Operations

Management
Managing Quality
Chapter 6

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 Definitions of Quality

 ASC: Product characteristics & features that affect

customer satisfaction
 User-Based: What consumer says it is
 Manufacturing-Based: Degree to which a product
conforms to design specification
 Product-Based: Level of measurable product
characteristic

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 Costs of Quality

 Prevention costs - reducing the potential for

defects
 Appraisal costs - evaluating products
 Internal failure - of producing defective parts or
service
 External costs - occur after delivery

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 TQM

Encompasses entire organization, from supplier to

customer
Stresses a commitment by management to have a
continuing, company-wide, drive toward
excellence in all aspects of products and services
that are important to the customer.

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 Deming’s Fourteen Points

 Create consistency of purpose

 Lead to promote change
 Build quality into the products
 Build long term relationships
 Continuously improve product, quality, and service
 Start training
 Emphasize leadership

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 Deming’s Points - continued

 Drive out fear

 Break down barriers between departments
 Stop haranguing workers
 Support, help, improve
 Remove barriers to pride in work
 Institute a vigorous program of education and self-
improvement
 Put everybody in the company to work on the
transformation
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 Quality Loss Function
High Loss
Unacceptable

Poor
L o ss

Fair

Good

Best
Low Loss
Target-oriented quality
yields more product in
the "best" category
Frequency

Conformance-oriented
quality keeps products
within 3 standard
deviations

Lower Target Upper

Distribution of Specifications for Products Produced
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 Target Specification Example
A study found U.S. consumers preferred Sony TV’s made in
Japan to those made in the U.S. Both factories used the
same designs & specifications. The difference in quality
goals made the difference in consumer preferences.

Freq. Japanese factory

(Target-oriented)
U.S. factory
(Conformance-
X oriented)
LSL Target USL
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 Quality Loss Function; Distribution of
Products Produced
High loss Quality Loss Function (a)
Unacceptable
Loss (to Target-oriented
producing Poor quality yields more
organization, Fair product in the
customer, and Good
“best” category
society) Best
Low loss Target-oriented quality
brings products toward
the target value
Conformance-oriented
Frequency quality keeps product
within three standard
deviations
Distribution of specifications
Lower Target Upper for product produced (b)
Specification
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 PDCA Cycle

4.Act: 1.Plan:
Implement the Identify the
plan improvement and
make a plan

3.Check: 2.Do:
Is the plan Test the plan
working

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 Tools of TQM
 Tools for generating ideas
 Check sheet
 Scatter diagram
 Cause and effect diagram
 Tools to organize data
 Pareto charts
 Process charts (Flow diagrams)
 Tools for identifying problems
 Histograms
 Statistical process control chart

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 Seven Tools for TQM

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 Pareto Analysis of Wine Glass
Defects (Total Defects = 75)
70 93% 97% 100% 100%
88%
60 54
72% 80%
Frequency (Number)

Cumulative Percent
50
40 60%
30 40%
20 12
20%
10 5 4 2
0 0%
Scratches Porosity Nicks Contamination Misc.
72% 16% 5% 4% 3%
Causes, by percent total defects

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 Process Chart

 Shows sequence of events in process

 Depicts activity relationships
 Has many uses
 Identify data collection points
 Find problem sources
 Identify places for improvement
 Identify where travel distances can be reduced

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 Statistical Process Control (SPC)
 Uses statistics & control charts to tell when to adjust
process
 Developed by Shewhart in 1920’s
 Involves
 Creating standards (upper & lower limits)
 Measuring sample output (e.g. mean wgt.)
 Taking corrective action (if necessary)

 Done while product is being produced

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 TQM In Services

 Service quality is more difficult to measure than for

goods
 Service quality perceptions depend on
 Expectations versus reality
 Process and outcome

 Types of service quality

 Normal: Routine service delivery
 Exceptional: How problems are handled

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 Goods versus Services
Good Service
 Can be resold  Reselling unusual
 Can be inventoried  Difficult to inventory
 Quality difficult to
 Some aspects of measure
quality measurable  Selling is part of
 Selling is distinct from service
production

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 Goods versus Services - continued
Good Service
 Product is transportable  Provider, not product is
 Site of facility important transportable
for cost  Site of facility important
for customer contact
 Often easy to automate  Often difficult to
automate
 Revenue generated
primarily from tangible  Revenue generated
product primarily from intangible
service.

