Quality control

IIBM Institute of Business Management
Examination Paper MM.100
Quality Control
Section A: Objective Type (30 marks)
 This section consists of Mixed Type questions & Short Answer type questions.
 Answer all the questions.
 Part One questions carries 1 mark each & Part Two questions carries 5 marks each.
Part One:
Multiple Choices:
1. A curve that shows the amount inspected by both the consumer and the producer for different
percent nonconforming values.
a. ASN curve
b. ATI curve
c. AOQ curve
d. None of the above
2. The producer’s risk is represented by the symbols
a. Alpha
b. Beta

c. Gamma
3. The International Committee of Weights and Measures revised the metric system in
a. 1970
b. 1960
c. 1950
d. 1999
4. ASRS stands for……………………………………………………………………..
5. A recent survey of retail customers by the ……………………………………………..
6. A cause-and-effect diagram was developed by ………………………………………
7. Variables that exhibit gaps are called ………………………………
8. How many techniques used to discard data.
a. One
b. Two
c. Three
Examination Paper of Quality Management
IIBM Institute of Business Management 8

9. Deviation charts are also called
a. Difference chart
b. Nominal chart
c. Target chart
d. (a), (b), & (c)
10. Dodge-Romig Tables developed by
a. H.F. Dodge
b. H.G. Romig
c. H.K. Fleming
d. Both (a) & (b)
Part Two:
1. Write short note on “Group Chart”.
2. What is “Measures of Dispersion”.
3. What is “Collection of Data”.
4. Write short note on “Binomial Probability Distribution”.
END OF SECTION A
Section B: Caselets (40 marks)
 This section consists of Caselets.
 Each caselet carries 20 marks.
 Detailed information should form the part of your answer (Word limit 200 to 250 words).

Caselet 1
It is 7:00 a.m. and the siren sounds high at Kandivli (a suburb of North Mumbai) plant of Mahindra &
Mahindra’s (M&M) Tractor division, signaling the starting time of the morning shift. Hardly any
workers have turned up. Reporting late on duty is a norm for the workers here. Seldom does the
morning shift start before 7:30 a.m. During the day shift, it was an ominous scene to find workers
stretching out under the trees and relaxing during the working hours. The union leaders hung around
the factory without doing any work at all. A few days back, the workers in the night shift had beaten
up a milkman for creating a lot of noise in the week hours of the morning and thus, disturbing their
sleep during their working hours. Things were worse at the other plant of M&M in Nagpur. But this
was all in the 1980s. M&M has come a long way since then – it has won the most coveted Deming
prize for quality, and started a farming equipment assembling plant in the U.S.A. After the huge
success there, the company opened a second assembly plant and a distribution centre in Georgia.
Now, the company is in the process of establishing assembling units in Canada to locally produce and
market a range of low horsepower cab tractors with features such as AC heater (keeping in view the
cold weather conditions for the farmers there), personal stereo, and even a sun roof. It has also
acquired Jiangling Tractors in China, which it would use to develop low cost products suited to
plough deeper into the US farm equipment market. Now, the fourth largest tractor company in the
world, M&M, has four tractor plants in India (Mumbai, Nagpur, Rudrapur in Uttranchal, and Jaipur).
It has been maintaining its market leadership for the past two decades. During the late 1980s, the
company tried to apply TQM concepts such as quality circles without getting any success. M&M was
the market leader in the tractors segment at that time, but in view of the looming multinational threat
in the near future, its internal situation was very fragile. During 1990-94, the company started the use
of the statistical process control and tried to perform business process reengineering. Its journey
towards the Deeming prize was initiated in 1994, with the appointment of Prof. Yasutoshi Washio, a

