Managing Operations: A

Focus on Excellence
Transformation Process

Inputs

Throughput

Cox, Blackstone, and

Schleier, 2003

Chapter 14
The Tools of Quality:
Exceeding Customers Expectations

The Seven Tools of Quality

1.
2.
3.
4.
5.
6.
7.

Control chart
Run chart
Pareto chart
Flow chart
Cause and effect diagram
Histogram
Scatter diagram

CBS Chapter 14

14-2

Statistical Process Control

A method of inspection by which it can
be determined whether a process is in
control
Differs from Acceptance Sampling in
that SPC does not make judgements
about the quality of the item processed.
Key tool is the Control Chart of which
several types exist.
CBS Chapter 14

14-3

SPC Defined
All processes are affected by multiple factors
and, therefore, SPC can be applied to any
process.
There is inherent variation in any process which
can be measured and controlled.
SPC does not eliminate variation, but it does
allow the user to track special cause variation.
SPC is a statistical method of separating
variation resulting from special causes from
natural variation and to establish and maintain
consistency in the process, enabling process
improvement. (Goetsch & Davis, 2003. p. 631)
CBS Chapter 14

14-4

Variation in Processes
Common Cause variation - the variation
which in inherent in the process itself; when
sampled, a normal distribution is found; a
process is said to be in statistical control
when only common cause variation exists.
Special (or Assignable) Cause variation - the
variation in process output that might be
traced to a specific cause; the process is said
to be out of control when a special cause
variation exists.
CBS Chapter 14

14-5

Rationale for SPC

Control of Variation
Continuous Improvement
Predictability of Processes
Elimination of Waste
Product Inspection

CBS Chapter 14

14-6

Creating Control Charts

All control charts rely on the periodic
sampling and measurement of items.
The data collected will allow the
calculation of a centerline, and upper
and lower control limits.
The centerline is the mean of all
samples, whereas the control limits are,
conceptually, the mean +/- three
standard deviations.
CBS Chapter 14

14-7

Interpreting Control Charts

SPC is based upon the
Central Limit Theorem
which tells us, in effect,
that the samples will
follow a normal
distribution regardless
of the shape of the
parent distribution.

2
(68%)

4 (95.5%)
6 (99.7%)

Interpreting control charts is, then, all about probabilities if

the observations arent probable, then there must be a
special cause variation.
CBS Chapter 14

14-8

Interpreting Control Charts

Special Cause Variation is assumed
to exist if:
1. Any point falls outside the
control limits.
2. Nine consecutive observations
fall on one side of the mean.
3. Six consecutive observations
are increasing (or decreasing.)
4. 14 observations alternate
above and below the mean.
5. Two of three consecutive
points fall in zone C in one-half
of the chart.
6. Four of five consecutive points
fall in zone B in one-half of the
chart.

CBS Chapter 14

+3x
+2
+1

UCL
C = 2.1%

B = 13.75%
A = 34%

A = 34%
+1
B = 13.75%
+2 C = 2.1%
-3x
LCL

7. 15 consecutive observations
in the A zones.
8. Eight consecutive points
outside of the A zones.

14-9

Risks of SPC
SPC has the same Type I and Type II
risks as acceptance sampling
If the process if in fact in control but we
conclude that it is out of control, we
have committed a Type I error.
If the process if in fact out of control but
we conclude that it is in control, we
have committed a Type II error.
CBS Chapter 14

14-10

Common control charts for

variables & attributes
Data Category

Chart Type

Statistical Qty

Variables data

X-bar & R

Mean & Range

X-tilde & R

Median & Range

X-Rs

Individual values

P-chart

Percent defective

Np-chart

Number of defectives

C-chart

Number of defects

U-chart

Number of defects per

unit (area, time, length,
etc.)

