Quality Management

Session 12
Dimensions of Quality, Quality
cost

DIMENSIONS OF QUALITY
1.
2.
3.
4.
5.
6.
7.
8.

Performance
Reliability
Durability
Serviceability
Aesthetics
Features
Perceived Quality
Conformance to Standards

1. Performance

2. Reliability
Refers to the product performing its
intended operation for a specified
period of time
Expressed in probability
What does a reliability of 0.9 mean?

2. Reliability
Failure
A change from the operational to nonoperational; status

Three types of failure

Early failure
Random failure
Wearout failure

2. Reliability
Overall reliability is obtained by
multiplying the probabilities of all the
components that can cause failure
Rp = R1.R2.R3Rn

When a system has parallel

redundancy
Rp = R1+ R1(1-R2)= 1-(1-R1)(1-R2)

Reliability of n parallel components is

R = 1-[(1-R1)(1-R2) (1-Rn)]

2. Reliability
A flow control system consists of three
components in series, with individual
reliabilities 0.90, 0.95 and 0.85. A failure of
the system costs $5,000.
a) What is the reliability of the system?
b) What is the long run expected cost of failure?
c) What would be the reliability of a complete
parallel backup system?
d) What should be the maximum amount of funds
that should be expended for a parallel system?

Solution
a) Rp = 0.90 *0.95 * 0.85 = 0.73
b) Probability of failure is 0.27.
Therefore expected cost is 0.27 * $5000 = 1350

c) The redundant system also is expected to

be reliable 73% of time. The reliability of
the combined system will be the reliability
of the primary system plus the 73% of the
expected 27% failure
Rp = 0.73 +(0.27)(0.73) = 0.93

Solution
The long-run expected cost of failure
is (0.07) ($5000) = 350
The cost has been reduced from
1350 to 350.
Hence the cost should be less than
1000

Reliability
Can be expressed as a product
failure rate, or mean time between
failures(MTBF)
Failure rate (FR) measures
The number of failures during an
operating period, or
The number of failures among the
product tested
FR = number of failure/operating time (number
tested)
MTBF = 1/FR

Reliability
One hundred artificial heart valves were
tested for 20,000 hours at a lab research
center and 6 valves failed during the test.
a) what is the percentage of failures?
b) what is the number of failures per unit
year
c) how many failures can be expected per
year for every 100 installations
d) what is the mean time between failures?

Solution
A) FR = 6/100 = 6%
B) Operating time = total time non-operating
time

= 100(20,000) 6(20,000)/2
= 19,40,000 unit hours
FR = 6/19,40,000 = 0.000003 failures per unit-hour
0.000003(24 hours)(365) = 0.026 failures per unit-year
C) (0.026 ) (100) = 2.6 failures per year
D) MTBF = 19,40,000/6 = 3,23,333.3 unit-hours per
failure

Quality control tools

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

Check sheet
Flow chart
Histogram
Pareto chart
Runchart
Fishbone diagram
Control chart

Case: shortening telephone waiting time

A bank is employing a call answering service

The main goal in terms of quality is zero waiting time
- customers get a bad impression
- company vision to be friendly and easy access
The question is how to analyze the situation and improve quality

The current process

Custo
mer A

Custo
mer B

Operator

Receiving
Party

How can we reduce

waiting time?

Fishbone diagram analysis

Absent receiving
party

Working system of
operators
Absent

Too many phone calls

Lunchtime

Out of office
Not at desk
Not giving receiving
partys coordinates
Complaining

Absent

Lengthy talk
Does not know
organization well

Takes too much time to

explain

Leaving a
message

Customer

Does not
understand
customer

Operator

Makes
custo
mer
wait

Reasons why customers have to wait

(12-day analysis with check sheet)
Daily
average

Total
number

One operator (partner out of office)

14.3

172

Receiving party not present

6.1

73

No one present in the section receiving call

5.1

61

Section and name of the party not given

1.6

19

Inquiry about branch office locations

1.3

16

Other reasons

0.8

10

29.2

351

Pareto Analysis: reasons why customers have to wait

Frequency

Percentage

300

87.1%

250

71.2%

200

49%

150
100

0%
A

Ideas for improvement

1. Taking lunches on three different shifts

2. Ask all employees to leave messages when leaving desks
3. Compiling a directory where next to personnels name
appears her/his title

Results of implementing the recommendations

After

Before
Percentage

Frequency

Percentage

Frequency

100%
87.1%

300

300

71.2%
200

49%

100

Improvem
ent

200

100

100%

0%
A

0%
B

CONTROL CHARTS
In general, how can we monitor quality?

By observing
variation in
output measures!

1. Assignable variation: we can assess the cause

2. Common variation: variation that may not be possible to
correct (random variation, random noise)

Source:
http://msi6.com/MSI6/QualityZone/QzoneJuranTrilogy.asp
22
x

Quality Costs
Four categories of cost of quality are:

23

Quality Costs

Examples of Prevention
Purchase Cost
Expense
Quality Planning
Training and Education
Process Definition
Customer Surveys
Preproduction Reviews
Technical Manuals
Detailed Product
Engineering
Early Approval of
Product
Specifications
Cost of Poor Quality 25
.PPT

Targets
Process Capability
Studies
Preventive
Maintenance
Supplier
Qualification
Job Descriptions
Housekeeping
Zero-Defect
Program

Examples of Appraisal
Expense
Supplier
Test
Inspection
Process Controls
Train QA Personnel
Product Audits
Quality Systems Audits
Customer Satisfaction
Surveys and Audits
Prototype Inspection
Accumulating Cost Data
Cost of Poor Quality 26
.PPT

Certification
Employee Surveys
Security Checks
Safety Checks
Reviews:
Operating
Expenditures
Product Costs
Financial Reports
Capital Expenditures

Examples of Internal Failure

Costs

Substandard Product
Scrap or Rework
Re-inspection
Redesign/Engineering
Change
Process Modifications
Payroll Errors
All Expediting Costs
Off-Spec/Waiver
Abandoned Programs

Cost of Poor Quality 27

.PPT

Supplier Problems
Scrap and rework
Late deliveries
Excess inventory

Equipment Downtime
Accidents, Injuries
Absenteeism
Unused Reports
Missed Schedule Cost
Lost Sales (any cause)

Examples of External Failure

Costs

Product Recall
Handling
Lawsuits
Complaints
Reports
Customer Service
Sales and service
Caused by Errors
Returns and
Products Returned
allowances
Analysis of Returns
Failure
Evaluation of Field
Stock
Late
and
LostPayments
Sales Because
of Customer Dissatisfaction!
Bad Debts

What Does Reality Look

The ratio of the individual
category costs to total
Like?
costs varies widely. Many companies exhibit ratios
which look like the following:

Quality Cost Category

Percent of Total

Internal Failure

25 to 40

External Failure

25 to 40

Appraisal

10 to 50

Prevention

.05 to 5