Japanese expert, in the implementation of the Deeming guidelines. The same year, the company was
rechristened M&M Farm Equipment Sector (FES).
Initially, Prof. Washio was skeptical about the Indian companies and workers. He felt that the
Indian companies are more like the American companies, which feel that results are important. On the
other hand, for the Japanese, the process is more important. Moreover, he had serious doubts about
the attitude of the Indian workers with respect to teamwork – a Deeming prerequisite – as he felt that
Indian were individualistic. He has proved wrong by the M&M workers. In his own words, ‘The
Indians can be good team workers, much better than the young in Japan today and, in that sense,
perhaps, Deeming is better suited to Indian companies’. In the initial few years of interaction with the
management of FES, Washio found himself isolated due to disagreements on various fronts. Washio
had major difficulties in making most of the Indian companies understand the importance of
implementation over creating a perfect framework. In his own words, ‘Indians are very good with
framework and the big picture, but are poor with implementation. The kaizen is weak.’ Kaizen means
gradual, orderly, and continuous improvement in work processes. It took a while for Washio to make
the FES personnel understand that good kaizen hinges on implementation, so there is no need to
spend too much time creating a perfect framework. Once you start implementing these, the rest will
happen automatically. The FES created a team to implement the team to implementing the Deeming
guidelines. The team identified eleven key areas to be fulfilled:
1. Top management leadership and involvement
2. Creating and maintaining TQM frameworks
3. Quality assurance
4. Management system
5. Human resource development
6. Effective utilization of resources
7. Understanding TQM concepts and value

8. Use of scientific method
9. Organizational power
10. Relationship with stakeholders
11. Enabling the unique TQM activities
In addition, there is another Deming must-do: eliminate dependence on inspection to achieve quality
by building quality into the product in the first place. The system at FES earlier was that at the end of
the assembly process or at the customer’s place, there used to be a final inspection. If a product
showed serious flaws then, it was sent again to the shop floor. This wasted a lot of time and effort,
and it did not add to the improvement in the quality of the manufactured product. In order to change
this system, computers were installed on the shop floor for showing the standard operating procedure
(SOP) of a particular process to make the workers understand the various steps in a process. This
reduces the chances of human error and acts as a natural check. At the end of every complete process,
a check is performed by a trained worker, who also follows an SOP. Employee involvement is the
first step in ensuring the success of any quality initiative. At FES, the workers would dictate terms to
the shift supervisor by saying that they would not do different tasks on many machines. The
management took time to conceive them by giving them examples such as: if your wife can do
multiple tasks of cleaning the house, feeding the children, and washing the cloths, why can’t you do
the same? The workers were explained the multinational threats looming large. They were told that, if
they did not mend their ways, the company might shut down the factory, or even worse, a
multinational may take it over and would invariably lay off all the problem creating workers.
Examples of companies shut down in Mumbai due to the changed scenario were given. The entire
programme was termed ‘Ashwamedh’ and analogies were drawn from mythology and the current
competitive situation. This brought a complete transformation in the workforce that was now willing
to perform multiple tasks, double their productivity, and maintain shift discipline by reporting on

time. The workers were informed by the management about every difficulty faced by the company in
beating the competition in the market place. Some of the workers were sent with the marketing staff
to meet the farmers using the company’s product and facing problems. This was called ‘Operation
Hamla’. The workers came back chastised and sobered when they realized that a small mistake on the
shop floor could cost a farmer his season’s crop. The company even sent some of the union leaders
for short training courses in the USA and UK.
This sustained effort on part of the company has paid rich dividends. Costs are down by 15% and
the market share has risen by one percent to 27.3% (10% higher than its closest competitor), despite
an overall decline in the tractor demands. The break-even point for a new model of a tractor has
decreased to 30,000 -32,000 from the 54,000 tractors three years ago. The worker productivity levels
have increased by 100%. Tractor exports from the company have increased 100% over the past 10
years, with 70% to the USA alone. The quality of tractors has improved drastically with the number
of complaints per 1000 tractors dropping from 228 to 90. The rejection rate for components bought
from vendors, rejection and rework in machining, and rejection at final testing have all been brought
down to near zero levels. FES has introduced 15 new models in accordance with the requirements in
the international markets. The journey to world-class quality is not over yet. The company now aims
at matching the world benchmarks in productivity and quality to establish a cost leadership in the
Indian industry.
1. If you were a part of the top management at M&M FES, how would you have involved the
workers in the Deming programme?
2. Do you think that M&M FES has a strategic quality management system in place?
Caselet 2

