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PMBA8155 Operations Management
___________________________________ 

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Statistical Quality Control ___________________________________ 

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Learning Objectives
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 Understand Process Capability
 Calculate and interpret process capability indexes: Cp and Cpk ___________________________________ 
 Understand the Technical Meaning of Six-Sigma
Quality ___________________________________ 
 Understand Common and Special Variations ___________________________________ 
 Traditional vs. Taguchi’s View on Cost of
Variation ___________________________________ 
 Construct and Interpret Control Charts
 P-chart
 X-bar and R charts
2

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Why Statistical Quality Control?
___________________________________ 
 Variations in Manufacturing/Service Processes
___________________________________ 
 Any process has some variations: common and/or
special ___________________________________ 
 Variations are causes for quality problems
 If a process is stable (no special variation), it is able to ___________________________________ 
produce product/service consistently
 As variation is reduced, quality is improved ___________________________________ 
 Statistics is the only science that is dedicated to
dealing with variations.
 Measure, monitor, and reduce variations in the process
3
 ___________________________________ 

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Role of Statistics
___________________________________ 
“Without statistical process control, today’s high-density
___________________________________ 
semi-conductor chips cannot be built. They can be
invented, but they cannot be built.”
___________________________________ 
-- Thurow, L. C. (1993)
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“The use of statistical methods has become deeply
rooted in Japan…. Japan’s advance in productivity cannot ___________________________________ 
be dissociated from the use of statistical methods. It was
through these that the quality level has risen, reliability
has risen, and cost has fallen.”
-- Ishikawa, K. (1985)
4

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Role of Statistics
___________________________________ 
“Our approach to quality has to be scientific, evidence-
___________________________________ 
based. We need control charts and biostatisticians. This
is the science of healthcare delivery”
___________________________________ 
--Dr. Stephen Swensen, Mayo Clinic (2008)
___________________________________ 

___________________________________ 

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Types of Variation
___________________________________ 

Natural (common) Assignable (special) ___________________________________ 

 Inherent to process
 Random
 Cannot be controlled
 Cannot be prevented
 Examples
 weather
 accuracy of measurements
 capability of machine
 Exogenous to process
___________________________________ 
 Not random
 Controllable ___________________________________ 
 Preventable
 Examples ___________________________________ 
 tool wear
 human factors (fatigue)
 poor maintenance

6
 ___________________________________ 
Cost of Variation: ___________________________________ 
Traditional vs. Taguchi’s View
___________________________________ 
High High ___________________________________ 
Incremental Incremental
Cost of Cost of ___________________________________ 
Variability Variability

___________________________________ 
Zero Zero
___________________________________ 
Lower Target Upper Lower Target Upper
Spec Spec Spec Spec Spec Spec

Traditional View Taguchi’s View

7

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Process Capability
___________________________________ 
 The ability of a process to meet product ___________________________________ 
design/technical specifications
 Design specifications for products (Tolerances) ___________________________________ 
 upper and lower tolerance limits (UTL, LTL)
___________________________________ 
 Process variability in production process
 natural variation in process (3 from the mean)
___________________________________ 
 Process may not be capable of meeting
specifications if natural variation in a process
exceeds allowable variation (tolerances)

___________________________________ 
Process Capability ___________________________________ 
Illustrations
___________________________________ 
(a) (b)
___________________________________ 
specification specification
___________________________________ 
natural variation natural variation
___________________________________ 
(c) (d)
___________________________________ 
specification specification

natural variation natural variation

9
 ___________________________________ 

Process Capability ___________________________________ 

A Standard Measure of How Good a Process Is
___________________________________ 
Specification width
___________________________________ 

___________________________________ 
Process width
___________________________________ 
A simple ratio:
___________________________________ 
Specification Width
Actual “Process Width”

Generally, the bigger the better.

