CH 3 Quality management and Control.ppt

Operations Management For Competitive Advantage
©The McGraw-Hill Companies, Inc., 2001
CHASE AQUILANO JACOBS
ninth edition 1
Quality Management and Control
Kahsu Mebrahtu(Asst. Prof.)
Mekelle University
College of Business and Economics
Department of Management
Postgraduate Program(MBA)
ninth edition
Chapter 3

ninth edition 2
8 - 2
What is Quality?
Quality is like beauty !!!
Meeting, or exceeding, customer
requirements now and in the future.
 Quality is the totality of features and
characteristics of a product or service
that bears on its ability to satisfy given
needs.

ninth edition 3
Copyright 2006 John Wiley & Sons, Inc. 3-3
Meaning of Quality:
Consumer’s Perspective
 Fitness for use
 how well product or
service does what it is
supposed to
 Quality of design
 designing quality
characteristics into a
product or service
 A Mercedes and a Ford are
equally “fit for use,” but with
different design dimensions

ninth edition 4
8 - 4
Dimensions of Quality : Manufacturing
QUALITY
Quality
of
Conformance
Field
Service
The
“Abilities”
Quality
of
Design

ninth edition 5
8 - 5
Quality of Design
 Determined before the product is produced
 Determined by market research
 Translates the “wishes” of customers into
specifications

ninth edition 6
8 - 6
Quality of Conformance
Producing a product that meets the
specifications

ninth edition 7
8 - 7
Abilities
 Availability (Continuity of service to customers)
 Reliability (Length of time that a product can be used
before it fails)
 Maintainability (Restoration of the product or service
once it has failed)

ninth edition 8
Dimensions of Quality: Services
 1. Time and Timelines: How long must a
customer wait for service and is it completed
on time ?
 2. Completeness: Is everything the customer
asked for provided?
 3. Courtesy: How are customers treated by
employees?
 4. Consistency
 is same level of service provided to each
customer each time?

ninth edition 9
 Accessibility and convenience
 how easy is it to obtain service?
 does service representative answer you calls quickly?
 Accuracy
 is service performed right every time?
 is your bank or credit card statement correct every
month?
 Responsiveness
 how well does company react to unusual situations?
 how well is a telephone operator at able to respond to a
customer’s questions?
Dimensions of Quality:
Service (cont.)

ninth edition 10
Meaning of Quality:
Producer’s Perspective
 Quality of conformance
 Making sure product or service is produced
according to design
 if new tires do not conform to specifications, y
wobble
 if a hotel room is not clean when a guest checks
in, hotel is not functioning according to
specifications of its design

ninth edition 11
Meaning of Quality:
A Final Perspective
 Consumer’s and producer’s
perspectives depend on each other
 Consumer’s perspective: PRICE
 Producer’s perspective: COST
 Consumer’s view must dominate

ninth edition 12
Fitness for
Consumer Use
Producer’s Perspective Consumer’s Perspective
Quality of Conformance
• Conformance to
specifications
• Cost
Quality of Design
• Quality characteristics
• Price
Marketing
Production
Meaning of Quality
The Meaning of Quality

ninth edition 13
8 - 13
The Quality Cycle
MARKETING
Interprets customer needs
Works with customer to
design product to fit
operations
Interpretation of needs
CUSTOMER
Specifies quality needs
Needs
OPERATIONS
Produces the product or
services
QUALITY CONTROL
Plans and monitors
quality
Product
ENGINEERING
Defines design concept
Prepares specifications
Define quality
characteristics
Specifications

ninth edition 14
Total Quality Management (TQM)
Defined
 Total quality management is defined as
managing the entire organization so that it
excels on all dimensions of products and
services that are important to the customer.

ninth edition 15
Con…
 TQM represents a set of management principles
that focus on quality improvement as the driving
force in all functional areas and at all levels in a
company
 Principles of TQM;
1. The customer define quality, and customer satisfaction
is the top priority
2. Top management must provide the leadership for
quality
3. Quality is a strategic issue and requires a strategic
plan
4. Quality is the responsibility of every employee at every
level of the organization

ninth edition 16
Con…
5. All functions of the company must focus on
continuous quality improvement to achieve
strategic goals
6 . Quality problems are solved through
cooperation among employees and
management
7. Problem solving and continuous quality
improvement use statistical quality control
methods
8. Training and education of all employees is
the basis for continuous quality improvement

