CH 3 Quality management and Control.pptx

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

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.
8 - 2

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
Copyright 2006 John Wiley & Sons, Inc. 3-3

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

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

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

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)
8 - 7

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?

Dimensions of Quality:
Service (cont.)
 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?

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, they wobble
 if a hotel room is not clean when a guest checks in, hotel is
not functioning according to specifications of its design

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

The Meaning of Quality
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 Quality Cycle
8 - 13
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

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.

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

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

Costs of Quality
External Failure
Costs
Appraisal Costs
Prevention Costs
Internal Failure
Costs
Costs of
Quality

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

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

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

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”

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

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.

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

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
9 -26

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?
9 -27

Process Control Chart
9 -28
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

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

 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

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

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

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%

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

p-Chart
Copyright 2006 John Wiley & Sons, Inc.
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

Con…
p =
T otal N um b er of D efectives
T otal N um b er of O bservations

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

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 =

p-Chart
Example
(cont.)
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

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

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

c-Chart
(cont.)
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

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

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

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

x- bar Chart Example
(cont.)
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
Retrieve Factor Value A2

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
=

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

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

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

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 –

Facto
rs
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

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

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.

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

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

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