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8/11/2013

 UserUser-based:
based: better performance, more
features, value, fitness for use,
support

 ManufacturingManufacturing-based:
based: conformance to
standards, making it right the first
time

 ProductProduct-based:
based: specific and
measurable attributes of the product
2011 Pearson Education,
Inc. publishing as Prentice
Hall

When you complete this chapter you should be able to:

1. Define quality and TQM

The totality of features and


characteristics of a product or service
that bears on its ability to satisfy stated
or implied needs

2. Describe the ISO international quality


standards
3. Explain Six Sigma
4. Explain how benchmarking is used
5. Use the seven tools of TQM

American Society for Quality

2011 Pearson Education,


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2011 Pearson Education,


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Hall

Sales Gains via

Quality in Goods

Quality in Services

o Performance

o Tangibles

 Improved response

o Features

o Reliability

 Flexible pricing

o Reliability

o Responsiveness

 Improved reputation

o Durability

o Competence

o Conformance

o Courtesy

o Serviceability

o Credibility

o Aesthetics

o Security

o Perceived quality

o Access

Improved
Quality

Reduced Costs via

Increased
Profits

 Increased productivity
 Lower rework and scrap costs

o Communication

 Lower warranty costs

o Understanding the customer

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Figure 6.1
Fundamentals of Operations
Management 4e

The McGraw-Hill Companies, Inc., 2003


66

8/11/2013

1. Company reputation
 Perception of new products
 Employment practices
 Supplier relations

2. Product liability
 Reduce risk

3. Global implications
 Improved ability to compete
2011 Pearson Education,
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Appraisal costs

Failure costs

Fundamentals of Operations
Management 4e

Costs associated with the development of


programs to prevent defectives from
occurring in the first place (e.g., training,
quality improvement programs)
Costs associated with the test and
inspection of subassemblies and products
after they have been made.
Costs associated with the failure of a
defective product.
Internal failure costsproducing
defective products that are identified
before shipment.
External failure costsproducing
defective products that are delivered to
the
The McGraw-Hill
Companies, Inc., 2003
customer.
68

 Established in 1988 by the U.S.


government
 Designed to promote TQM practices
 Recent winners include
 Honeywell Federal, Midway USA,
AtlantiCare,
AtlantiCare, Heartland Health, Cargill Corn
Milling, PROPRO-TEC Coating Co., City of Coral
Springs, Premier Inc., Sunny Fresh Foods,
Park Place Lexus, Richland College
2011 Pearson Education,
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Categories
Leadership
Strategic Planning
Customer & Market Focus
Measurement, Analysis, and Knowledge
Management
Workforce Focus
Process Management
Results

Points
120
85
85
90
85
85
450

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Cost Category
Prevention costs

Applicants are evaluated on:

Leader

Philosophy/Contribution

W. Edwards Deming

14 Points for Management

Joseph M. Juran

Top management
commitment, fitness for use

Armand Feigenbaum

Total Quality Control

Philip B. Crosby

Quality is Free, zero defects

2011 Pearson Education,


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Table 6.1

 Operations managers must deliver


healthy, safe, quality products and
services
 Poor quality risks injuries, lawsuits,
recalls, and regulation
 Organizations are judged by how they
respond to problems
 All stakeholders much be considered
2011 Pearson Education,
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8/11/2013

 ISO 9000 series (Europe/EC)


 Common quality standards for products sold in
Europe (even if made in U.S.).
U.S.). The standard is
being accepted worldwide.




 2008 update places greater emphasis on


leadership, and customer requirements and
satisfaction

 ISO 14000 series (Europe/EC)


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An approach for integrating quality at all functional


areas and levels within an organization.
Encompasses entire organization, from supplier to
customer.
Stresses a commitment by management to have a
continuing, companywide drive toward excellence in
all aspects of products and services that are
important to the customer.
Focuses on producing high quality goods and
services.

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1. Create consistency of purpose

Core Elements:
 Environmental management
 Auditing
 Performance evaluation
 Labeling
 Life cycle assessment
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Advantages:
 Positive public image and reduced
exposure to liability
 Systematic approach to pollution
prevention
 Compliance with regulatory requirements
and opportunities for competitive
advantage

2. Lead to promote change


3. Build quality into the product; stop
depending on inspections
4. Build long-term relationships based on
performance instead of awarding
business on price
5. Continuously improve product, quality,
and service
2011 Pearson Education,
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Table 6.2

6. Start training
7. Emphasize leadership
8. Drive out fear
9. Break down barriers between
departments
10. Stop haranguing workers
11. Support, help, and improve

 Reduction in multiple audits


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Table 6.2

8/11/2013

12. Remove barriers to pride in work

 Successful Implementation of TQM


o Requires total integration of TQM into dayday-toto-day

13. Institute education and selfimprovement

operations.
 Causes of TQM Implementation Failures

14. Put everyone to work on the


transformation

o Lack of focus on strategic planning and core

competencies
o Obsolete, outdated organizational cultures.

