Prof. V. B.

Shah Institute of Management

PROF. V.B.SHAH INSITUTE OF MANAGEMENT,

AMROLI, SURAT

COURSE: B.B.A
YEAR: S.Y.BBA (SEM –IV)
SUBJECT: Production & Operations
Management
Faculty: Dr. Swati Mehta & Dr. Tanvi Bhalala
UNIT 4: PRODUCTION PLANNING & QUALITY CONTROL MANAGEMENT (25%)
4.1 Production Planning:
• Definition and Concept, Concept of Aggregate Production Planning,
• Master Production Schedule: Definition, Flow Chart, General Explanation, Functions,
Process,
• Material Requirement Planning: Definitions, Flowchart, Inputs and Outputs,
• Capacity Requirement Planning: Definition, Flow Chart, General Understanding,
Inputs and Outputs, Methods of Capacity Adjustments,
• Scheduling: Backward and Forward, Priority Sequencing Rules, Strategies,
• Assignment Problems (With Numerical), Johnson’s Rule (With Numerical)
4.2 Quality Control: (Theory Only)
• Definitions and Methods (Statistical Quality Control, Quality Circles, Genichi
Taguchi’s Quality Loss Function, TQM, Zero Defect Approach)
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Prof. V. B. Shah Institute of Management

4.2 Quality Control

Quality is a measure of sum/totality of attributes/properties/characteristics of a product or
service which impart it functional or aesthetic value so as to satisfy the needs of end users /
customers for a given price paid/payable by them.
The properties of materials may be
• Physical properties such as taste, colour, appearance, dimensions, surface finish etc.
• Mechanical properties such as tensile strength, compressive strength, hardness, wear
resistance, specific gravity etc.
• Chemical properties such as corrosion resistance, reactivity, acidic or basic or neutral
nature, stability etc.
• Electrical properties such as resistance, conductivity, semi conductivity, insulation,
magnetism etc.

The properties of service may be

• Proficiency i.e. skill with which service is provided. E.g. typing without mistakes,
transporting the goods without damage etc.
• Timeliness i.e. point in time when service is to be provided and length of time required to
provide it. E.g. minimum time of waiting, timely arrival and departure, minimum time in
flights etc. indicate high quality.
• Service environment which includes facilities used & space and expectations of customer
e.g. convenient access, pleasant surroundings, cleanliness, absence of air or water
pollutants, friendly people etc. give impression of a courteous and quality environment.

4.2.1 Quality Control

Quality Control is the system of policies, procedures and guide lines which establish and
maintain the specified standards of quality.
It includes all the aspects of quality such as
• Research & development (R and D),
• Design parameters,
• Inspection, measurement and analysis of current quality levels, future trends and also
competitors' quality levels,
• Feedback from field performance of quality,
• Choice of machines, tools, processes, technology etc.,
• Determination of inspection devices, tolerances, allowances etc.,
• Selection and training of production and inspection staff and
• Corrective action and follow up etc.

4.2.2 Objectives of Quality Control

The main objective of quality control is to satisfy the functional and / or aesthetic needs of
end users/customers of goods or services. The other objectives derived from this main
objective are as following.

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1. To clearly define top management’s commitments towards quality and production

2. To design the product which has features as required to satisfy the needs
3. To keep the features of product within specified limits as predetermined
4. To ensure consistency of quality by measuring and controlling it; thereby to maintain the
reliability of products
5. To measure the quality of products of competitors so as to make changes in own products
to make them competitive
6. To balance between customer requirements and their capability to pay i.e. price elasticity
of demand while designing the product, is to be taken care.
7. To balance between customer requirements and organisation's ability to meet them.
8. To balance the costs of inspection of quality and benefits of quality control
9. To use the statistical techniques of quality control so as to avoid mass inspection and reduce
the costs of inspection.
10. To predetermine the effects of changes in process by statistical quality control.
11. To have an early detection of faults by SQC and reduce scrap, wastage and rework.
12. To involve and train employees in quality control activities.
13. To increase employee participation and develop team work by Quality Circles, Total
Quality Management etc.
14. To help vendor development by quality control of incoming raw materials and
components.
15. To make supervision more effective.
16. To prevent indemnity losses arising out of defective items supplied to customers, which are
covered by the terms and conditions of sales contract.

4.2.3 Methods of Quality Control

Various methods used for quality control are as following.

Deductive Logic
Statistical
Quality Control
Inductive Logic

Quality Control
Quality Circle
Methods

TQC/ TQM
Pro-active
Quality Control
Taguchi's
methods of QC

Zero Defet
Approach

1. Statistical Quality Control

It includes either deductive logic or inductive logic (Acceptance sampling).
• Deductive Logic: In quality control, when the characteristics of a population are known
and documented, we wish to have deductive statements about specific items. E.g. If. A

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population variable is known to follow a Normal, Poisson or other statistical distribution;

the probabilities of individual events can be deduced from the prior knowledge of
population. This use of probability theory is called deductive logic.

• Inductive Logic (Acceptance sampling): It means that inference about population is

drawn on the basis of sample evidence. When 100% inspection is not feasible because of
high inspection cost or the destructive nature of testing activities; the incoming or outgoing
quality is estimated by sampling. Random samples provide each element with equal chance
of being selected and we can make logical conclusion about population quality on the basis
of sample evidence. Usually mean (u) and standard deviation (σ) of population from the
sample mean (x) and sample standard deviation (s).