Attributes data

CBS Chapter 14

14-11

What SPC does not do

SPC only determines whether a process is
in statistical control NOT whether the
process is producing within specifications
nor whether the process is even capable
of producing within specifications.
We must rely on another measure AFTER
we have assured that the process is in
control using SPC.
CBS Chapter 14

14-12

Process Capability
Process capability is the ability of the
process, as it currently exists, to
product within specifications.
One measure known as Cp compares
the natural variation of the process to
the specification width.
Another, more precise, measure known
as Cpk compares the natural variation of
the process to the specification width
and target.
CBS Chapter 14

14-13

Process Capability
Process Capability (PC) is the range in which "all" output
can be produced the inherent capability of the process.

Definition:
PC = 6

6 (99.7%)
CBS Chapter 14

14-14

Process Capability
and Process Specifications
Process output
distribution

Output
out of spec

Output
out of spec
5.010
4.90

4.95

5.00

5.05

5.10

5.15
cm

Tolerance band
LSL
USL
CBS Chapter 14

Inherent capability (6 )

14-15

Process Capability
and Process Specifications
This process is
CAPABLE of
producing all good
output.
Control the process.
Lower
Spec
Limit

Upper
Spec
Limit

This process is
NOT CAPABLE.

INSPECT - Sort out

the defectives
CBS Chapter 14

14-16

Process Capability Index

Index Cpk compares the spread and location
of the process, relative to the specifications.

Cpk =

the smaller of:

OR

Upper Spec Limit - X

3

X - Lower Spec Limit

3

CBS Chapter 14

14-17

Cpk Values
Cpk = 1.0

LSL

Cpk = 1.33

USL

Cpk = 1.0

LSL
CBS Chapter 14

LSL

Cpk = 3.0

USL

Cpk = 0.60

USL

LSL

LSL

USL

Cpk = 0.80

USL LSL

USL
14-18

Run Charts
Number of
defectives

x
x

x
x

x
x
Time

Figure 14.13. Run chart

CBS Chapter 14

14-19

Pareto Chart
Comments

200
180
160
140
120
100
80
60
40
20

x
x
x

Crust
too
hard

Few
toppings

Need
more
cheese

Too
much
sauce

Service
too
slow

Figure 14.14. Pareto Analysis of problems at a pizza parlor

CBS Chapter 14

Element

14-20

Flow Chart

Time (distance)
Brief Description
5 min.
Sale is made. Items sold are entered into POS terminal.
D
4 hours
Average delay until the end of the day.
1 min.
Inventory records are updated for sales and receipts by computer.
D
14 hours
Delay until order review.
20 min.
Manager builds an order to maximize discount/minimize freight costs by ordering reorder
items and other items required to reach discount.

3 days
Mail order to vendor.
3 days
Vendor processes order.

3 days
Vendor ships order.
5 min.
Inspect shipment for damage.

5 min.
Move shipment to stock room.
D
2 days
Temporarily placed in stock room until time is available to stock shelf.

2 min.
Move coffees to proper shelves.
30 minutes Coffees/teas placed in correct display containers.

15 days
Wait until time to pay invoice.
5 min.
Pay invoice.
Summary of Work Elements
Element
Number
Time/distance
Percentage
6
3 days
61 min.
11
D
3
2 days
18 hrs.
11

4
6 days
7 min.
22

1
15 days
56
1
5 min.
0
Figure 11.7. Process flow chartcurrent method of inventory replenishment