Table 6.2

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Fundamentals of Operations
Management 4e

 Leadership

Lack of a companycompany-wide definition of quality.


Lack of a formalized strategic plan for change.
 Lack of a customer focus.
 Poor interinter-organizational communication.
 Lack of real employee empowerment.
 Lack of employee trust in senior management.
 View of the quality program as a quick fix.
 Drive for shortshort-term financial results.
 Politics and turf issues.


o Top management vision, planning and support

 Employee involvement
o All employees assume responsibility for inspecting the

quality of their work.


 Product/Process Excellence
o Involves product design quality and monitoring the

process for continuous improvement.


PokaPoka-yokes are devices that prevent defect products
from being produced..
Fundamentals of Operations
Management 4e

The McGraw-Hill Companies, Inc., 2003


620

 Continuous Improvement

Fundamentals of Operations
Management 4e

1.

o A concept that recognizes that quality improvement is a

journey with no end and that there is a need for continually


looking for new approaches for improving quality.
 Customer Focus on Fitness for Use

o Design quality

Specific characteristics of a product that determine its


value in the marketplace.
o Conformance quality

The degree to which a product meets its design


specifications.
Fundamentals of Operations
Management 4e

The McGraw-Hill Companies, Inc., 2003


622

The McGraw-Hill Companies, Inc., 2003


621

2.
3.
4.
5.
6.
7.

The McGraw-Hill Companies, Inc., 2003


623

Continuous improvement
(Kaizen)
Six Sigma
Employee empowerment
Benchmarking
JustJust-inin-time (JIT)
Taguchi concepts
Knowledge of TQM tools

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Lower limits

 Represents continual improvement of all


processes (never
process)
(never ending process)
 Involves all operations and work centers
including suppliers and customers
 People, Equipment, Materials, Procedures

 The end goal is perfection,


perfection, which is never
achieved but always sought

Upper limits

 Two meanings
2,700 defects/million

 Statistical definition of a process that is


3.4 defects/million
99.9997% capable, 3.4 defects per
million opportunities (DPMO)
 A program designed to reduce defects,
lower costs, and improveMean
customer
satisfaction
3
3

6
6
Figure 6.4

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2011 Pearson Education,


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 Originally developed by Motorola,


adopted and enhanced by Honeywell
and GE

4. Act
1.Plan
1.Plan
Implement the Identify the pattern
plan document and make a plan

 Highly structured approach to process


improvement
3. Check
Is the plan
working?

 A strategy

2. Do
Test the plan

 A discipline - DMAIC
Figure 6.3

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 Two meanings
 Statistical definition of a process that is
99.9997% capable, 3.4 defects per
million opportunities (DPMO)
 A program designed to reduce defects,
lower costs, and improve customer
satisfaction

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1. Define critical outputs


and identify gaps for
improvement

DMAIC Approach

2. Measure the work and


collect process data
3. Analyze the data
4. Improve the process
5. Control the new process to make
sure new performance is
maintained
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 Emphasize defects per million opportunities as


a standard metric
 Provide extensive training
 Focus on corporate sponsor support
(Champions)
 Create qualified process improvement experts
(Black Belts, Green Belts, etc.)
 Set stretch objectives
This cannot be accomplished without a major commitment from top
level management
2011 Pearson Education,
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 Getting employees involved in product and


process improvements

Selecting best practices to use as a standard


for performance
1. Determine what to
benchmark
2. Form a benchmark team
3. Identify benchmarking partners
4. Collect and analyze benchmarking
information
5. Take action to match or exceed the
benchmark
2011 Pearson Education,
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Best Practice

Justification

Make it easy for clients


to complain

It is free market research

Respond quickly to
complaints

It adds customers and loyalty

 Build communication networks


that include employees

Resolve complaints on
first contact

It reduces cost

 Develop open, supportive supervisors

Use computers to
manage complaints

Discover trends, share them, and


align your services

Recruit the best for


customer service jobs

It should be part of formal training


and career advancement

 85% of quality problems are due


to process and material

 Techniques

 Move responsibility to employees


 Build a highhigh-morale organization
 Create formal team structures
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 Group of employees who meet


regularly to solve problems

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Table 6.3

Relationship to quality:

 Trained in planning, problem solving,


and statistical methods

 JIT cuts the cost of quality

 Often led by a facilitator

 Better quality means less inventory


and better, easiereasier-toto-employ JIT
system

 Very effective when done properly

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 JIT improves quality

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 Pull system of production scheduling


including supply management
 Production only when signaled

 Engineering and experimental design


methods to improve product and process
design
 Identify key component and process
variables affecting product variation

 Allows reduced inventory levels


 Inventory costs money and hides process and
material problems

 Encourages improved process and product


quality

 Taguchi Concepts
 Quality robustness
 Quality loss function
 TargetTarget-oriented quality

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 Ability to produce products uniformly in


adverse manufacturing and
environmental conditions
Work in process
inventory level
(hides problems)

Unreliable
Vendors

Scrap

 Remove the effects of adverse conditions


 Small variations in materials and process
do not destroy product quality

Capacity
Imbalances

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 Shows that costs increase as the


product moves away from what the
customer wants

Reducing inventory reveals


problems so they can be solved

 Costs include customer


dissatisfaction, warranty
and service, internal
scrap and repair, and costs to society
Unreliable
Vendors
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Scrap

Capacity
Imbalances

 Traditional conformance specifications


are too simplistic
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L = D2C

High loss

where
L = loss to society
D = distance from target
value
C = cost of deviation

Unacceptable

Loss (to
producing
organization,
customer, and
society)

Poor
Fair
Good
Best

Low loss

TargetTarget-oriented quality
yields more product in
the best category
TargetTarget-oriented quality
brings product toward the
target value

Frequency

(a) Check Sheet: An organized method of recording data

Defect
A
B

1
///
//

2
/
/

//

3
/

4
/
/

Hour
5
/

6
/

7
///
//

8
/
///

//

////

ConformanceConformance-oriented
quality keeps products
within 3 standard
deviations
Lower
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Target
Specification

Upper
Figure 6.5

 Tools for Generating Ideas

Figure 6.6

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(b) Scatter Diagram: A graph of the value of one variable vs.


another variable

 Check sheets
 CauseCause-andand-effect diagrams

 Tools to Organize the Data


 Pareto charts

Productivity

 Scatter diagrams

 Flowcharts
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 Tools for Identifying Problems

Absenteeism
Figure 6.6

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(c) Cause
Cause--andand-Effect Diagram: A tool that identifies process
elements (causes) that might effect an outcome

 Histogram
 Statistical process control chart

Cause

Materials

Methods
Effect

Manpower
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Machinery
Figure 6.6

8/11/2013

Data for October

Method
(shooting process)
Grain/Feel
(grip)

60

Bend knees

Air pressure
Hand position
Lopsidedness

Balance

FollowFollow-through

Training

Missed
freefree-throws

Rim size

Conditioning

Rim height

Motivation

Consistency

Backboard
stability

Rim alignment
Concentration

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Number of
occurrences

30
20

12

10

CheckCheck-in
16%

Pool hours
5%

Minibar
4%

Misc.
3%

Causes and percent of the total

Figure 6.7
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(e) Flowchart (Process Diagram): A chart that describes the steps in a


process

Passenger processing at gate

Aircraft late to gate


Other

72

40

Room svc
72%

Personnel

Equipment

54

50

Machine
(hoop &
backboard)

Manpower
(shooter)

100
93
88

70

Aiming point

Frequency (number)

Size of ball

Cumulative percent

Material
(ball)

Late cabin cleaners

Mechanical failures

Unavailable cockpit crew

Weather

Late cabin crew

Air traffic delays

Late baggage to aircraft

Poor announcement of departures

Late fuel

Weight/balance sheet late

Late food service

Delayed check-in procedure

Contractor not provided


updated schedule
Materials

Delayed
flight
departures

Waiting for late passengers

Procedures

To Accompany Krajewski &


Ritzman Operations

Figure 4.11

Source:
Adapted from
D. Daryl Wyckoff,
Management:
Strategy
and New Tools for Achieving Service Quality. The Cornell Hotel and Restaurant
Administration Quarterly, November 1984, pg. 89. 1984 Cornell H.R.A. Quarterly. Used by permission. All rights reserved.

Analysis, Seventh Edition


2004 Prentice Hall, Inc. All

(d) Pareto Chart: A graph to identify and plot problems or defects in


descending order of frequency

MRI Flowchart
1.
2.
3.
4.
5.
6.

