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MEHMET TANLAK

Quality And Performance

For Operations Management, 9e by


PowerPoint Slides
Krajewski/Ritzman/Malhotra
by Jeff Heyl © 2010 Pearson Education
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 5–1
Costs of Quality

A failure to satisfy a customer is


considered a defect
Prevention costs
Appraisal costs
Internal failure costs
External failure costs
Ethics and quality

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Total Quality Management

Customer
satisfaction

Figure 5.1 – TQM Wheel

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Total Quality Management

Customer satisfaction
 Conformance to specifications
 Value

 Fitness for use


 Support

 Psychological impressions
Employee involvement
 Cultural change
 Teams

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Total Quality Management

Continuous improvement
 Kaizen

A philosophy
 Not unique to quality
 Problem solving process

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The Deming Wheel

Plan

Act Do

Study
Figure 5.2 – Plan-Do-Study-Act Cycle
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Six Sigma
Process average OK; Process variability OK;
too much variation process off target
X X
X X X
XX XX
X X X
X
X
X X

X X
Process
on target with
Reduce low variability Center
spread process

XX
X
X
X XX
X

Figure 5.3 – Six-Sigma Approach Focuses on Reducing Spread and Centering the Process

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Six Sigma Improvement Model

Define

Measure

Analyze

Improve

Control

Figure 5.4 – Six Sigma Improvement Model

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Acceptance Sampling

Application of statistical techniques


Acceptable quality level (AQL)
Linked through supply chains

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Acceptance Sampling

Firm A uses TQM or Six


Buyer Sigma to achieve internal
Manufactures process performance
furnaces fan
mo
tors

Firm A Supplier uses TQM or Six


Sigma to achieve internal
Manufacturers process performance
furnace fan motors
fan
Motor inspection TARGET: Buyer’s specs bla
des

Supplier
Manufactures
Yes Accept No fan blades
motors? Blade inspection TARGET: Firm A’s specs

Yes No
Accept
blades?

Figure 5.5 – Interface of Acceptance Sampling and Process


Performance Approaches in a Supply Chain

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Statistical Process Control

Used to detect process change


Variation of outputs
Performance measurement – variables
Performance measurement – attributes
Sampling
Sampling distributions

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Sampling Distributions

1. The sample mean is the sum of the observations


divided by the total number of observations

∑x i
x= i =1
n
ere

xi = observation of a quality characteristic (such as time)


n = total number of observations
x = mean

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Sampling Distributions

2. The range is the difference between the largest


observation in a sample and the smallest. The
standard deviation is the square root of the
variance of a distribution. An estimate of the
process standard deviation based on a sample is
given by
(∑ x ) 2

∑( x − x) 2
∑ i−
x 2

n
i

σ= i
or σ =
n −1 n −1

where

σ = standard deviation of a sample

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Sample and Process Distributions

Mean
Distribution of
sample means

Process
distribution

25 Time
Figure 5.6 – Relationship Between the Distribution of Sample
Means and the Process Distribution
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Causes of Variation

Common causes
 Random, unavoidable sources of variation
 Location

 Spread

 Shape

Assignable causes
 Can be identified and eliminated
 Change in the mean, spread, or shape
 Used after a process is in statistical control

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Assignable Causes
Average

Time
(a) Location

Figure 5.7 – Effects of Assignable Causes on the Process


Distribution for the Lab Analysis Process
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Assignable Causes
Average

Time
(b) Spread

Figure 5.7 – Effects of Assignable Causes on the Process


Distribution for the Lab Analysis Process
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Assignable Causes
Average

Time
(c) Shape

Figure 5.7 – Effects of Assignable Causes on the Process


Distribution for the Lab Analysis Process
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Control Charts

Time-ordered diagram of process


performance
 Mean
 Upper control limit
 Lower control limit
Steps for a control chart
1. Random sample
2. Plot statistics
3. Eliminate the cause, incorporate improvements
4. Repeat the procedure