10

___________________________________ 
Process Capability Index: ___________________________________ 
Cp -- Measure of Potential Capability
___________________________________ 
allowable process variation UTL  LTL
Cp  
actual process variation 6 ___________________________________ 
LTL UTL

Cp > 1
___________________________________ 

___________________________________ 

Cp = 1 ___________________________________ 

Cp < 1
11

___________________________________ 
Process Capability Index: ___________________________________ 
Cpk -- Measure of Actual Capability
___________________________________ 

 X  LTL UTL  X  ___________________________________ 

C pk  min 
3 
,
 3 ___________________________________ 
 is the standard deviation of the production process
___________________________________ 
• Cpk considers both process variation () and process
location (X) ___________________________________ 
• For a process to be capable, Cp and Cpk must be greater
or equal to 1 with larger value indicating better capability.
If Cp  Cpk, the process is not centered.
12
 ___________________________________ 
Process Capability Index ___________________________________ 
Example
___________________________________ 
A process produces a certain part with a mean diameter
of 2 inches and a standard deviation of 0.03 inches. The ___________________________________ 
lower and upper engineering specification limits are 1.90
inches and 2.05 inches. ___________________________________ 
UTL  LTL 2.05  1.90
Cp    0.83 ___________________________________ 
6 6(0.03)
 X  LTL UTL  X   2  1.90 2.05  2  ___________________________________ 
C pk  min   min  
3 
, ,
 3  3(0.03) 3(0.03) 
 min[1.11, 0.56]  0.56
Therefore, the process is not capable (the variation is
too much and the process mean is not on the target)
13

___________________________________ 
Example ___________________________________ 
Back to The Cereal Box
___________________________________ 
 We are the maker of this cereal. Consumer Reports has
just published an article that shows that we frequently ___________________________________ 
have less than 15 ounces of cereal in a box.
 Let’s assume that the government says that we must be
___________________________________ 
within ± 5 percent of the weight advertised on the box.
 Upper Tolerance Limit = 16 + .05(16) = 16.8 ounces
___________________________________ 
 Lower Tolerance Limit = 16 – .05(16) = 15.2 ounces
___________________________________ 
 We go out and buy 1,000 boxes of cereal and find that
they weight an average of 15.875 ounces with a
standard deviation of .529 ounces.

14

Cereal Box Example
Process Capability (Cp)
 Tolerance Limits
 UTL = 16.8 oz
 Observed Weight
Mean = 15.875 oz

___________________________________ 
___________________________________ 
___________________________________ 
___________________________________ 

 LTL = 15.2 oz  Std Dev = .529 oz

___________________________________ 

UTL  LTL 16.8  15.2 ___________________________________ 

Cp    0.5041
6 6(0.529) ___________________________________ 

15
 ___________________________________ 
Cereal Box Example
___________________________________ 
Process Capability (Cpk)
___________________________________ 
 Tolerance Limits  Observed Weight
Mean = 15.875 oz ___________________________________ 
 UTL = 16.8 oz 

 LTL = 15.2 oz  Std Dev = .529 oz

___________________________________ 
 X  LTL UTL  X 
C pk  Min  ; 
 3 3  ___________________________________ 
15.875  15.2 16.8  15.875 
 Min  ;  ___________________________________ 
 3(.529) 3(.529) 
 Min .4253; .5829
 .4253
16

___________________________________ 
Cereal Box Example
___________________________________ 
Interpreting the Results
___________________________________ 
 Cp = 0.5041 < 1, indicating that process ___________________________________ 
variation is too much
 Cpk = 0.4253, which is less than Cp, ___________________________________ 
suggesting that the process center has ___________________________________ 
shifted (to the left side)
 Many companies look for a Cpk of 1.3 or ___________________________________ 
better. 6-Sigma companies want 2.0!