CBS Chapter 14

14-21

Cause and Effect Diagram

Out of Gas

BATTERY

FUEL

Old

Cable Corroded

Dead
Fuel Line Closed

Lights Left On

CAR WONT
START

Loose Wire
STARTER
SOLENOID

Wires Corroded
WIRES

Figure 14.15. Ishikawa (cause and effect) diagram for car wont start

CBS Chapter 14

14-22

Histogram
18
16
14

14

25
23

14
20

10
8

11

4
2

15

15

Frequency

11

12

14

11

11

10

10

3
5

2
1

2 3 4 5 6 7 8 9 10 11 12
Result
Figure 14.16a. Histogram of expected results

10

Result
Figure 14.16b. Histogram of actual
results

11

CBS Chapter 14

12

14-23

Possible Histogram Shapes

14

14
12

Frequency

12

12

10

Frequency

9
8
6

8
6

4
3

12

12

10

Figure 14.18. Bimodal histogram

Category

C a te g o r y

F ig u r e 1 4 .1 9 . C liff-lik e h isto g r a m

10

14

12

Frequency

Frequency

Frequency

17

6
5
4
3

10
8
6
4

1
0

Figure 14.20. Saw-toothed histogram

CBS Chapter 14

10

11
Category

12

Figure 14.21. Skewed histogram

10

Category
14-24

Points Scored

Scatter Diagram
40
35
30
25
20
15
10
5
0

50

100

150

200

250

300

Figure 14.22. Scatter diagram

350
400
450
Yards Gained Rushing

CBS Chapter 14

14-25

The Seven New Tools

1.
2.
3.
4.
5.
6.
7.

Affinity diagram
Relational diagram
Tree diagram
Matrix diagram
Program decision process chart
Arrow diagram
Matrix data analysis

CBS Chapter 14

14-26

Affinity Diagram
A method to get your arms around a complex problem.
Similar to a brainstorming session wherein each
participant writes his/her idea for a cause on an index
card.
2
7
1
8
6

13
11

3
10
CBS Chapter 14

12
14

16
15
14-27

Affinity Diagram
A method to get your arms around a complex problem.
Similar to a brainstorming session wherein each
participant writes his/her idea for a cause on an index
card.
The possible causes are then arranged into groups of
similar causes. The groups might be functional areas.
Group 1

Group 2

Group 3
2

13

12

10

15

14

16

11

Group 4

CBS Chapter 14

14-28

Relational Diagram
Used to logically examine the interrelationships among the
causes within a particular grouping.
The problem is written to the left and the causes are placed
according to their relationship to the problem -- the further away
the weaker the relationship.
5

1
12

Statement of
problem
16

14

CBS Chapter 14

14-29

Relationship Diagram Example

Losses not
defined

Planning work
Accepting current
reality

Status quo is
rewarded
Busy
maximizing
department
profit

Short-term
profit goals

Schedule is
overloaded

Too many
projects

Employees lack
understanding

Lack incentive
for
improvement

Lack time to
develop
employees
Improvement
work competes
with day-to-day
work

Management is
not setting a
good example

CBS Chapter 14

Figure 14.23. Relational diagram

14-30

10

Tree Diagram
Used to identify and sequence the tasks necessary to accomplish
an objective (the opposite of the problem) using the affinity
diagram and the relationship diagram as a reference.
1

13

12

10

15

14

11

16

Objective

CBS Chapter 14

14-31

Tree
Diagram
Example

Interaction must
occur with
frequency

Make group
meetings
more
Effective

Publish and
adhere to agenda,
with team input

Develop
procedures
to assure
team
effectiveness

Require each
function to
periodically
report status

Provide
system to
communicate
progress

Improve interaction
among functional
areas represented
in the group, in the
creation and
implementation of
an effective business
plan

Distribute
tracking charts
of team
performance
Each function
shows its plan
to fulfill
overall plan

Show
functional
interdependencies
in plan
development

Identify
relationships in
dependencies in
project plan

Interaction
techniques

Participate in
joint training
of planning
methods

Use consensus
building
techniques in plan
development and
implementation

Use facilitator
approach at
meetings

Figure 14.24. Example tree diagram

CBS Chapter 14

14-32

Matrix Diagram
A\B

B1

B2

B3

B4

B5

A1
A2
A3
A4
A5

L-shaped

C5

C5

C4

C4

C3

C3
C2

C2

C1

C1
B1

B2

B3

B4

B5

D5

D4

D3

D2

B1

D1

A1

A1

A2

A2

A3

A3

A4

A4

B2

B3

B4

B5

A5

A5

T-shaped
CBS Chapter 14

X-shaped
14-33

11

Dept 1 Dept 2 Dept 3

1
1
2
5
1
3
1
2
T 10
2
3
1
A 3
4
1
S
K 6
1
2
13
1
3
2
2
2
1
8
2
1
12
1
2
14
1
7
3
2
1
11
3
1
2
9
2
1
16
1
2
15
1
2
CBS Chapter 14

Matrix Diagram
Example
The matrix L-diagram is
often used to identify and
assign responsibility for
tasks identified in the tree
diagram.
1 = primary
2 = secondary
3 = tertiary
14-34

Case received via mail.