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Control Charts

UCL

Nominal

LCL
Assignable
causes likely

1 2 3
Samples

Figure 5.8 – How Control Limits Relate to the Sampling


Distribution: Observations from Three Samples

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Control Charts

UCL
Variations

Nominal

LCL

Sample number

(a) Normal – No action

Figure 5.9 – Control Chart Examples

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Control Charts

UCL
Variations

Nominal

LCL

Sample number

(b) Run – Take action

Figure 5.9 – Control Chart Examples

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Control Charts

UCL
Variations

Nominal

LCL

Sample number

(c) Sudden change – Monitor

Figure 5.9 – Control Chart Examples

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Control Charts

UCL
Variations

Nominal

LCL

Sample number

(d) Exceeds control limits – Take action

Figure 5.9 – Control Chart Examples

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Control Charts

Two types of error are possible with


control charts
A type I error occurs when a process is
thought to be out of control when in fact it
is not
A type II error occurs when a process is
thought to be in control when it is actually
out of statistical control
These errors can be controlled by the
choice of control limits

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SPC Methods

Control charts for variables


 R-Chart

UCLR = D4R and LCLR = D3R

where
R = average of several past R values and
the central line of the control chart
D3, D4 = constants that provide three
standard deviation (three-sigma) limits for the
given sample size

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Control Chart Factors
TABLE 5.1 | FACTORS FOR CALCULATING THREE-SIGMA LIMITS FOR
| THE x-CHART AND R-CHART

Size of Factor for UCL and LCL Factor for LCL for Factor for UCL for R-
Sample (n) for x-Chart (A2) R-Chart (D3) Chart (D4)

2 1.880 0 3.267
3 1.023 0 2.575
4 0.729 0 2.282
5 0.577 0 2.115
6 0.483 0 2.004
7 0.419 0.076 1.924
8 0.373 0.136 1.864
9 0.337 0.184 1.816
10 0.308 0.223 1.777

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SPC Methods

Control charts for variables


 x-Chart

UCLx = x + A2R and LCLx = x – A2R

where
x = central line of the chart, which can
be either the average of past sample means or
a target value set for the process
A2 = constant to provide three-sigma
limits for the sample mean

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Steps for x- and R-Charts

1. Collect data
2. Compute the range
3. Use Table 5.1 to determine R-chart
control limits
4. Plot the sample ranges. If all are in
control, proceed to step 5. Otherwise,
find the assignable causes, correct them,
and return to step 1.
5. Calculate x for each sample

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Steps for x- and R-Charts

6. Use Table 5.1 to determine x-chart


control limits
7. Plot the sample means. If all are in
control, the process is in statistical
control. Continue to take samples and
monitor the process. If any are out of
control, find the assignable causes,
correct them, and return to step 1. If no
assignable causes are found, assume
out-of-control points represent common
causes of variation and continue to
monitor the process.
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Using x- and R-Charts
EXAMPLE 5.1
The management of West Allis Industries is concerned about the
production of a special metal screw used by several of the
company’s largest customers. The diameter of the screw is critical
to the customers. Data from five samples appear in the
accompanying table. The sample size is 4. Is the process in
statistical control?

SOLUTION
Step 1: For simplicity, we use only 5 samples. In practice,
more than 20 samples would be desirable. The data
are shown in the following table.

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Using x- and R-Charts
Data for the x- and R-Charts: Observation of Screw Diameter (in.)
Observation
Sample 1 2 3 4 R x
Number
1 0.5014 0.5022 0.5009 0.5027 0.0018 0.5018
2 0.5021 0.5041 0.5024 0.5020 0.0021 0.5027
3 0.5018 0.5026 0.5035 0.5023 0.0017 0.5026
4 0.5008 0.5034 0.5024 0.5015 0.0026 0.5020
5 0.5041 0.5056 0.5034 0.5047 0.0022 0.5045
Average 0.0021 0.5027

Step 2: Compute the range for each sample by subtracting


the lowest value from the highest value. For example,
in sample 1 the range is 0.5027 – 0.5009 = 0.0018 in.
Similarly, the ranges for samples 2, 3, 4, and 5 are
0.0021, 0.0017, 0.0026, and 0.0022 in., respectively. As
shown in the table, R = 0.0021.

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Using x- and R-Charts
Step 3: To construct the R-chart, select the appropriate
constants from Table 5.1 for a sample size of 4. The
control limits are

UCLR = D4R = 2.282(0.0021) = 0.00479 in.