In 1965, a Yale University undergraduate student Frederick W. Smith wrote a term paper about the
passenger route systems used by most airfreight shippers, which he viewed as economically
inadequate. Smith wrote of the need for shippers to have a system designed specifically for airfreight
that could accommodate time sensitive shipments such as medicines, computer parts, and electronics.
In August 1971, following a stint in the military, Smith bought controlling interest in Arkansas. While
operating his new firm, Smith identified the tremendous difficulty in getting packages and other
airfreight delivered with in 1 – 2 days. This dilemma motivated him to do the necessary research for
resolving the inefficient distribution system. Thus, the idea for Federal Express was born – a company
that revolutionized global business practices and now defines speed and reliability. Federal Express
was so named due to the patriotic meaning associated with the word ‘federal’, which suggested an
interest in nationwide economic activity. At that time, Smith hoped to obtain a contract with the
Federal Reserve Bank and, although the proposal was denied, he believed the name was a particularly
good one for attracting public attention and maintaining name recognition.
Company Growth
Though the company did not show a profit until July 1975, it soon became the premier carrier of
high-priority goods in the marketplace and the standard setter for the industry it established. In the
mid-1970s, Federal Express took a leading role in lobbying for air cargo deregulation that finally
came in 1977. These changes allowed Federal Express to use larger aircraft (such as Boeing 727s and
McDonnell-Douglas DC-10s) and spurred the company’s rapid growth. Today FedEx express has the
world’s largest all-cargo air fleet, including McDonnell-Douglas MD-11s and Airbus A-300s and A-
310s. The planes have a total daily lift capacity of more than 26.5 million pounds. In a 24-hour
period, the fleet travels nearly 500,000 miles while its couriers log 2.5 million miles a day- the

equivalent of 100 trips around the earth. The company entered its maturing phase in the first half of
the 1980s. Federal Express was well established. Competitors were trying to catch up with a company
whose growth rate was compounding at about 40% annually. In the fiscal year 1983, Federal Express
reported $1 billion in revenues, making American business history as the first company to reach that
financial hallmark inside 10 years of start-up without mergers or acquisitions.
Overseas Expansion
Following the first several international acquisitions, intercontinental operations began in 1984 with
service to Europe and Asia. The following year, FedEx marked its first regularly scheduled flight to
Europe. In 1988, the company initiated direct-scheduled cargo service to Japan. The acquisition of
Tiger International, Inc. occurred in February 1989. With the integration of the Flying Tigers network
on 7 August 1989, the company became the world’s largest full-service, All-cargo Airline, Included
in the acquisition were route to 21 countries, a fleet of Boeing 747 and 727 aircraft, facilities
throughout the world, and Tigers’ expertise in international airfreight. Federal Express obtained
authority to serve China through a 1995 acquisition from evergreen International Airlines. Under this
authority, Federal Express became the sole US-based, All-cargo carrier with aviation rights to the
world’s most populous nation. Since then, the company’s global reach has continued to expand,
resulting in an unsurpassed worldwide network. FedEx Express today delivers to customers in more
than 210 countries.
Evolving Identify
The first evolution of the company’s corporate identify came in 1994 when Federal Express officially
adopted ‘FedEx’ as its primary brand, talking a cue from its customers, who frequently referred to the

company by the shortened name. By that time, customers used the term as a verb, meaning, ‘to send
an overnight shipment’. It did not take long for the meaning to catch on, and today it is common
terminology to ‘FedEx’ a package. The second evolution came in 2000 when the company was
renamed ‘FedEx Express’ to reflect its position in the overall FedEx Corporation portfolio of services.
This also signified the expanding breadth of FedEx Express – specific service offerings as well as a
FedEx that was no longer just overnight delivery.
FedEx Firsts
Throughout its existence, FedEx has amassed an impressive list of ‘firsts’, most notably for leading
the industry in introducing new services for customers. Federal Express originated the Overnight
Letter and was
 the first transportation company dedicated to overnight package delivery,
 the first to offer next-day delivery by 10:30 a.m.,
 the first to offer Saturday delivery, Examination Paper of Quality Management
 the first express company to offer time define service for freight, and
 the first in the industry with money-back guarantees and free proof of performance – services that
now extend to its worldwide network.
Being a ‘first’ company resulted in many firsts for awards and honors, too. In 1990, Federal Express
became the first company to win the Malcolm Baldrige National Quality Award in the service
category. It also received ISO 9001 registration for all of its worldwide operations in 1994, making in
the first global express transportation company to receive simultaneous system-wide certification.
Today, FedEx Express is the largest operating company in the FedEx family, handling about 3.2
million packages and documents every business day.