ninth edition 17
Costs of Quality
External Failure
Costs
Appraisal Costs
Prevention Costs
Internal Failure
Costs
Costs of
Quality

ninth edition 18
Cost of Quality
 Cost of Achieving Good Quality
– Prevention costs
» costs incurred during product design
– Appraisal costs
» costs of measuring, testing, and analyzing
 Cost of Poor Quality
– Internal failure costs
» include scrap, rework, process failure, downtime,
and price reductions
– External failure costs
» include complaints, returns, warranty claims,
liability, and lost sales

ninth edition 19
Prevention Costs
 Quality planning costs
– costs of developing and
implementing quality
management program
 Product-design costs
– costs of designing products
with quality characteristics
 Process costs
– costs expended to make
sure productive process
conforms to quality
specifications
 Training costs
– costs of developing and
putting on quality training
programs for employees and
management
 Information costs
– costs of acquiring and
maintaining data related to
quality, and development of
reports on quality
performance

ninth edition 20
Appraisal Costs
 Inspection and testing
– costs of testing and inspecting materials, parts, and
product at various stages and at end of process
 Test equipment costs
– costs of maintaining equipment used in testing
quality characteristics of products
 Operator costs
– costs of time spent by operators to gather data for
testing product quality, to make equipment
adjustments to maintain quality, and to stop work to
assess quality

ninth edition 21
Internal Failure Costs
 Scrap costs
– costs of poor-quality
products that must be
discarded, including labor,
material, and indirect costs
 Rework costs
– costs of fixing defective
products to conform to
quality specifications
 Process failure costs
– costs of determining why
production process is
producing poor-quality
products
 Process downtime costs
– costs of shutting down
productive process to fix
problem
 Price-downgrading costs
– costs of discounting poor-
quality products—that is,
selling products as “seconds”

ninth edition 22
External Failure Costs
 Customer complaint costs
– costs of investigating and
satisfactorily responding to a
customer complaint resulting
from a poor-quality product
 Product return costs
– costs of handling and
replacing poor-quality products
returned by customer
 Warranty claims costs
– costs of complying with
product warranties
 Product liability costs
– litigation costs
resulting from product
liability and customer
injury
 Lost sales costs
– costs incurred
because customers
are dissatisfied with
poor quality products
and do not make
additional purchases

ninth edition 23
Benchmarking
1. Identify those processes needing
improvement.
2. Identify a firm that is the world leader in
performing the process.
3. Contact the managers of that company and
make a personal visit to interview managers
and workers.
4. Analyze data.

ninth edition 24
PART II Statistical Quality Control

ninth edition 25
9 -25
Designing of Quality Control Systems
 Processes and “internal customers.”
 “Critical points” and guidelines in identifying
them.
 Steps in designing QC systems.

ninth edition 26
9 -26
Steps in Designing QC Systems
 Identify critical points
 Decide on the type of measurement
(variable versus attribute)
 Decide on the amount of inspection to be
used.
 Decide who should do the inspection

ninth edition 27
9 -27
Process Quality Control
 Basic assumptions (tenets) of Process
Quality Control:
– Every process has random variation in it.
– Production processes are not usually found in a state of
control.
 “State of Control”; what does it mean?

ninth edition 28
9 -28
Process Control Chart
x
y
Time
Upper control limit (UCL)
Center line (CL)
Lower control limit (LCL)
Average + 3
standard
deviations
Quality
measurement
average
Average - 3
standard
deviations

ninth edition 29
9 -29
UCL
LCL
CL
1 2 3 4 5 6
Sample
Quality Control Chart
Stop the process; look for assignable cause
Stop the process; look for assignable cause

ninth edition 30
Quality Measures: Attributes & Variables
 Attribute: is a product characteristics such as
color, surface texture, cleanliness, or smell or
taste
 Hence attributes can be evaluated as: good or
bad, acceptable or not, or yes or no
 A variable measure is a product characteristic
that is measured on a continuous scale such as
length h, temperature, or time

ninth edition 31
Types of Statistical Sampling
 Attribute (Go or no-go information)
– Defectives refers to the acceptability of product
across a range of characteristics.
– Defects refers to the number of defects per unit
which may be higher than the number of
defectives.
– p-chart application
– C-chart
 Variable (Continuous)
– Usually measured by the mean and the standard
deviation.
– X-bar and R chart applications

