A P R OJ E CT ON P R ODU CT I ON AND OP E R AT I ONS

MANAGE ME NT
STATISTICAL QUALITY
CONTROL
Made by:
Shreya Tewatia (50364)
Shruti Jain (50365)
Suhani Rao (50378)
Varun Goel (50393)
WHAT IS STATISTICAL QUALITY
CONTROL?
Statistical quality control (SQC) is the term used to describe the
set of statistical tools used by quality professionals. Statistical
quality control can be divided into three broad categories:
Descriptive statistics are used to describe quality
characteristics and relationships. They include statistics such as
the mean, standard deviation, the range, and a measure of
the distribution of data.
Statistical process control (SPC) involves inspecting a random
sample of the output from a process and deciding whether
the process is producing products with characteristics that fall
within a predetermined range. SPC answers the question of
whether the process is functioning properly or not.
Acceptance sampling is the process of randomly inspecting a
sample of goods and deciding whether to accept the entire
lot based on the results. Acceptance sampling determines
whether a batch of goods should be accepted or rejected.

USES AND IMPORTANCE
The tools in each of these categories provide different types
of information for use in analyzing quality.
Descriptive statistics are used to describe certain quality
characteristics, such as the central tendency and variability
of observed data.
Acceptance sampling helps us decide whether desirable
quantity has been achieved for a batch of products, and
whether to accept or reject the items produced.
All three of these statistical quality control categories are
helpful in measuring and evaluating the quality if product or
services.
The quality control tools we will be learning about do not
only measure the value of a quality characteristic. They also
help us identify a change or variation in some quality
characteristic of the product or process.
Variation in the production process leads to quality defects
and lack of product consistency.

SOURCES OF VARIATION
Variation exists in all processes.
Variation can be categorized as either;
Common or Random causes of variation, or chance variations.
These variations arise on account of purely random events that
are not in the control of the system designer or the operating
personnel. Therefore, the causes of these variations are also known
as common causes of variations.
Assignable causes of variation, Certain perceptible changes
happen in the system, resulting in variations, and the system
drifts away from the desired state. It is possible to identify
these changes, take corrective measures, and restore the
system back to its desired state of operation.

Common Causes:
Since the common cause of variations stem from random behavior
of the system, one can utilize the laws of probability to
understand, analyze, and predict the state of system.

How do we know whether the observed changes are due to
random variations or assignable causes?

How does one ensure that the random variances are indeed rare
events?

Ans.
we can make use of several samples of an observation and
construct a distribution of the means of the samples.
The distribution of the sample means follows a normal distribution.
Therefore, using the sample, we can compute the statistical
attribute (such as the mean and the standard deviation) of the
population from which we have drawn the sample.
A normal distribution is characterized by the location of average,
the speed of the distribution, and the shape. A normal distribution
is symmetric around the center unlike gamma distribution, which
is skewed to the right.

Assignable Causes:
When the observed variations are not statistically found
due to random effects, it clearly points to the existence
of some assignable causes.
From a statistical point of view, assignable causes of
variations impact the distribution of the process in more
ways than one.
It is possible to trace the causes of the variations and
take corrective actions. Once corrective action is taken,
the system will return to normal operating conditions and
variations will be only due to chance.
A process having only chance variations is said to be in
a state of control. Therefore, it is clear when a process is
under a state of control; the associated distribution of
the process will not shift the average. Moreover, the
spread of the process will also remain the same and the
distribution will be symmetric.

TRADITIONAL STATISTICAL TOOLS
Descriptive Statistics can be helpful in describing certain characteristics
of a product and a process. They include::
The Mean- measure of central tendency




The Range- difference between largest/smallest observations in a set of data
Standard Deviation measures the amount of data dispersion around mean




Distribution of Data shape
Normal or bell shaped or
Skewed
( )
1 n
X x

n
1 i
2
i

=

=
DISTRIBUTION OF DATA
Normal distributions

Skewed distribution

PROCESS CONTROL FUNDAMENTALS
The terms associated with the process control technique are:
Nominal Value:
The desired average for a process is known as the nominal value
Specification Limits:
Specifications limits are nothing but the tolerances allowed in every process. These tolerances are
arrived at after making a detailed design based on several considerations. The upper specifications limit
(USL) provides the upper limit for the measure under consideration, while the lower specification limit
(LSL) provides the lower limit
Process Average:
How the process is operating is independent of what one desires the process to be. By actually sampling
the process, one can establish the average at which the process is operating. This average is known as the
Centre line (of the process).
Control Limits:
The process is said to be under control when there are only chance variations. The upper control limit
(UCL) is defined by the value of three positive standard deviations from the process average. Similarly,
the lower control limit (LCL) is defined by the three negative standard deviations from the process
average. It can be numerically expressed as follows:

UCL = Process average + 3
LCL = Process average - 3
Clearly, as actual observations fall within UCL and LCL, we conclude that there are only chance
variations.
SETTING UP A PROCESS CONTROL
SYSTEM
Choose the
characteristic for
process control
Choose an
appropriate sampling
procedure
Calculate the control
limits
Choose the type of
control chart
Plot the data and
analyse
Choose the
measurement method

Step 1: Choose the Characteristic for Process Control


We should know about the aspect of the process
that needs to be monitored and controlled.
The choice is among those who have a direct
bearing on the quality of the product and service
offered to the customer.
However, in reality, it is difficult to make an
appropriate choice of the attribute purely on the
basis of the quality dimension alone. There are other
issues to be considered at the time of selecting an
appropriate characteristic. These include ease of
observation and measurement characteristic, the
ease of adjustment of the process to alter
characteristic value, the likely monetary impact on
the quality, and the criticality of the characteristic to
the process.




Step 2: Choose the Measurement Method


This step makes a choice regarding how the
selected characteristic will be measured. There are
alternative ways of measuring the characteristic.
One is by simple clustering of the characteristic into
a few categories (such as good or bad). This is
known as attribute-based measurement. To
frequently use attribute measures are the proportion
of defects (denoted as p) and the number of
defects (denoted as c). The other is to make
detailed observation of the characteristic. This is
known as variable-based measurement. Using the
detailed measurement one can estimate the
average of these measurement (denoted as X) and
the range of the measurements (denoted by R).

Step 3: Choose an Appropriate Sampling Procedure
Deciding on an appropriate sampling procedure is an
essential step in setting up a process control system. The
sampling procedure typically involves deciding on:
The size of each sample or sub group (denoted as n),
and
The number of such samples to be taken (denoted as m).
The major consideration for deciding on n and m is that the
observations within each sub-group should look alike and
the observations across the sub-groups should look
different.
Translating these requirements to practical conditions
would mean that n cannot be large. If it is so, by the time
the nth observation is made, there would have been a
long time interval between the nth and 1
st
sample.
Therefore, the observations within a subgroup may not be
homogenous. Similarly, it can be argued that two
consequent sub-groups, cannot be sampled without
sufficient time intervals. In consideration of these, generally
n is kept small, in the range of 5-10 and m in the range of
10-20.

Step 4: Choose the type of Control Chart


A control chart is a graphical representation
of the process status in terms of the UCL, LCL,
process average, and the plot of the sample
data.




The plot of the sample data, once the control limits are
established, is an integral part of setting up the control
chart. It helps to identify when the process goes out of
control. A plot outside the control limit is an indication
of the possibility of assignable causes for the variations.
Control charts are available for both attribute
measures and variable measures.
Four types of charts are used for process control
application. The X chart and the R chart are used for
variable measurements while the p chart and the c
chart are used for attribute measurement.

Step 5: Compute the control limits


Use x-bar and R-bar
charts together
Used to monitor
different variables
X-bar & R-bar Charts
reveal different
problems
In statistical control on
one chart, out of
control on the other
chart? OK?

Step 6: Plot the data and analyze it
CONTROL CHARTS FOR VARIABLES
Use x-bar charts to monitor the
changes in the mean of a process
(central tendencies)
Use R-bar charts to monitor the
dispersion or variability of the process
System can show acceptable central
tendencies but unacceptable
variability or
System can show acceptable
variability but unacceptable central
tendencies
CONSTRUCTING A X-BAR CHART: A QUALITY CONTROL INSPECTOR AT THE
COCOA FIZZ SOFT DRINK COMPANY HAS TAKEN THREE SAMPLES WITH FOUR
OBSERVATIONS EACH OF THE VOLUME OF BOTTLES FILLED. IF THE STANDARD
DEVIATION OF THE BOTTLING OPERATION IS .2 OUNCES, USE THE BELOW
DATA TO DEVELOP CONTROL CHARTS WITH LIMITS OF 3 STANDARD
DEVIATIONS FOR THE 16 OZ. BOTTLING OPERATION.
x x
x x
n 2 1
z x LCL
z x UCL
sample each w/in ns observatio of # the is
(n) and means sample of # the is ) ( where
n