LCLR = D3R = 0(0.0021) = 0 in.

Step 4: Plot the ranges on the R-chart, as shown in Figure


5.10. None of the sample ranges falls outside the
control limits so the process variability is in statistical
control. If any of the sample ranges fall outside of the
limits, or an unusual pattern appears, we would search
for the causes of the excessive variability, correct
them, and repeat step 1.

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Using x- and R-Charts

Figure 5.10 – Range Chart from the OM Explorer x and R-Chart Solver for the
Metal Screw, Showing That the Process Variability Is in Control

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Using x- and R-Charts

Step 5: Compute the mean for each sample. For example, the
mean for sample 1 is

0.5014 + 0.5022 + 0.5009 + 0.5027


= 0.5018 in.
4

Similarly, the means of samples 2, 3, 4, and 5 are 0.5027,


0.5026, 0.5020, and 0.5045 in., respectively. As shown in
the table, x = 0.5027.

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Using x- and R-Charts
Step 6: Now construct the x-chart for the process average. The
average screw diameter is 0.5027 in., and the average
range is 0.0021 in., so use x = 0.5027, R = 0.0021, and A2
from Table 5.1 for a sample size of 4 to construct the
control limits:

LCLx = x – A2R = 0.5027 – 0.729(0.0021) = 0.5012 in.

UCLx = x + A2R = 0.5027 + 0.729(0.0021) = 0.5042 in.

Step 7: Plot the sample means on the control chart, as shown in


Figure 5.11.
The mean of sample 5 falls above the UCL, indicating
that the process average is out of statistical control and
that assignable causes must be explored, perhaps using
a cause-and-effect diagram.

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Using x- and R-Charts

Figure 5.11 – The x-Chart from the OM Explorer x and R-Chart Solver for the
Metal Screw, Showing That Sample 5 is out of Control

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An Alternate Form

If the standard deviation of the process distribution is known,


another form of the x-chart may be used:

UCLx = x + zσx and LCLx = x – zσx

where

σx = σ/ n
σ = standard deviation of the process distribution
n = sample size
x = central line of the chart
z = normal deviate number

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Using Process Standard Deviation
EXAMPLE 5.2
For Sunny Dale Bank the time required to serve customers at the
drive-by window is an important quality factor in competing with
other banks in the city.
 Mean time to process a customer at the peak demand period
is 5 minutes
 Standard deviation of 1.5 minutes
 Sample size of six customers
 Design an x-chart that has a type I error of 5 percent
 After several weeks of sampling, two successive samples
came in at 3.70 and 3.68 minutes, respectively. Is the
customer service process in statistical control?

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Using Process Standard Deviation
SOLUTION

x = 5 minutes
σ = 1.5 minutes
n = 6 customers
z = 1.96

The process variability is in statistical control, so we proceed


directly to the x-chart. The control limits are

UCLx = x + zσ/√n = 5.0 + 1.96(1.5)/√6 = 6.20 minutes

LCLx = x – zσ/√n = 5.0 – 1.96(1.5)/√6 = 3.80 minutes

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Using Process Standard Deviation

 Obtain the value for z in the following way


 For a type I error of 5 percent, 2.5 percent of the curve will
be above the UCL and 2.5 percent below the LCL
 From the normal distribution table (see Appendix 1) we find
the z value that leaves only 2.5 percent in the upper portion
of the normal curve (or 0.9750 in the table)
 So z = 1.96
 The two new samples are below the LCL of the chart,
implying that the average time to serve a customer has
dropped
 Assignable causes should be explored to see what caused
the improvement

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Application 5.1
Webster Chemical Company produces mastics and caulking for
the construction industry. The product is blended in large
mixers and then pumped into tubes and capped.
Webster is concerned whether the filling process for tubes of
caulking is in statistical control. The process should be
centered on 8 ounces per tube. Several samples of eight tubes
are taken and each tube is weighed in ounces.
Tube Number
Sample 1 2 3 4 5 6 7 8 Avg Range
1 7.98 8.34 8.02 7.94 8.44 7.68 7.81 8.11 8.040 0.76
2 8.23 8.12 7.98 8.41 8.31 8.18 7.99 8.06 8.160 0.43
3 7.89 7.77 7.91 8.04 8.00 7.89 7.93 8.09 7.940 0.32
4 8.24 8.18 7.83 8.05 7.90 8.16 7.97 8.07 8.050 0.41
5 7.87 8.13 7.92 7.99 8.10 7.81 8.14 7.88 7.980 0.33
6 8.13 8.14 8.11 8.13 8.14 8.12 8.13 8.14 8.130 0.03
Avgs 8.050 0.38

