Production and operation management

Unit 4

Control Charts?

Comparison of univariate and multivariate control data Control charts are used to routinely monitor
quality. Depending on the number of process characteristics to be monitored, there are two basic types
of control charts. The first, referred to as a univariate control chart, is a graphical display (chart) of one
quality characteristic. The second, referred to as a multivariate control chart, is a graphical display of a
statistic that summarizes or represents more than one quality characteristic.

Characteristics of control charts If a single quality characteristic has been measured or computed from a
sample, the control chart shows the value of the quality characteristic versus the sample number or
versus time. In general, the chart contains a center line that represents the mean value for the in-control
process. Two other horizontal lines, called the upper control limit (UCL) and the lower control limit (LCL),
are also shown on the chart. These control limits are chosen so that almost all of the data points will fall
within these limits as long as the process remains in-control. The figure below illustrates this.

Chart demonstrating basis of control chart

Chart showing theoretical basis for a control chart

Why control charts "work" The control limits as pictured in the graph might be 0.001 probability
limits. If so, and if chance causes alone were present, the probability of a point falling above the upper
limit would be one out of a thousand, and similarly, a point falling below the lower limit would be one
out of a thousand. We would be searching for an assignable cause if a point would fall outside these
limits. Where we put these limits will determine the risk of undertaking such a search when in reality
there is no assignable cause for variation.

Since two out of a thousand is a very small risk, the 0.001 limits may be said to give practical assurances
that, if a point falls outside these limits, the variation was caused be an assignable cause. It must be
noted that two out of one thousand is a purely arbitrary number. There is no reason why it could not
have been set to one out a hundred or even larger. The decision would depend on the amount of risk the
management of the quality control program is willing to take. In general (in the world of quality control)
it is customary to use limits that approximate the 0.002 standard.

Letting X denote the value of a process characteristic, if the system of chance causes generates a
variation in X that follows the normal distribution, the 0.001 probability limits will be very close to the 3σ
limits. From normal tables we glean that the 3σ in one direction is 0.00135, or in both directions 0.0027.
For normal distributions, therefore, the 3σ limits are the practical equivalent of 0.001 probability limits.
Plus or minus "3 sigma" limits are typical In the U.S., whether X is normally distributed or not, it is
an acceptable practice to base the control limits upon a multiple of the standard deviation. Usually this
multiple is 3 and thus the limits are called 3-sigma limits. This term is used whether the standard
deviation is the universe or population parameter, or some estimate thereof, or simply a "standard
value" for control chart purposes. It should be inferred from the context what standard deviation is
involved. (Note that in the U.K., statisticians generally prefer to adhere to probability limits.)

If the underlying distribution is skewed, say in the positive direction, the 3-sigma limit will fall short of
the upper 0.001 limit, while the lower 3-sigma limit will fall below the 0.001 limit. This situation means
that the risk of looking for assignable causes of positive variation when none exists will be greater than
one out of a thousand. But the risk of searching for an assignable cause of negative variation, when none
exists, will be reduced. The net result, however, will be an increase in the risk of a chance variation
beyond the control limits. How much this risk will be increased will depend on the degree of skewness.

If variation in quality follows a Poisson distribution, for example, for which np = 0.8, the risk of exceeding
the upper limit by chance would be raised by the use of 3-sigma limits from 0.001 to 0.009 and the lower
limit reduces from 0.001 to 0. For a Poisson distribution the mean and variance both equal np. Hence the
upper 3-sigma limit is 0.8 + 3 sqrt(0.8) = 3.48 and the lower limit is 0 (here sqrt denotes "square root").
For np = 0.8 the probability of getting more than 3 successes is 0.009.

Strategies for dealing with out-of-control findings If a data point falls outside the control limits, we
assume that the process is probably out of control and that an investigation is warranted to find and
eliminate the cause or causes.

Does this mean that when all points fall within the limits, the process is in control? Not necessarily. If the
plot looks non-random, that is, if the points exhibit some form of systematic behavior, there is still
something wrong. For example, if the first 25 of 30 points fall above the center line and the last 5 fall
below the center line, we would wish to know why this is so. Statistical methods to detect sequences or
nonrandom patterns can be applied to the interpretation of control charts. To be sure, "in control"
implies that all points are between the control limits and they form a random pattern.

Acceptance sampling

Acceptance sampling uses statistical sampling to determine whether to accept or reject a production lot
of material. It has been a common quality control technique used in industry. It is usually done as
products leaves the factory, or in some cases even within the factory. Most often a producer supplies a
consumer a number of items and a decision to accept or reject the items is made by determining the
number of defective items in a sample from the lot. The lot is accepted if the number of defects falls
below where the acceptance number or otherwise the lot is rejected.