ninth edition 32
UCL
LCL
Samples
over time
1 2 3 4 5 6
UCL
LCL
Samples
over time
1 2 3 4 5 6
UCL
LCL
Samples
over time
1 2 3 4 5 6
Normal Behavior
Possible problem, investigate
Possible problem, investigate
Statistical Process Control
(SPC) Charts

ninth edition 33
Control Limits
We establish the Upper Control Limits (UCL)
and the Lower Control Limits (LCL) with plus
or minus 3 standard deviations. Based on
this we can expect 99.7% of our sample
observations to fall within these limits.
x
LCL UCL
99.7%

ninth edition 34
Control Charts for
Attributes
 p-charts
 uses portion defective in a sample
 c-charts
 uses number of defects in an item

ninth edition 35
Copyright 2006 John Wiley & Sons, Inc.
p-Chart
UCL = p + zp
LCL = p - zp
z = number of standard deviations from
process average
p = sample proportion defective; an estimate
of process average
p = standard deviation of sample proportion
p =
p(1 - p)
n

ninth edition 36
Con…
p =
T otal N um b er of D efectives
T otal N um b er of O bservations
n
s
)
p
-
(1
p
=
p

ninth edition 37
p-Chart Example
20 samples of 100 pairs of jeans
NUMBER OF PROPORTION
SAMPLE DEFECTIVES DEFECTIVE
1 6 .06
2 0 .00
3 4 .04
: : :
: : :
20 18 .18
200

ninth edition 38
p-Chart Example (cont.)
UCL = p + z = 0.10 + 3
p(1 - p)
n
0.10(1 - 0.10)
100
UCL = 0.190
LCL = 0.010
LCL = p - z = 0.10 - 3
p(1 - p)
n
0.10(1 - 0.10)
100
= 200 / 20(100) = 0.10
total defectives
total sample observations
p =

ninth edition 39
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
0.18
0.20
Proportion
defective
Sample number
2 4 6 8 10 12 14 16 18 20
UCL = 0.190
LCL = 0.010
p = 0.10
p-Chart
Example
(cont.)

ninth edition 40
c-Chart
UCL = c + zc
LCL = c - zc
where
c = number of defects per sample
c = c

ninth edition 41
c-Chart (cont.)
Number of defects in 15 sample rooms
1 12
2 8
3 16
: :
: :
15 15
190
SAMPLE
c = = 12.67
190
15
UCL = c + zc
= 12.67 + 3 12.67
= 23.35
LCL = c + zc
= 12.67 - 3 12.67
= 1.99
NUMBER
OF
DEFECTS

ninth edition 42
3
6
9
12
15
18
21
24
Number
of
defects
Sample number
2 4 6 8 10 12 14 16
UCL = 23.35
LCL = 1.99
c = 12.67
c-Chart
(cont.)

ninth edition 43
Control Charts for
Variables
 Mean chart ( x -Chart )
 uses average of a sample
 Range chart ( R-Chart )
 uses amount of dispersion in a
sample

ninth edition 44
x-bar Chart
x =
x1 + x2 + ... xk
k
=
UCL = x + A2R LCL = x - A2R
= =
where
x = average of sample means
=

ninth edition 45
x-bar Chart Example
Example 15.4
OBSERVATIONS (SLIP- RING DIAMETER, CM)
SAMPLE k 1 2 3 4 5 x R
1 5.02 5.01 4.94 4.99 4.96 4.98 0.08
2 5.01 5.03 5.07 4.95 4.96 5.00 0.12
3 4.99 5.00 4.93 4.92 4.99 4.97 0.08
4 5.03 4.91 5.01 4.98 4.89 4.96 0.14
5 4.95 4.92 5.03 5.05 5.01 4.99 0.13
6 4.97 5.06 5.06 4.96 5.03 5.01 0.10
7 5.05 5.01 5.10 4.96 4.99 5.02 0.14
8 5.09 5.10 5.00 4.99 5.08 5.05 0.11
9 5.14 5.10 4.99 5.08 5.09 5.08 0.15
10 5.01 4.98 5.08 5.07 4.99 5.03 0.10
50.09 1.15

ninth edition 46
UCL = x + A2R = 5.01 + (0.58)(0.115) = 5.08
LCL = x - A2R = 5.01 - (0.58)(0.115) = 4.94
=
=
x = = = 5.01 cm
= x
k
50.09
10
x- bar Chart
Example (cont.)
Retrieve Factor Value A2