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Application 5.1
Assuming that taking only 6 samples is sufficient, is the process
in statistical control?
Conclusion on process variability given R = 0.38 and n = 8:

UCLR = D4R = 1.864(0.38) = 0.708

LCLR = D3R = 0.136(0.38) = 0.052

The range chart is out of control since sample 1 falls outside the
UCL and sample 6 falls outside the LCL. This makes the x
calculation moot.

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Application 5.1
Consider dropping sample 6 because of an inoperative scale,
causing inaccurate measures.

Tube Number
Sample 1 2 3 4 5 6 7 8 Avg Range
1 7.98 8.34 8.02 7.94 8.44 7.68 7.81 8.11 8.040 0.76
2 8.23 8.12 7.98 8.41 8.31 8.18 7.99 8.06 8.160 0.43
3 7.89 7.77 7.91 8.04 8.00 7.89 7.93 8.09 7.940 0.32
4 8.24 8.18 7.83 8.05 7.90 8.16 7.97 8.07 8.050 0.41
5 7.87 8.13 7.92 7.99 8.10 7.81 8.14 7.88 7.980 0.33
Avgs 8.034 0.45

What is the conclusion on process variability and process


average?

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Application 5.1

Now R = 0.45, x = 8.034, and n = 8

UCLR = D4R = 1.864(0.45) = 0.839

LCLR = D3R = 0.136(0.45) = 0.061

UCLx = x + A2R = 8.034 + 0.373(0.45) = 8.202

LCLx = x – A2R = 8.034 – 0.373(0.45) = 7.832

The resulting control charts indicate that the process is


actually in control.

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Control Charts for Attributes

 p-charts are used to control the proportion


defective
 Sampling involves yes/no decisions so the
underlying distribution is the binomial distribution
 The standard deviation is

σp = p( 1− p ) / n
p = the center line on the chart

and
UCLp = p + zσp and LCLp = p – zσp

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Using p-Charts

 Periodically a random sample of size n is taken


 The number of defectives is counted
 The proportion defective p is calculated
 If the proportion defective falls outside the UCL, it
is assumed the process has changed and
assignable causes are identified and eliminated
 If the proportion defective falls outside the LCL,
the process may have improved and assignable
causes are identified and incorporated

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Using a p-Chart

EXAMPLE 5.3
 Hometown Bank is concerned about the number of wrong
customer account numbers recorded
 Each week a random sample of 2,500 deposits is taken and
the number of incorrect account numbers is recorded
 The results for the past 12 weeks are shown in the following
table
 Is the booking process out of statistical control?
 Use three-sigma control limits, which will provide a Type I
error of 0.26 percent.

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Using a p-Chart

Sample Number Wrong Account Sample Number Wrong Account


Numbers Numbers
1 15 7 24
2 12 8 7
3 19 9 10
4 2 10 17
5 19 11 15
6 4 12 3
Total 147

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Using a p-Chart

Step 1: Using this sample data to calculate p

Total defectives 147


p= = = 0.0049
Total number of observations 12(2,500)

σp = √ p(1 – p)/n = √ 0.0049(1 – 0.0049)/2,500 = 0.0014

UCLp = p + zσp = 0.0049 + 3(0.0014) = 0.0091

LCLp = p – zσp = 0.0049 – 3(0.0014) = 0.0007

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Using a p-Chart
Step 2: Calculate the sample proportion defective. For sample 1,
the proportion of defectives is 15/2,500 = 0.0060.
Step 3: Plot each sample proportion defective on the chart, as
shown in Figure 5.12.
Fraction Defective

.0091 X
UCL
X X
X
.0049 X X
X Mean
X
X
.0007
X X
X LCL
| | | | | | | | | | | |
1 2 3 4 5 6 7 8 9 10 11 12
Sample