In general, acceptance sampling is employed when one or several of the following hold:l

testing is destructive;

the cost of 100% inspection is very high; and

100% inspection takes too long.

A wide variety of acceptance sampling plans are available. For example, multiple sampling plans use
more than two samples to reach a conclusion. A shorter examination period and smaller sample sizes are
features of this type of plan. Although the samples are taken at random, the sampling procedure is still
reliable.

Probability is a key factor in acceptance sampling, but it is not the only factor. If a company makes a
million products and tests 10 units with one default, an assumption would be made on the probability
that 100,000 of the 1,000,000 are defective. However, this could be a grossly inaccurate representation.
More reliable conclusions can be made by increasing the batch size higher than 10, and increasing the
sample size by doing more than just one test and averaging the results. When done correctly, acceptance
sampling is a very effective tool in quality control.

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ABOUT TOTAL QUALITY MANAGEMENT (TQM)

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WHAT IS TOTAL QUALITY MANAGEMENT (TQM)?

Quality Glossary Definition: TQM

TQM stands for total quality management. A core definition of total quality management (TQM)
describes a management approach to long-term success through customer satisfaction. In a TQM effort,
all members of an organization participate in improving processes, products, services, and the culture in
which they work.

TOTAL QUALITY MANAGEMENT (TQM) PRIMARY ELEMENTS

Total quality management, or TQM, can be summarized as a management system for a customer-focused
organization that involves all employees in continual improvement. It uses strategy, data, and effective
communications to integrate the quality discipline into the culture and activities of the organization.
Many of these concepts are present in modern quality management systems, the successor to TQM.
Here are the 8 principles of total quality management:

1. Customer-focused

The customer ultimately determines the level of quality. No matter what an organization does to foster
quality improvement - training employees, integrating quality into the design process, or upgrading
computers or software -the customer determines whether the efforts were worthwhile.
2. Total employee involvement

All employees participate in working toward common goals. Total employee commitment can only be
obtained after fear has been driven from the workplace, when empowerment has occurred, and when
management has provided the proper environment. High-performance work systems integrate
continuous improvement efforts with normal business operations. Self-managed work teams are one
form of empowerment.

3. Process-centered

A fundamental part of TQM is a focus on process thinking. A process is a series of steps that take inputs
from suppliers (internal or external) and transforms them into outputs that are delivered to customers
(internal or external). The steps required to carry out the process are defined, and performance
measures are continuously monitored in order to detect unexpected variation.

4. Integrated system

Although an organization may consist of many different functional specialties often organized into
vertically structured departments, it is the horizontal processes interconnecting these functions that are
the focus of TQM.

Micro-processes add up to larger processes, and all processes aggregate into the business processes
required for defining and implementing strategy. Everyone must understand the vision, mission, and
guiding principles as well as the quality policies, objectives, and critical processes of the organization.
Business performance must be monitored and communicated continuously.

5. Strategic and systematic approach

A critical part of the management of quality is the strategic and systematic approach to achieving an
organization’s vision, mission, and goals. This process, called strategic planning or strategic management,
includes the formulation of a strategic plan that integrates quality as a core component.

6. Continual improvement

A large aspect of TQM is continual process improvement. Continual improvement drives an organization
to be both analytical and creative in finding ways to become more competitive and more effective at
meeting stakeholder expectations.
7.Fact-based decision making

In order to know how well an organization is performing, data on performance measures are necessary.
TQM requires that an organization continually collect and analyze data in order to improve decision
making accuracy, achieve consensus, and allow prediction based on past history.

8.Communications

During times of organizational change, as well as part of day-to-day operation, effective communications
plays a large part in maintaining morale and in motivating employees at all levels. Communications
involve strategies, method, and timeliness.

ISO 9000 series standards

ISO 9000 is defined as a set of international standards on quality management and quality assurance
developed to help companies effectively document the quality system elements needed to maintain an
efficient quality system. They are not specific to any one industry and can be applied to organizations of
any size.

ISO 9000 can help a company satisfy its customers, meet regulatory requirements, and achieve continual
improvement. It should be considered to be a first step or the base level of a quality system.

ISO 9000 VS. 9001

ISO 9000 is a series, or family, of quality management standards, while ISO 9001 is a standard within the
family. The ISO 9000 family of standards also contains an individual standard named ISO 9000. This
standard lays out the fundamentals and vocabulary for quality management systems (QMS).

