Timing & Magnitude
•  IDENTITY (What is it we’re trying to explain)
•  LOCATION (Where we observe it)
•  TIMING (when it occurs)
•  MAGNITUDE (How serious, how extensive it is)
In our example…
•  IDENTITY: What beverage cost is too high? The
report breaks it down to 5 categories…
•  LOCATION: Where is beverage cost too high? The
report breaks it down to 8 outlets
•  TIMING: When was the high cost observed first?
During what shifts has it been observed since?
•  MAGNITUDE: What is the extent of the problem?
(percent) & how many sub-categories are affected?
IS and IS NOT (Basis for comparison)
•  We know that the beverage cost is is high, what
could we gain by identifying an outlet or a category
of beverage for which beverage cost COULD BE,
but IS NOT high?
•  Make a logical comparison for IDENTITY,
LOCATION, TIMING and MAGNITUDE…
Extraction of Key information in the
Problem’s 4 dimensions to Generate
Possible Causes
•  What is distinctive about “Drink On The Beach”’s
beverage cost and “Dining on the Rock”’s?
•  What is distinctive about Spirit costs and Wine
costs?
– … here your analysis begins to reveal
important clues to the cause of the problem
(clues, not answers and explanations yet!)
Changes
•  When you have explored DISTINCTIONS in the 4
– Does the distinction suggests a CHANGE?
•  In our example, let’s assume that the beverage cost
has always been to high (no change has triggered a
drop of performance, it is therefore a DAY ONE
problem)
In Summary
Deviation Statement:
DIMENSIONS
SPECIFIC QUESITONS
PERFORMANCE
CLOSEST LOGICAL
DEVIATION
COMPARISON
WHAT IS DISTINCTIVE
IDENTITY
WHAT?
IS…
COULD BE but IS
NOT…
LOCATION
WHERE?
IS…
COULD BE but IS
NOT…
TIMING
WHEN?
IS…
COULD BE but IS
NOT…
MAGNITUDE
EXTENT?
IS…
COULD BE but IS
NOT…
Generation of Possible Causes
•  Somewhere in the list of distinctions and changes
that emerge during PA, lies the explanation of
CAUSE, provided that all relevant information about
the problem has been obtained and included.
– In our example, a category of beverage
clearly stands out
Ishikawa Cause & Effect Diagram
•  Also called Fishbone, E-book p 36
People
Process
Product
Effect
Environment
Management
Material
Testing for most probable causes
•  The Ishikawa fishbone lists POSSIBLE causes
which need to be verified
– Is it the true cause of the problem?
– The true cause MUST explain each and every
aspect of the deviation since the true cause
created the exact effect we have specified.
Effects are specific, not general.
•  IF (probable cause) is the true cause of the
problem, then how does it explain why the cost of
(IDENTITY) is observed only at (LOCATION)…?
Verification of the true cause
•  To verify a likely cause is to prove that it did produce
the observed effect.
•  In our example verification was explained…
•  Sometimes no verification is possible
•  Sometimes failure occurs (This is when there is too
little data in the specification, insufficient
identification of key distinctions or when
assumptions have distorted judgment ...
In Conclusion
•  The LOGIC of Problem Analysis defends
conclusions that support FACTS, it sets aside those
that cannot.
•  It is a process that makes good use of the
EXPERIENCE and JUDGMENT we possess.
•  It helps us to use both in the most SYSTEMATIC
and OBJECTIVE way possible.
The Process Reviewed:
Deviation Statement
Verify the most probable
causes
SpecificationDistinctions?
Test for probable causes
Changes?
Generate Possible
Causes