People-Service-Profit
Federal Express’s ‘people-service-profit’ philosophy guides management policies and actions. The
company has a well-developed and thoroughly deployed management evaluation system called SFA
(survey/feedback/action), which involves a survey of employees, analysis of each work group’s
results by the work group’s manager, and a discussion between the manager and the work group to
develop written action plans for the manager to improve and become more effective. Data from the
SFA process are aggregated at all levels of the organization for use in policymaking. Training of
front-line personnel is a responsibility of managers and ‘recurrency training’ is a widely used
instrument for improvement. Teams regularly assess training needs and a worldwide staff of training
professionals devices programs to address those needs. To aid these efforts, Federal Express has
developed an interactive video system for employee instruction.
An internal television network, accessible throughout the company, also serves as an important
avenue for employee education. Consistently included in listings of the best US companies to work
for, Federal Express has a ‘no lay-off’ philosophy, and its ‘guaranteed fair treatment procedure’ for
handling employee grievances is used as a model by firms in many industries. Employees can
participate in a program to qualify front-line workers for management positions. In addition, Federal
Express has a well-developed recognition program for team and individual contributions to company
performance. Over the last five years, at least 91% of the employees responded that they were ‘proud
to work for Federal Express’.
Service Quality Indicators
To spur progress toward its ultimate target of 100% customer satisfaction, Federal Express recently
replaced its old measure of quality performance-percent of on-time deliveries – with a 12 component
index that comprehensively describes how customers view its performance. Each item in the service
quality indicator (SQI) is weighted to reflect how significantly it affects the overall customer
satisfaction. Performance data are gathered with the company’s advanced computer and tracking

systems, including the SuperTracker, a hand-held computer used for scanning a shipment’s bar code
every time a package changes hands between pick-up and delivery. Rapid analysis of data from the
firm’s far-flung operations yields daily SQI reports transmitted to workers at all Federal Express sites.
The management meets daily to discuss the previous day’s performance and tracks weekly, monthly,
and annual trends. Analysis of data contained in the company’s more than 30 major database assist
the quality action teams (QATs) in locating the root causes of problems that surface in SQI reviews.
Extensive customer and internal data are used by cross-functional teams involved in the company’s
new product introduction process. To reach its aggressive quality goals, the company has set up one
cross-functional team for each service component in the SQI. A senior executive heads each team and
assures the involvement of front line employees, support personnel, and managers from all parts of
the corporation when needed. Two of these corporate-wide teams have a network of over 1,000
employees working on improvements. The SQI measurements are directly linked to the corporate
planning process, which begins with the CEO and the COO and an executive planning committee.
Service quality indicators from the basis on which corporative executives are evaluated. Individual
performance objectives are established and monitored. Executives bonuses rest upon the performance
of the whole corporation in meeting performance improvement goals. In the annual employee survey,
if employees do not rate management leadership at least as high as they rated them the year before, no
executive receives a year-end bonus. Employees are encouraged to be innovative and to make
decisions that advance quality goals. Federal Express provides employees with the information and
technology they need to continuously improve their performance. An example is the digitally assisted
dispatch system (DADS), which communicates to some 30,000 couriers through screens in their vans.
The system enables quick response to pick-up and delivery dispatches and allows couriers to manage
their time and routes with high efficiency. Since 1987, overall customer satisfaction with Federal
Express’s domestic service has averaged better than 95%, and its international service has rated a

satisfaction score of about 94%. In an independently conducted survey of air-express industry
customers, 53% gave Federal Express a perfect score, as compared with 39% for the next-best
competitor. The company has received 195 of nearly 600 businesses and organizations have visited its
facilities.
1. What lessons can Indian companies take from FedEx?
2. What are the factors that have gone against India and why did FedEx not start its operations here?
END OF SECTION B
.
Section C: Practical Problems (30 marks)
 This section consists Long Questions.
 Each question carries 15 marks.
1. An electrician testing the incoming the voltage for a residential house obtains 5 readings: 115,
113, 121, 115, 116. What is the average?
2. A single sampling plan is desired with a consumer’s risk of 0.10 of accepting 3.0%
nonconforming product and a producer’s risk of 0.05 of not accepting 0.7% nonconforming
product. Select the plan with the lowest sample size.
END OF SECTION C

Quality control

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