Figure 5.12 – The p-Chart from POM for Windows for Wrong Account Numbers,
Showing That Sample 7 is Out of Control

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Application 5.2
A sticky scale brings Webster’s attention to whether caulking
tubes are being properly capped. If a significant proportion of the
tubes aren’t being sealed, Webster is placing their customers in
a messy situation. Tubes are packaged in large boxes of 144.
Several boxes are inspected and the following numbers of
leaking tubes are found:

Sample Tubes Sample Tubes Sample Tubes


1 3 8 6 15 5
2 5 9 4 16 0
3 3 10 9 17 2
4 4 11 2 18 6
5 2 12 6 19 2
6 4 13 5 20 1
7 2 14 1 Total = 72

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Application 5.2
Calculate the p-chart three-sigma control limits to assess
whether the capping process is in statistical control.

Total number of leaky tubes 72


p= = = 0.025
Total number of tubes 20( 144 )

p(1 − p ) 0.025 ( 1 − 0.025 )


σp = = = 0.01301
n 144
UCL p = p + zσ p = 0.025 + 3( 0.01301) = 0.06403

LCL p = p − zσ p = 0.025 − 3( 0.01301) = −0.01403 = 0

The process is in control as the p values for the samples


all fall within the control limits.

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Control Charts for Attributes

 c-charts count the number of defects per unit of


service encounter
 The underlying distribution is the Poisson
distribution
 The mean of the distribution is c and the
standard deviation is √c

UCLc = c + z√c and LCLc = c – z√c

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Using a c-Chart

EXAMPLE 5.4
The Woodland Paper Company produces paper for the
newspaper industry. As a final step in the process, the paper
passes through a machine that measures various product
quality characteristics. When the paper production process is
in control, it averages 20 defects per roll.
a. Set up a control chart for the number of defects per roll.
For this example, use two-sigma control limits.
b. Five rolls had the following number of defects: 16, 21, 17,
22, and 24, respectively. The sixth roll, using pulp from a
different supplier, had 5 defects. Is the paper production
process in control?

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Using a c-Chart

SOLUTION
a. The average number of defects per roll is 20. Therefore

UCLc = c + z√c = 20 + 2(√20) = 28.94

LCLc = c – z√c = 20 – 2(√20) = 11.06

The control chart is shown in Figure 5.13

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Using a c-Chart

Figure 5.13 – The c-Chart from POM for Windows for Defects per Roll of Paper

b. Because the first five rolls had defects that fell within the
control limits, the process is still in control. Five defects,
however, is less than the LCL, and therefore, the process is
technically “out of control.” The control chart indicates that
something good has happened.

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Application 5.3
At Webster Chemical, lumps in the caulking compound could
cause difficulties in dispensing a smooth bead from the tube.
Even when the process is in control, there will still be an
average of 4 lumps per tube of caulk. Testing for the presence of
lumps destroys the product, so Webster takes random samples.
The following are results of the study:

Tube # Lumps Tube # Lumps Tube # Lumps


1 6 5 6 9 5
2 5 6 4 10 0
3 0 7 1 11 9
4 4 8 6 12 2

Determine the c-chart two-sigma upper and lower control


limits for this process.

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Application 5.3

6 + 5 + 0 + 4 + 6 + 4 + 1+ 6 + 5 + 0 + 9 + 2
c= =4
12

σc = 4 =2

UCL c = c + zσ c = 4 + 2( 2 ) = 8

LCL c = c − zσ c = 4 − 2( 2 ) = 0

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Process Capability

Process capability refers to the ability of


the process to meet the design
specification for the product or service
Design specifications are often expressed
as a nominal value and a tolerance

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Process Capability

Nominal
value

Process distribution
Lower Upper
specification specification

Minutes
20 25 30

(a) Process is capable

Figure 5.14 – The Relationship Between a Process Distribution and


Upper and Lower Specifications

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Process Capability

Nominal
value

Process distribution

Lower Upper
specification specification

Minutes
20 25 30

(b) Process is not capable

Figure 5.14 – The Relationship Between a Process Distribution and


Upper and Lower Specifications

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Process Capability
Nominal value