Physician schedules MRI


Patient taken to MRI
Patient signs in
Patient is prepped
Technician carries out MRI
Technician inspects film

7.
8.
9.
10.

If unsatisfactory, repeat
Patient taken back to room
MRI read by radiologist
MRI report transferred to
physician
11. Patient and physician discuss

Percent

Frequency

Figure 6.6

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8
1

80%

11
9

A
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10

20%
Figure 6.6

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(f)

Histogram: A distribution showing the frequency of occurrences of a


variable

Frequency

Distribution

Plots the percent of free throws missed


20%

Upper control limit

10%

Coachs target value

0%

|
1

|
2

|
3

|
4

|
5

|
6

|
7

|
8

|
9

Lower control limit

Game number

Repair time (minutes)


Figure 6.6

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(g) Statistical Process Control Chart: A chart with time on the horizontal
axis to plot values of a statistic

Figure 6.8
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 Involves examining items to see if an item is


good or defective
 Detect a defective product

Upper control limit

 Does not correct deficiencies in process or


product
 It is expensive

Target value

 Issues

Lower control limit

 When to inspect
 Where in process to inspect

Time
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Figure 6.6

 Uses statistics and control charts to tell


when to take corrective action

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1. At the suppliers plant while the supplier is


producing

 Drives process improvement

2. At your facility upon receipt of goods from the


supplier

 Four key steps

3. Before costly or irreversible processes

 Measure the process


 When a change is indicated, find the assignable cause

4. During the stepstep-byby-step production process

 Eliminate or incorporate the cause

5. When production or service is complete

 Restart the revised process

6. Before delivery to your customer


7. At the point of customer contact

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 Many problems
 Worker fatigue
 Measurement error
 Process variability

 Cannot inspect quality into a product


 Robust design, empowered
employees, and sound processes are
better solutions
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The Operations Manager must


recognize:
1. The tangible component of services
is important
2. The service process is important

Reliability

Consistency of performance and dependability

Responsiveness

Willingness or readiness of employees

Competence

Required skills and knowledge

Access

Approachability and ease of contact

Courtesy

Politeness, respect, consideration, friendliness

Communication

Keeping customers informed

Credibility

Trustworthiness, believability, honesty

Security

Freedom from danger, risk, or doubt

Understanding/
knowing the customer

Understand the customers needs

Tangibles

Physical evidence of the service

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Managers should have a plan for when


services fail
Marriotts LEARN routine
 Listen
 Empathize

3. The service is judged against the


customers expectations

 Apologize

4. Exceptions will occur

 Notify

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Table 6.5

 React

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 Also known as source control


 The next step in the process is your
customer
 Ensure perfect product
to your customer
PokaPoka-yoke is the concept of foolproof devices or techniques designed
to pass only acceptable product

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Organization

What is
Inspected

Jones Law Office Receptionist


performance

Standard
Is phone answered by the
second ring

Hard Rock Hotel

Arnold Palmer
Hospital

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Standard

Busboy

Serves water and bread


within 1 minute

Accurate, timely, and


correct format

Busboy

Clears all entre items and


crumbs prior to dessert

Attorney

Promptness in returning
calls

Waiter

Knows and suggest


specials, desserts

Table 6.4

What is
Inspected

What is
Inspected

Organization

Reception
desk

Use customers name

Doorman

Greet guest in less than 30


seconds

Room

All lights working, spotless


bathroom

Minibar

Restocked and charges


accurately posted to bill

Table 6.4

What is
Inspected

Table 6.4

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Standard

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Organization

Olive Garden
Restaurant

Billing

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Organization

What is
Inspected

Organization

Standard

Nordstrom
Department
Store

Standard

Display areas Attractive, well-organized,


stocked, good lighting
Stockrooms

Rotation of goods,
organized, clean

Salesclerks

Neat, courteous, very


knowledgeable

Table 6.4

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Japanese English
Term
Equivalent

Meaning in Japanese
Context

Seiri

Tidiness

Throw away all rubbish and unrelated


materials in the workplace

Billing

Accurate, timely, and


correct format

Pharmacy

Prescription accuracy,
inventory accuracy

Seiton

Orderliness

Set everything in proper place for


quick retrieval and storage

Lab

Audit for lab-test accuracy


Charts immediately
updated

Seiso

Cleanliness

Nurses

Clean the workplace; everyone


should be a janitor

Admissions

Data entered correctly and


completely

Seiketsu

Standardization

Standardize the way of maintaining


cleanliness

Shitsuke

Discipline

Practice 'Five S' daily - make it a way


of life; this also means 'commitment'