17

___________________________________ 

___________________________________ 
Process Capability and Six Sigma
___________________________________ 
 Process A has ___________________________________ 
Cp=Cpk=1, a
three-sigma level ___________________________________ 
with 2700 DPMO
___________________________________ 
 Process B has
Cp=Cpk=2, a six- ___________________________________ 
sigma level with
2 DPBO

18
 ___________________________________ 
Statistical ___________________________________ 
Process Control ___________________________________ 
 On-line quality control tool used when the
product/service is being produced ___________________________________ 
 Purpose: prevent systematic quality problems
___________________________________ 
 Procedure
 Take periodic random samples from a process ___________________________________ 
 Plot the sample statistics on control chart(s)
___________________________________ 
 Determine if the process is under control
 If the process is under control, do nothing
 If the process is out of control, investigate and fix the
cause
19

___________________________________ 
Statistical Process Control
___________________________________ 
Types Of Data
___________________________________ 
 Attribute data (go/no go values) ___________________________________ 
 Quality characteristic evaluated about
whether it meets the required specifications ___________________________________ 
 Good/bad, yes/no
___________________________________ 
 Variable data (continuous values)
___________________________________ 
 Quality characteristic that can be measured
 Length, size, weight, height, time, velocity

20

___________________________________ 
Statistical Process Control
___________________________________ 
Control Charts ___________________________________ 
 Charts for attributes ___________________________________ 
 p-chart (for proportions)
___________________________________ 
 c-chart (for counts)
___________________________________ 
 Charts for variables
 X-chart (for means)
___________________________________ 
 R-chart (for ranges)

21
 ___________________________________ 
Control Chart
___________________________________ 
General Structure
___________________________________ 
Out-of-control signal
Upper
control ___________________________________ 
limit (UCL)

Process ___________________________________ 
target or
average ___________________________________ 

Lower ___________________________________ 
control
limit (LCL)
1 2 3 4 5 6 7 8 9 10

Sample number
22

___________________________________ 

___________________________________ 
A Process Is In Control If ...
___________________________________ 
 No sample points outside control limits ___________________________________ 

 Most points near the process average ___________________________________ 

 About an equal # points above & below ___________________________________ 

the centerline ___________________________________ 

 Points appear randomly distributed

23

___________________________________ 

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Common Out-of-control Signs
___________________________________ 
One observation
outside the limits ___________________________________ 

___________________________________ 
Sample observations
consistently below or
above the average ___________________________________ 

___________________________________ 
Sample observations
consistently decrease
or increase

24
 ___________________________________ 
Control Charts for Attributes
___________________________________ 
p-charts
___________________________________ 
UCL = p + zs p
___________________________________ 
LCL = p - zs p
___________________________________ 
p = Averageproportion of defectivesin the sample
Total Number of Defectives ___________________________________ 
=
Total Number of Observations
___________________________________ 
p (1 - p )
sp =
n
n  sample size
25

___________________________________ 
1. Calculate the sample proportion, p, for ___________________________________ 
each sample.
Sample ___________________________________ 
Sample Size Defectives p
1 100 4 0.04
2 100 2 0.02 ___________________________________ 
p-chart 3
4
100
100
5
3
0.05
0.03 ___________________________________ 
Example 5
6
100
100
6
4
0.06
0.04
7 100 3 0.03
___________________________________ 
8 100 7 0.07
9 100 1 0.01 ___________________________________ 
10 100 2 0.02
11 100 3 0.03
12 100 2 0.02
13 100 2 0.02
14 100 8 0.08
15 100 3 0.03

___________________________________ 
2. Calculate the average of the sample proportions.
___________________________________ 
55
p= = 0.0367
1500 ___________________________________ 
3. Calculate the sample standard deviation.
___________________________________ 
p (1 - p ) .0367(1 - .0367)
sp = = = .0188 ___________________________________ 
n 100
___________________________________ 
4. Calculate the control limits (where Z=3).
___________________________________ 
UCL = p + Z sp = .0367  3(.0188)= .0931
LCL = p - Z sp = .0367 - 3(.0188)= - 0.0197 0
 ___________________________________ 

___________________________________ 
p-Chart Example (Continued)
___________________________________ 
5. Plot the individual sample proportions, the
average of the proportions, and the control limits ___________________________________ 
0.1
UCL ___________________________________ 
0.08

0.06 ___________________________________ 
p
0.04 CL ___________________________________ 
0.02