Six sigma

Four sigma

Two sigma

Lower Upper
specification specification

Mean

Figure 5.15 – Effects of Reducing Variability on Process Capability

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Process Capability

The process capability index measures


how well a process is centered and
whether the variability is acceptable

x – Lower specification Upper specification – x


Cpk = Minimum of ,
3σ 3σ

where
σ = standard deviation of the process distribution

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Process Capability

The process capability ratio tests whether


process variability is the cause of
problems

Upper specification – Lower specification


Cp =

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Determining Process Capability

Step 1. Collect data on the process output,


and calculate the mean and the
standard deviation of the process
output distribution.
Step 2. Use the data from the process
distribution to compute process
control charts, such as an x- and an
R-chart.

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Determining Process Capability

Step 3. Take a series of at least 20 consecutive


random samples from the process and plot
the results on the control charts. If the
sample statistics are within the control limits
of the charts, the process is in statistical
control. If the process is not in statistical
control, look for assignable causes and
eliminate them. Recalculate the mean and
standard deviation of the process
distribution and the control limits for the
charts. Continue until the process is in
statistical control.

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Determining Process Capability

Step 4. Calculate the process capability index. If the


results are acceptable, the process is capable
and document any changes made to the
process; continue to monitor the output by
using the control charts. If the results are
unacceptable, calculate the process capability
ratio. If the results are acceptable, the process
variability is fine and management should
focus on centering the process. If not,
management should focus on reducing the
variability in the process until it passes the
test. As changes are made, recalculate the
mean and standard deviation of the process
distribution and the control limits for the
charts and return to step 3.
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Assessing Process Capability

EXAMPLE 5.5
 The intensive care unit lab process has an average
turnaround time of 26.2 minutes and a standard deviation of
1.35 minutes
 The nominal value for this service is 25 minutes with an
upper specification limit of 30 minutes and a lower
specification limit of 20 minutes
 The administrator of the lab wants to have four-sigma
performance for her lab
 Is the lab process capable of this level of performance?

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Assessing Process Capability
SOLUTION
The administrator began by taking a quick check to see if the
process is capable by applying the process capability index:
26.2 – 20.0
Lower specification calculation = = 1.53
3(1.35)
30.0 – 26.2
Upper specification calculation = = 0.94
3(1.35)

Cpk = Minimum of [1.53, 0.94] = 0.94

Since the target value for four-sigma performance is 1.33, the


process capability index told her that the process was not
capable. However, she did not know whether the problem was
the variability of the process, the centering of the process, or
both. The options available to improve the process depended
on what is wrong.
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Assessing Process Capability

She next checked the process variability with the process


capability ratio:

30.0 – 20.0
Cp = = 1.23
6(1.35)

The process variability did not meet the four-sigma target of


1.33. Consequently, she initiated a study to see where
variability was introduced into the process. Two activities,
report preparation and specimen slide preparation, were
identified as having inconsistent procedures. These
procedures were modified to provide consistent performance.
New data were collected and the average turnaround was now
26.1 minutes with a standard deviation of 1.20 minutes.

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Assessing Process Capability

She now had the process variability at the four-sigma level of


performance, as indicated by the process capability ratio:

30.0 – 20.0
Cp = = 1.39
6(1.20)

However, the process capability index indicated additional


problems to resolve:

(26.1 – 20.0) (30.0 – 26.1)


Cpk = Minimum of , = 1.08
3(1.20) 3(1.20)

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Application 5.4
Webster Chemical’s nominal weight for filling tubes of caulk
is 8.00 ounces ± 0.60 ounces. The target process capability
ratio is 1.33, signifying that management wants 4-sigma
performance. The current distribution of the filling process is
centered on 8.054 ounces with a standard deviation of
0.192 ounces. Compute the process capability index and
process capability ratio to assess whether the filling process
is capable and set properly.

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Application 5.4

a. Process capability index:

x – Lower specification Upper specification – x


Cpk = Minimum of ,
3σ 3σ

8.054 – 7.400 8.600 – 8.054


= Minimum of = 1.135, = 0.948
3(0.192) 3(0.192)

Recall that a capability index value of 1.0 implies that the firm
is producing three-sigma quality (0.26% defects) and that the
process is consistently producing outputs within
specifications even though some defects are generated. The
value of 0.948 is far below the target of 1.33. Therefore, we
can conclude that the process is not capable. Furthermore,
we do not know if the problem is centering or variability.