Program
Decision
Process
Chart

Case scanned by paralegal

No conflict of interest

Conflict of interest

Attorney and paralegal

meet with client

Sent to another attorney

Attorney and paralegal

"discover evidence
A settlement offer is made
Plaintiff settles

Plaintiff doesn't settle

File motion to
dismiss case

File trial motions

Hold hearing on motions

Judge orders mediation

Judge doesn't order mediation

No settlement

Mediate settlement
Set trial date
Depose witnesses
Go to trial
Figure 14.27. Sample program decision process chart
CBS Chapter 14

14-35

Arrow Diagram
Operations

10

11 12

Foundation
Framework
Scaffolding
Exterior
Interior walls
Plumbing and
electrical work
Doors and
windows
Interior painting
Interior finished
Final inspection
and delivery
CBS Chapter 14

Figure 14.28a. Gantt chart to plan the construction of a house

14-36

12

Arrow Diagram
4

10

Figure 14.28b. Arrow diagram for construction of a house

CBS Chapter 14

14-37

What is QFD?
A specialized method for making customers part of
the product development cycle.
It translates customer wants into what the
organization produces enabling the organization
to:
Prioritize customer needs;
Find innovative responses to those needs; and,
Improve processes to maximize effectiveness.

CBS Chapter 14

14-38

Structure of QFD
6
2

1 Customer Input
2 Manufacturers Current
Requirements/Specifications
to Suppliers
3 Planning Matrix
importance rating
competition rating
target values
scale-up needed
sales points
4 Relationships

5
CBS Chapter 14

5 Prioritized list of
manufacturers critical
process requirements
6 Process requirement
trade-offs

14-39

13

QFD Example
X = conflicting requirement
+ = supporting requirement

Tapes from CD

Large speakers

Light weight

Good balance

Good sound

Inexpensive

Attractive

CBS Chapter 14

3 Color choices

6 Speakers

Plastic handle

Plastic case

PRIORITY

Tape recorder

Product
characteristics

A = Competitor 1
B = Competitor 2
C = Our Boom Box
WORST

BEST

A B

B C
+

AC

C
X

C
+

BC

AB
A

Figure 14.29. House of quality for a boom box

Technical features

Customer
Requirements

Matrix 1

14-40

QFD Process

Applied technologies

Technical
features

Matrix 2

Applied
technologies

Matrix 3

Manufacturing
processes

Matrix 4

Quality control
processes

Matrix 5

Statistical process
control

Matrix 6

Manufacturing processes
Quality control processes
Statistical process control
Specifications for the finished product

CBS Chapter 14

14-41

Taguchi Loss Function

COSTS
$

L = k(T-x)2 where:
L = loss
k = a constant (typically a
measure of intolerance of
deviation)
T = target
x = observed value

12 OUNCE

AMOUNT

Figure 14.30. The Taguchi loss function

CBS Chapter 14

14-42

14

Business System Model

L IC
Y

Y
PH

CT
JE
OB

EM
EN
T

&

GY
TE

ES
IV

INFORMATION
SYSTEMS

SO
ILO

PO

RA
ST

S
AL
GO

ORGANIZATION

GE

PH

MA
NA
G

NA
MA

NT
ME

NT O L
ME TR
GE ON
CE
NA & C
AN TS
MA ING
RM EN
N
FO REM
AN
N
PL
ER
U
IO
P
T
AS
TA
ME
EN
EM
PL
N
IM
SIG
DE

THE ENVIRONMENT: GLOBAL COMPETITORS AND

SUPPLIERS, GOVERNMENTS, ECONOMIES,
CONSUMER TASTES, UNIONS, ETC.

CUSTOMERS
SUPPLIERS

PHYSICAL
RESOURCES

PEOPLE

BUSINESS PROCESSES

INPUT

TRANSFORMATION

THROUGHPUT

FIGURE 1.6g. BUSINESS SYSTEM MODEL

CBS Chapter 14

14-43

15