Usually sampling involves alpha (α) risk i.e. producer's risk that a sample having higher
proportion of defectives than the lot as a whole is drawn and a good lot is rejected. It has beta
(β) risk i.e. consumer’s risk that a sample having lower proportion of defectives than the lot as
a whole is drawn and a bad lot is accepted. The amount of risk can be specified in terms of a
sampling plan so that the consequences of making a wrong decision can be evaluated. If the
expected costs are too high, the (α) risk or (β) risk can be shifted by mutual agreement between
producer and customer or it can be reduced in total by taking a larger sample.

A sampling plan is a decision rule which specifies how large a sample (n) should be taken
and allowable measurement, number or % defectives in a sample.

If the items to be classified qualitatively according to an attribute such as good or bad,

acceptable or not acceptable etc., the sampling plan is called attribute sampling plan. Then
probabilities of defectives in population are estimated from discrete distribution such as
binomial or Poisson. A typical plan may be: "Take a sample of n=40 and count the number
of defectives 'c'. If c ≤ 3, accept the lot; otherwise reject it. "

If the items are classified quantitatively according to some measureable characteristic, it is

called variables' sampling plan. As variables require recording of actual information, they
provide more information and fewer inspections for the same degree of assurance than attribute
plans. They use normal distribution. A typical plan may be: "Take a random sample of n=40
and determine mean tensile strength. If x≥12000 psi, accept the lot; otherwise reject it."

When tolerance limits for x or range of a sample are specified in terms of certain number of
standard deviations from the mean of means of samples; they form the Control Charts for
controlling the on-going process. Depending on x or range R, they are called x charts or R
charts, for variables. When fraction defectives (p) limits are shown, they are called "p" charts
for attributes. Accordingly, if a sample has value of either x or R or p out of control limits, it
indicates the process being out of control due to some assignable cause which should be
investigated and corrected.

2. Pro-active Quality Control: The SQC methods measure the quality level and find the cause
of variation after it has entered the manufacturing system when the item is being produced or

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already it has been produced. But, Pro-active Quality Control tries to prevent variations from
entering the process or system. They are explained as following.

a) Quality Circle (A Japanese concept): It is a small group of employees e.g. 8 to 10

members. The group meets for an hour a week to share ideas about job related quality and
productivity problems. It includes foreman and employees who perform similar jobs. The
members discuss common problems. Sometimes, they are taught how to collect and analyse
data statistically so as to analyse the cause of quality problems. Their recommendations are
recognized and acted upon by management. The survey results of Quality Circles show that (in
Japan and other countries of the world) the defects are reduced by two third, productivity has
increased, job satisfaction improves resulting in reduced man-power turn over and
absenteeism. Thus, workers' participation in decision making is also enhanced.
Definition: “A small group of employees who meet regularly to undertake work-related
projects designed to improve working conditions, mutual self-development and to
advance the company, all by using quality control concepts.”

Other Names of Quality Circles: -

(1) Small Groups
(2) Action Circles
(3) Excellence Circles
(4) Human Resources Circles
(5) Productivity Circles

b) TQC (Total Quality Control) / TQM (Total Quality Management): It suggests that the
quality is produced at every stage of production, right from raw materials or other inputs to
final assembly and distribution stage where end-users receive the product or service. Every
employee and Work Centre related to manufacturing process is a quality centre which must be
attended so that practically zero defect lots are produced. It defeats the traditional beliefs that
QC is the job of QC department, 100% defect free goods are not possible or it requires to spend
more to produce quality.

“TQM is a philosophy that involves everyone in an organization in a continual effort to

improve quality and to achieve customer satisfaction.” By TQM, the level of about 10
defectives per million has also been achieved.
Total Quality Management is about:
• Total customer satisfaction as the objective
• Totality of all functions in an organisation
• Total range of product and services offered by an organisation
• Addressing all aspects and dimensions of quality
• Addressing the quality aspect in everything- products, services, process, people and
resources.
• Addressing the total organisational issue of retaining customers and improving profits
• Involving everyone in the organisation in the attainment of the said objectives.

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Prof. V. B. Shah Institute of Management

c) Taguchi's method of Quality Control: It emphasizes quality loss function and quality
design. The function measures quantitatively, the success or failure of QC and reflects
economic losses which customers suffer when they purchase a defective product. Losses
include maintenance cost, failure cost, environmental pollution, cost of operating the product
etc. Higher quality means lower losses to customers.

Regarding quality design, Taguchi emphasizes (1) Product design: It should be strong enough
so as to function under a wide range of environmental conditions, (2) Product planning, (3)
Process design and (4) Production service after purchase. Thus, it shows a proactive way to
QC.

d) Zero Defect Approach: The idea of zero defect approach was first originated in 1961 in
the Orlando division of the martin company in USA which manufactured Missile Systems. The
philosophy behind Zero Defect Approach is to negate the commonly held view of “to err is
human”

Zero defects philosophy believes in total perfection or ‘to do the job right at the first time’. It
also emphasises that sometimes a very small error or defect may lead to major losses to the
company.

Errors or defects can be aroused because of two reasons. (i) By lack of knowledge and (ii) By
lack of intention. First problem can be sort out by training and development, whereas second
problem is attitudinal problem which is directly related with the motivational issues of workers.
The main theme behind zero defect approach is that the worker should be positively motivated
to achieve as much perfection as possible.

Removal of Defects: Removal of defects can be done with 2 ways. Motivating workers and by
error removing campaigns.