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Application 5.4

b. Process capability ratio:

Upper specification – Lower specification 8.60 – 7.40


Cp = = = 1.0417
6σ 6(0.192)

Recall that if the Cpk is greater than the critical value (1.33 for
four-sigma quality) we can conclude that the process is
capable. Since the Cpk is less than the critical value, either the
process average is close to one of the tolerance limits and is
generating defective output, or the process variability is too
large. The value of Cp is less than the target for four-sigma
quality. Therefore we conclude that the process variability must
be addressed first, and then the process should be retested.

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Quality Engineering

Quality engineering is an approach


originated by Genichi Taguchi that involves
combining engineering and statistical
methods to reduce costs and improve
quality by optimizing product design and
manufacturing processes.
The quality loss function is based on the
concept that a service or product that
barely conforms to the specifications is
more like a defective service or product
than a perfect one.

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Quality Engineering

Loss (dollars)

Lower Nominal Upper


specification value specification

Figure 5.16 – Taguchi’s Quality Loss Function

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International Standards

ISO 9000:2000 addresses quality


management by specifying what the firm
does to fulfill the customer’s quality
requirements and applicable regulatory
requirements while enhancing customer
satisfaction and achieving continual
improvement of its performance
Companies must be certified by an external
examiner
Assures customers that the organization is
performing as they say they are

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International Standards

ISO 14000:2004 documents a firm’s


environmental program by specifying what
the firm does to minimize harmful effects
on the environment caused by its activities
The standards require companies to keep
track of their raw materials use and their
generation, treatment, and disposal of
hazardous wastes
Companies are inspected by outside,
private auditors on a regular basis

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International Standards

External benefits are primarily increased


sales opportunities
ISO certification is preferred or required by
many corporate buyers
Internal benefits include improved
profitability, improved marketing, reduced
costs, and improved documentation and
improvement of processes

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The Baldrige Award

The Malcolm Baldrige National Quality


Award promotes, recognizes, and
publicizes quality strategies and
achievements by outstanding
organizations
It is awarded annually after a rigorous
application and review process
Award winners report increased
productivity, more satisfied employees and
customers, and improved profitability

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The Baldrige Award

The seven categories of the award are


1. Leadership
2. Strategic Planning
3. Customer and Market Focus
4. Measurement, Analysis, and Knowledge
Management
5. Workforce Focus
6. Process Management
7. Results

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Solved Problem 1
The Watson Electric Company produces incandescent
lightbulbs. The following data on the number of lumens for 40-
watt lightbulbs were collected when the process was in control.
Observation
Sample 1 2 3 4
1 604 612 588 600
2 597 601 607 603
3 581 570 585 592
4 620 605 595 588
5 590 614 608 604

a. Calculate control limits for an R-chart and an x-chart.


b. Since these data were collected, some new employees were
hired. A new sample obtained the following readings: 570,
603, 623, and 583. Is the process still in control?

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Solved Problem 1
SOLUTION
a. To calculate x, compute the mean for each sample. To
calculate R, subtract the lowest value in the sample from the
highest value in the sample. For example, for sample 1,

604 + 612 + 588 + 600


x= = 601
4
R = 612 – 588 = 24

Sample x R
1 601 24
2 602 10
3 582 22
4 602 32
5 604 24
Total 2,991 112
Average x = 598.2 R = 22.4

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Solved Problem 1
The R-chart control limits are

UCLR = D4R = 2.282(22.4) = 51.12


LCLR = D3R = 0(22.4) = 0

The x-chart control limits are

UCLx = x + A2R = 598.2 + 0.729(22.4) = 614.53

LCLx = x – A2R = 598.2 – 0.729(22.4) = 581.87

b. First check to see whether the variability is still in control


based on the new data. The range is 53 (or 623 – 570), which
is outside the UCL for the R-chart. Since the process
variability is out of control, it is meaningless to test for the
process average using the current estimate for R. A search
for assignable causes inducing excessive variability must be
conducted.
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Solved Problem 2

The data processing department of the Arizona Bank has five


data entry clerks. Each working day their supervisor verifies
the accuracy of a random sample of 250 records. A record
containing one or more errors is considered defective and
must be redone. The results of the last 30 samples are shown
in the table. All were checked to make sure that none was out
of control.