ninth edition 47
x- bar
Chart
Example
(cont.)
UCL = 5.08
LCL = 4.94
Mean
Sample number
|
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
9
|
10
5.10 –
5.08 –
5.06 –
5.04 –
5.02 –
5.00 –
4.98 –
4.96 –
4.94 –
4.92 –
x = 5.01
=

ninth edition 48
R- Chart
UCL = D4R LCL = D3R
R =
R
k
where
R = range of each sample
k = number of samples

ninth edition 49
R-Chart Example
OBSERVATIONS (SLIP-RING DIAMETER, CM)
SAMPLE k 1 2 3 4 5 x R
1 5.02 5.01 4.94 4.99 4.96 4.98 0.08
2 5.01 5.03 5.07 4.95 4.96 5.00 0.12
3 4.99 5.00 4.93 4.92 4.99 4.97 0.08
4 5.03 4.91 5.01 4.98 4.89 4.96 0.14
5 4.95 4.92 5.03 5.05 5.01 4.99 0.13
6 4.97 5.06 5.06 4.96 5.03 5.01 0.10
7 5.05 5.01 5.10 4.96 4.99 5.02 0.14
8 5.09 5.10 5.00 4.99 5.08 5.05 0.11
9 5.14 5.10 4.99 5.08 5.09 5.08 0.15
10 5.01 4.98 5.08 5.07 4.99 5.03 0.10
50.09 1.15
Example 15.3

ninth edition 50
R-Chart Example (cont.)
Example 15.3
R
k
R = = = 0.115
1.15
10
UCL = D4R = 2.11(0.115) = 0.243
LCL = D3R = 0(0.115) = 0
Retrieve Factor Values D3 and D4

ninth edition 51
R-Chart Example (cont.)
UCL = 0.243
LCL = 0
Range
Sample number
R = 0.115
|
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
9
|
10
0.28 –
0.24 –
0.20 –
0.16 –
0.12 –
0.08 –
0.04 –
0 –

ninth edition 52
Fac
tors
n A2 D3 D4
SAMPLE SIZE FACTOR FOR x-CHART FACTORS FOR R-CHART
2 1.88 0.00 3.27
3 1.02 0.00 2.57
4 0.73 0.00 2.28
5 0.58 0.00 2.11
6 0.48 0.00 2.00
7 0.42 0.08 1.92
8 0.37 0.14 1.86
9 0.44 0.18 1.82
10 0.11 0.22 1.78
11 0.99 0.26 1.74
12 0.77 0.28 1.72
13 0.55 0.31 1.69
14 0.44 0.33 1.67
15 0.22 0.35 1.65
16 0.11 0.36 1.64
17 0.00 0.38 1.62
18 0.99 0.39 1.61
19 0.99 0.40 1.61
20 0.88 0.41 1.59
Appendix:
Determining Control Limits for x-bar and R-Charts
Return

ninth edition 53
9 -53
Continuous Improvement
 Pareto analysis
 Cause-and-effect (fish-bone) diagrams
 Process capability charts

ninth edition 54
CHECK SHEETS
Used to keep a record
of the number and type
of discontinuities over a
specified period of time
or within a certain
batch of product.
PARETO CHART
A graphical representation ranking
discontinuities from the most to
least significant. Used to help
brainstorm what discontinuities, if
worked upon first, would be the
most likely to produce the greatest
improvement in quality.
Class Example
Our manufacturing procedure is composed of several steps. Several of these
procedures have lead to discontinuities noticed upon inspection. The steps causing
defectives are as follows:
 Caulking 198 defectives
 Fitting 25 defectives
 Connections 103 defectives
 Torque 18 defectives
 Gapping 72 defective
A Pareto Diagram will be developed.

ninth edition 55

ninth edition 56

ninth edition 57
CAUSE AND EFFECT DIAGRAMS (Fishbone Diagram)
Used in brainstorming session to help identify the causes of quality
losses. This diagram is particularly useful after the flow chart and
the Pareto diagrams have been developed.
QUALITY
(Effect)
Cause
Step 1:Decide on the quality characteristic {e.g. Reduction of
wobble during machine rotation}
Step 2:Set up the fish bone backbone
Step 3:Identify main factors causing effect {e.g. Workers,
Materials, Inspection, Tools}
Step 4: Add Cause to each branch

ninth edition 58

ninth edition 59
Reading Assignment
1. Acceptance Sampling
2. Kaizen method of quality
management
3. Process Capability Index
4. ISO quality guidelines
5. The History of Total Quality
Management

ninth edition 60
Thank You

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