0 LCL
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Ob s e r vatio n

Control Charts For Variables
X-bar charts and R-charts
x Chart Control Limits
UCL = x + A 2 R
LCL = x - A 2 R
Where X = average of sample means = Xi / m
R = average of sample ranges = Ri / m
Xi = mean of sample i, i = 1,2,…,m
Ri = range of sample i, i = 1,2,…,m
m = total number of samples
A2, D3, and D4 are constants given in Exhibit 9A.6
___________________________________ 
___________________________________ 
___________________________________ 
R Chart Control Limits
___________________________________ 
UCL = D4 R
___________________________________ 
LCL = D3 R
___________________________________ 
___________________________________ 
29

___________________________________ 
X-bar and R Charts
___________________________________ 
Example
___________________________________ 
Observation Sample Sample
Sample 1 2 3 4 5 Mean (Xi) Range (Ri)
1 10.682 10.689 10.776 10.798 10.714 10.732 0.116 ___________________________________ 
2 10.787 10.860 10.601 10.746 10.779 10.755 0.259
3 10.780 10.667 10.838 10.785 10.723 10.759 0.171
4 10.591 10.727 10.812 10.775 10.730 10.727 0.221 ___________________________________ 
5 10.693 10.708 10.790 10.758 10.671 10.724 0.119
6 10.749 10.714 10.738 10.719 10.606 10.705 0.143
7 10.791 10.713 10.689 10.877 10.603 10.735 0.274 ___________________________________ 
8 10.744 10.779 10.110 10.737 10.750 10.624 0.669
9 10.769 10.773 10.641 10.644 10.725 10.710 0.132
10 10.718 10.671 10.708 10.850 10.712 10.732 0.179 ___________________________________ 
11 10.787 10.821 10.764 10.658 10.708 10.748 0.163
12 10.622 10.802 10.818 10.872 10.727 10.768 0.250
13 10.657 10.822 10.893 10.544 10.750 10.733 0.349
14 10.806 10.749 10.859 10.801 10.701 10.783 0.158
15 10.660 10.681 10.644 10.747 10.728 10.692 0.103
Overall Averages 10.728 0.220
X R
 ___________________________________ 
X-bar and R Charts ___________________________________ 
Example
___________________________________ 
Exhibit 9A.6

n A2 D3 D4 ___________________________________ 
2 1.88 0 3.27
Since n=5, from Exhibit 3 1.02 0 2.57 ___________________________________ 
9A.6, we find 4 0.73 0 2.28
A2=0.58 5 0.58 0 2.11 ___________________________________ 
6 0.48 0 2.00
D3=0 ___________________________________ 
7 0.42 0.08 1.92
D4=2.11 8 0.37 0.14 1.86
9 0.34 0.18 1.82
10 0.31 0.22 1.78
11 0.29 0.26 1.74
31

___________________________________ 
X-bar and R Charts ___________________________________ 
Example
___________________________________ 
X-bar chart
UCL = x + A 2 R  10.728  .58(0.220) = 10.856 ___________________________________ 
LCL = x - A 2 R  10.728 - .58(0.220) = 10.600
___________________________________ 
1 0 .9 0 0

1 0 .8 5 0 UCL
1 0 .8 0 0
___________________________________ 
1 0 .7 5 0
M eans

X ___________________________________ 
1 0 .7 0 0

1 0 .6 5 0

1 0 .6 0 0
LCL
1 0 .5 5 0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
S a m p le
32

___________________________________ 
X-bar and R Charts
___________________________________ 
Example
___________________________________ 
R chart
___________________________________ 
UCL = D 4 R  ( 2 . 11 )( 0 . 220 )  0.464
LCL = D 3 R  ( 0 )( 0 . 220 )  0 ___________________________________ 
0 .8 0 0

0 .7 0 0

0 .6 0 0
___________________________________ 
0 .5 0 0
UCL
R 0 .4 0 0 ___________________________________ 
0 .3 0 0

0 .2 0 0 R
0 .1 0 0

0 .0 0 0 LCL
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
S a m p le 33