Table 6.4

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8/11/2013

Checklists

Attributes
 Items are either good or bad, acceptable or

unacceptable
 Does not address degree of failure


Headliner Defects
Defect type

Variables

Tally

Total

A. Tears in fabric

 Measures dimensions such as weight,

B. Discolored fabric

speed, height, or strength


 Falls within an acceptable range

C. Broken fiber board

D. Ragged edges

Use different statistical techniques

Total
To Accompany Krajewski &
Ritzman Operations

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Management:
Figure
4.12 Strategy and

Analysis, Seventh Edition


2004 Prentice Hall, Inc. All

Tools for Improving Quality

Checklists
Headliner Defects
Defect type






Step 1Checklist
Step 2Pareto chart
Step 3Cause-and-effect

diagram
Step 4Bar chart

Tally

Total

A. Tears in fabric
B. Discolored fabric
C. Broken fiber board

//

D. Ragged edges
Total

To Accompany Krajewski &


Ritzman Operations
Management: Strategy and
Analysis, Seventh Edition
2004 Prentice Hall, Inc. All

To Accompany Krajewski &


Ritzman Operations
Management:
Figure
4.12 Strategy and

Analysis, Seventh Edition


2004 Prentice Hall, Inc. All

Checklists

Checklists
Headliner Defects
Headliner Defects

Defect type

Tally

Defect type

A. Tears in fabric

A. Tears in fabric

B. Discolored fabric

B. Discolored fabric

C. Broken fiber board

C. Broken fiber board

Total

//

D. Ragged edges

D. Ragged edges

Total

Total
To Accompany Krajewski &
Ritzman Operations

To Accompany Krajewski &


Ritzman Operations

Management:
Figure
4.12 Strategy and

Management:
Figure
4.12 Strategy and

Analysis, Seventh Edition


2004 Prentice Hall, Inc. All

Tally

Total

Analysis, Seventh Edition


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Checklists

Cause-and-Effect Diagram
Headliner Defects

Defect type

People

Tally

Total

Materials
Training
Out of specification

A. Tears in fabric

Absenteeism

Not available

Communication

B. Discolored fabric
C. Broken fiber board

D. Ragged edges

//

Humidity

Broken
fiber board

maintenance
Machine

Machine speed

Schedule changes

Wrong setup

Total
Other
To Accompany Krajewski &
Ritzman Operations
Management:
Figure
4.12 Strategy and
Analysis, Seventh Edition
2004 Prentice Hall, Inc. All

Process

To Accompany Krajewski &


Ritzman Operations
Management:
Figure
4.12 Strategy and
Analysis, Seventh Edition
2004 Prentice Hall, Inc. All

Bar Chart
Headliner Defects
Tally

Total

A. Tears in fabric

Defect type

////

B. Discolored fabric

///

C. Broken fiber board

D. Ragged edges

//// //// //// ////


//// //// //// /
//// //
Total

36
7
50

To Accompany Krajewski &


Ritzman Operations
Management:
Figure
4.12 Strategy and
Analysis, Seventh Edition
2004 Prentice Hall, Inc. All

20

Number of broken fiber boards

Checklists

15

10

First

To Accompany Krajewski &


Ritzman Operations
Management:
Figure
4.12 Strategy and
Analysis, Seventh Edition
2004 Prentice Hall, Inc. All

Pareto Chart
50

100

Second
Shift

Third

Entrance

Buffer

Work Station

Buffer

Door

Line

Teller

Served Customers

Number of defects

80

30
20
10

To Accompany Krajewski &


Ritzman Operations
Management:
Figure
4.12 Strategy and

Analysis, Seventh Edition


2004 Prentice Hall, Inc. All

60


D

40
20

Work Station
Teller 1
Entrance

Buffer

Buffer

Door

Line

Served Customers
Work Station
Teller 2

B
0

Defect type

Cumulative percentage

(a) Flowchart for one-teller bank

40

To Accompany Krajewski &


Flowchart for
Ritzman(b)
Operations
Management: Strategy and
Analysis, Seventh Edition
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two-teller bank

Figure 4.13

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8/11/2013

Element

Element

Types

Names

Entrance(s)

Door

Buffer(s)

Line

Statistics

Overall
Means

Service level

0.90

Mean inventory

4.47

Mean cycle time

11.04

To Accompany Krajewski &


Ritzman Operations
Figure
4.14
Management: Strategy and
Analysis, Seventh Edition
2004 Prentice Hall, Inc. All

15