ISO 9000 Series of Standards

The ISO 9000 family contains these standards:

ISO 9001:2015: Quality management systems - Requirements

ISO 9000:2015: Quality management systems - Fundamentals and vocabulary (definitions)

ISO 9004:2009: Quality management systems – Managing for the sustained success of an organization
(continuous improvement)

ISO 19011:2011: Guidelines for auditing management systems

ASQ is the only place where organizations can obtain the American National Standard versions of these
standards in the ISO 9000 family.

ISO 9000 History and Revisions: ISO 9000:2000, 2008, and 2015

ISO 9000 was first published in 1987 by the International Organization for Standardization (ISO), a
specialized international agency for standardization composed of the national standards bodies of more
than 160 countries. The standards underwent major revisions in 2000 and 2008. The most recent
versions of the standard, ISO 9000:2015 and ISO 9001:2015, were published in September 2015.

ASQ administers the U.S. Technical Advisory Groups and subcommittees that are responsible for
developing the ISO 9000 family of standards. In its standards development work, ASQ is accredited by
the American National Standards Institute (ANSI).

ISO 9000:2000

ISO 9000:2000 refers to the ISO 9000 update released in the year 2000.

The ISO 9000:2000 revision had five goals:

Meet stakeholder needs

Be usable by all sizes of organizations

Be usable by all sectors

Be simple and clearly understood

Connect quality management system to business processes

ISO 9000:2000 was again updated in 2008 and 2015. ISO 9000:2015 is the most current version.

ISO 9000:2015 Principles of Quality Management

The ISO 9000:2015 and ISO 9001:2015 standards are based on seven quality management principles that
senior management can apply to promote organizational improvement:

Customer focus

Understand the needs of existing and future customers

Align organizational objectives with customer needs and expectations

Meet customer requirements

Measure customer satisfaction

Manage customer relationships

Aim to exceed customer expectations

Learn more about the customer experience and customer satisfaction.

Leadership

Establish a vision and direction for the organization

Set challenging goals

Model organizational values

Establish trust

Equip and empower employees

Recognize employee contributions

Learn more about leadership.

Engagement of people

Ensure that people’s abilities are used and valued

Make people accountable

Enable participation in continual improvement

Evaluate individual performance

Enable learning and knowledge sharing

Enable open discussion of problems and constraints

Learn more about employee involvement.

Process approach

Manage activities as processes

Measure the capability of activities

Identify linkages between activities

Prioritize improvement opportunities

Deploy resources effectively

Learn more about a process view of work and see process analysis tools.

Improvement

Improve organizational performance and capabilities

Align improvement activities

Empower people to make improvements

Measure improvement consistently

Celebrate improvements

Learn more about approaches to continual improvement.

Evidence-based decision making

Ensure the accessibility of accurate and reliable data

Use appropriate methods to analyze data

Make decisions based on analysis

Balance data analysis with practical experience

See tools for decision making.

Relationship management

Identify and select suppliers to manage costs, optimize resources, and create value

Establish relationships considering both the short and long term

Share expertise, resources, information, and plans with partners

Collaborate on improvement and development activities

Recognize supplier success.

WHAT IS ISO 14001:2015?—ENVIRONMENTAL MANAGEMENT SYSTEMS STANDARD

ISO 14001 on ASQTV™

Purchase ISO 14001:

Definition: ISO 14001

ISO 14001 is the international standard that specifies requirements for an effective environmental
management system (EMS). It provides a framework that an organization can follow, rather than
establishing environmental performance requirements.

Part of the ISO 14000 family of standards on environmental management, ISO 14001 is a voluntary
standard that organizations can certify to. Integrating it with other management systems standards, most
commonly ISO 9001, can further assist in accomplishing organizational goals.

The International Organization of Standardization (ISO) defines an environmental management system as

“part of the management system used to manage environmental aspects, fulfill compliance obligations,
and address risks and opportunities.” The framework in the ISO 14001 standard can be used within a
plan-do-check-act (PDCA) approach to continuous improvement.

THE ISO 14001:2015 REVISION

ISO 14001:2015 should be used by any organization that wishes to set up, improve, or maintain an
environmental management system to conform with its established environmental policy and
requirements. The requirements of the standard can be incorporated into any environmental
management system, the extent to which is determined by several factors including the organization’s
industry, environmental policy, products and service offerings, and location.

ISO 14001:2015 is relevant to all organizations, regardless of size, location, sector, or industry.

WHAT TOPICS DOES ISO 14001:2015 COVER?

At the highest level, ISO 14001:2015 covers the following topics with regard to environmental
management systems:

Context of the organization

Leadership

Planning

Support

Operation

Performance evaluation

Improvement