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 Operations
Management

Statistical Process Control

Supplement 6
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 Statistical Quality Control (SPC)
 Measures performance of a process
 Uses mathematics (i.e., statistics)
 Involves collecting, organizing, & interpreting data
 Objective: provide statistical signal when assignable
causes of variation are present
 Used to
 Control the process as products are produced
 Inspect samples of finished products

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 Quality Characteristics
Variables Attributes
 Characteristics that you  Characteristics for which you
measure, e.g., weight, length focus on defects
 May be in whole or in  Classify products as either
fractional numbers ‘good’ or ‘bad’, or count #
 Continuous random variables defects
 e.g., radio works or not
 Categorical or discrete
random variables

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 Statistical Process Control (SPC)

 Statistical technique used to ensure process is

making product to standard
 All process are subject to variability
 Natural causes: Random variations
 Assignable causes: Correctable problems
 Machine wear, unskilled workers, poor material
 Objective: Identify assignable causes
 Uses process control charts

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 Sampling Distribution of Means, and
Process Distribution
Sampling distribution
of the means

Process
distribution of the
sample

xm
( mean )

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 Process Control Charts

Plot of Sample Data Over Time

80
Sample Value

Sample
60 Value
UCL
40
Average
20
LCL
0
1 5 9 13 17 21
Time
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 Control Chart Purposes

 Show changes in data pattern

 e.g., trends
 Make corrections before process is out of control
 Show causes of changes in data
 Assignable causes
 Data outside control limits or trend in data
 Natural causes
 Random variations around average

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 Theoretical Basis
of Control Charts
Central Limit Theorem
As sample size sampling distribution
gets becomes almost normal
large regardless of population
enough, distribution.

X
X
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 Control Chart Types

Continuous Numerical Categorical or Discrete

Data Control Numerical Data
Charts

Variables Attributes
Charts Charts

R X P C
Chart Chart Chart Chart

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 X Chart

 Type of variables control chart

 Interval or ratio scaled numerical data
 Shows sample means over time
 Monitors process average
 Example: Weigh samples of coffee & compute
means of samples; Plot

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Control Chart for Samples of 9 Boxes
Variation due to
assignable causes

17=UCL
Variation due to
16=Mean
natural causes
15=LCL
Variation due to
1 2 3 4 5 6 7 8 9 10 11 12 assignable causes
Sample Number
Out of control

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 X Chart
Control Limits
UCL x  x  A  R From
Table S6.1

LCLx  x  A R Range for

sample i
Mean for
n sample i
 xi n
 Ri
x  i  i 1
R 
n n
# Samples
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 Factors for Computing Control Chart
Limits
Sample Mean Upper Lower
Size, n Factor, A2 Range, D4 Range, D3
2 1.880 3.268 0
3 1.023 2.574 0
4 0.729 2.282 0
5 0.577 2.115 0
6 0.483 2.004 0
7 0.419 1.924 0.076
8 0.373 1.864 0.136
9 0.337 1.816 0.184
10 0.308 1.777 0.223
12 0.266 1.716 0.284
0.184

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 R Chart
 Type of variables control chart
 Interval or ratio scaled numerical data
 Shows sample ranges over time
 Difference between smallest & largest values in
inspection sample
 Monitors variability in process
 Example: Weigh samples of coffee & compute
ranges of samples; Plot

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 R Chart
Control Limits
UCL R  D 4 R
From Table S6.1
LCL R  D 3R

n Range for Sample i

 Ri
R  i 1
n # Samples
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 Steps to Follow When Using Control
Charts
1. Collect 20 to 25 samples of n=4 or n=5 from a
stable process and compute the mean.
2. Compute the overall means, set approximate
control limits,and calculate the preliminary
upper and lower control limits.If the process is
not currently stable, use the desired mean
instead of the overall mean to calculate limits.
3. Graph the sample means and ranges on their
respective control charts and determine
whether they fall outside the acceptable
limits.
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 Steps to Follow When Using Control
Charts - continued

4. Investigate points or patterns that indicate the

process is out of control. Assign causes for the
variations.
5. Collect additional samples and revalidate the
control limits.

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 Mean and Range Charts
Complement Each Other

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 Patterns to Look for in Control
Charts

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Deciding Which Control Chart to Use
 Using an X and R chart:
 Observations are variables
 Collect 20-25 samples of n=4, or n=5, or more each
from a stable process and compute the mean for the X
chart and range for the R chart.
 Track samples of n observations each.
 Using the P-Chart:
 We deal with fraction, proportion, or percent defectives
 Observations are attributes that can be categorized in
two states
 Have several samples, each with many observations
 Assume a binomial distribution unless the number of
samples is very large – then assume a normal
distribution.
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Deciding Which Control Chart to Use
 Using a C-Chart:
 Observations are attributes whose defects per unit of
output can be counted
 The number counted is often a small part of the
possible occurrences
 Assume a Poisson distribution
 Defects such as: number of blemishes on a desk,
number of typos in a page of text, flaws in a bolt of
cloth

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 Process Capability Ratio, Cp

Upper Specification  Lower Specification

Cp 
6σ

  standard deviation of the process

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 Process Capability Cpk
 Upper Specification Limit  x
C pk  minimum of  , or
 3
x  Lower Specification Limit 
3 

where x  process mean
  standard deviation of the process population
Assumes that the process is:
• under control
• normally distributed

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 Meanings of Cpk Measures

Cpk = negative number

Cpk = zero

Cpk = between 0 and 1

Cpk = 1

Cpk > 1

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