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Solved Problem 2

Sample Number of Defective Sample Number of Defective


Records Records

1 7 16 8
2 5 17 12
3 19 18 4
4 10 19 6
5 11 20 11
6 8 21 17
7 12 22 12
8 9 23 6
9 6 24 7
10 13 25 13
11 18 26 10
12 5 27 14
13 16 28 6
14 4 29 11
15 11 30 9
Total 300

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Solved Problem 2

a. Based on these historical data, set up a p-chart using z = 3.


b. Samples for the next four days showed the following:

Sample Number of Defective Records

Tues 17
Wed 15
Thurs 22
Fri 21

What is the supervisor’s assessment of the data-entry process


likely to be?

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Solved Problem 2

SOLUTION
a. From the table, the supervisor knows that the total
number of defective records is 300 out of a total sample of
7,500 [or 30(250)]. Therefore, the central line of the chart is

300
p= = 0.04
7,500

The control limits are

p( 1− p ) 0.04(0.96)
UCL p = p + z = 0.04 + 3 = 0.077
n 250
p ( 1 − p ) = 0.04 − 3 0.04(0.96) = 0.003
LCL p = p − z
n 250

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Solved Problem 2

b. Samples for the next four days showed the following:

Sample Number of Defective Records Proportion

Tues 17 0.068
Wed 15 0.060
Thurs 22 0.088
Fri 21 0.084

Samples for Thursday and Friday are out of control. The


supervisor should look for the problem and, upon identifying
it, take corrective action.

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Solved Problem 3
The Minnow County Highway Safety Department monitors
accidents at the intersection of Routes 123 and 14. Accidents at
the intersection have averaged three per month.
a. Which type of control chart should be used? Construct a
control chart with three sigma control limits.
b. Last month, seven accidents occurred at the intersection. Is
this sufficient evidence to justify a claim that something has
changed at the intersection?

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Solved Problem 3
SOLUTION
a. The safety department cannot determine the number of
accidents that did not occur, so it has no way to compute a
proportion defective at the intersection. Therefore, the
administrators must use a c-chart for which

UCLc = c + z c = 3 + 3 3 = 8.20
LCLc = c – z c = 3 – 3 3 = –2.196

There cannot be a negative number of accidents, so the LCL


in this case is adjusted to zero.

b. The number of accidents last month falls within the UCL


and LCL of the chart. We conclude that no assignable
causes are present and that the increase in accidents was
due to chance.

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Solved Problem 4
Pioneer Chicken advertises “lite” chicken with 30 percent fewer
calories. (The pieces are 33 percent smaller.) The process
average distribution for “lite” chicken breasts is 420 calories,
with a standard deviation of the population of 25 calories.
Pioneer randomly takes samples of six chicken breasts to
measure calorie content.

a. Design an x-chart using the process standard deviation.


b. The product design calls for the average chicken breast to
contain 400 ± 100 calories. Calculate the process capability
index (target = 1.33) and the process capability ratio.
Interpret the results.

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Solved Problem 4

SOLUTION
a. For the process standard deviation of 25 calories, the
standard deviation of the sample mean is

σ 25
σx = = = 10.2 calories
n 6

UCLx = x + zσx = 420 + 3(10.2) = 450.6 calories

LCLx = x – zσx = 420 – 3(10.2) = 389.4 calories

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Solved Problem 4
b. The process capability index is

x – Lower specification Upper specification – x


Cpk = Minimum of ,
3σ 3σ

420 – 300 500 – 420


= Minimum of = 1.60, = 1.07
3(25) 3(25)
The process capability ratio is
Upper specification – Lower specification 500 – 300
Cp = = = 1.33
6σ 6(25)
Because the process capability ratio is 1.33, the process
should be able to produce the product reliably within
specifications. However, the process capability index is 1.07,
so the current process is not centered properly for four-sigma
performance. The mean of the process distribution is too close
to the upper specification.
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