,
...x x x
x x
=
+ =
=
+ +
=
k
k
Time 1 Time 2 Time 3
Observation 1 15.8 16.1 16.0
Observation 2 16.0 16.0 15.9
Observation 3 15.8 15.8 15.9
Observation 4 15.9 15.9 15.8
Sample
means (X-bar)
15.875 15.975 15.9
Sample
ranges (R)
0.2 0.3 0.2
Center line and control
limit formulas
SOLUTION AND CONTROL
CHART (X-BAR)
Center line (x-double bar):



Control limits for3 limits:

15.92
3
15.9 15.975 15.875
x =
+ +
=
15.62
4
.2
3 15.92 z x LCL
16.22
4
.2
3 15.92 z x UCL
x x
x x
=
|
|
.
|

\
|
= =
=
|
|
.
|

\
|
+ = + =
X-BAR CONTROL CHART
CONTROL CHART FOR RANGE (R)
0.0 0.0(.233) R D LCL
.53 2.28(.233) R D UCL
.233
3
0.2 0.3 0.2
R
3
4
R
R
= = =
= = =
=
+ +
=
Center Line and Control Limit
formulas:
Factors for three sigma control
limits

Factor for x-Chart
A2 D3 D4
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 0.34 0.18 1.82
10 0.31 0.22 1.78
11 0.29 0.26 1.74
12 0.27 0.28 1.72
13 0.25 0.31 1.69
14 0.24 0.33 1.67
15 0.22 0.35 1.65
Factors for R-Chart
Sample Size
(n)
R-BAR CONTROL CHART
SECOND METHOD FOR THE X-BAR
CHART USING
R-BAR AND THE A2 FACTOR
Use this method when sigma for the process
distribution is not know
Control limits solution:


( )
( ) 15.75 .233 0.73 15.92 R A x LCL
16.09 .233 0.73 15.92 R A x UCL
.233
3
0.2 0.3 0.2
R
2
x
2
x
= = =
= + = + =
=
+ +
=
CONTROL CHARTS FOR ATTRIBUTES
P-CHARTS & C-CHARTS
Attributes are discrete events; yes/no, pass/fail
Use P-Charts for quality characteristics that are discrete and
involve yes/no or good/bad decisions
Number of leaking caulking tubes in a box of 48
Number of broken eggs in a carton

Use C-Charts for discrete defects when there can be more
than one defect per unit
Number of flaws or stains in a carpet sample cut from a
production run
Number of complaints per customer at a hotel
P-CHART EXAMPLE: A PRODUCTION MANAGER FOR A TIRE
COMPANY HAS INSPECTED THE NUMBER OF DEFECTIVE TIRES IN
FIVE RANDOM SAMPLES WITH 20 TIRES IN EACH SAMPLE. THE
TABLE BELOW SHOWS THE NUMBER OF DEFECTIVE TIRES IN EACH
SAMPLE OF 20 TIRES. CALCULATE THE CONTROL LIMITS.
Sample Number
of
Defective
Tires
Number of
Tires in
each
Sample
Proportion
Defective
1 3 20 .15
2 2 20 .10
3 1 20 .05
4 2 20 .10
5 2 20 .05
Total 9 100 .09
( )
( ) 0 .102 3(.064) .09 z p LCL
.282 3(.064) .09 z p UCL
0.64
20
(.09)(.91)
n
) p (1 p

.09
100
9
Inspected Total
Defectives #
p CL
p
p
p
= = = =
= + = + =
= =

=
= = = =
Solution:

P- CONTROL CHART
C-CHART EXAMPLE: THE NUMBER OF WEEKLY
CUSTOMER COMPLAINTS ARE MONITORED IN A
LARGE HOTEL USING A
C-CHART. DEVELOP THREE SIGMA CONTROL LIMITS
USING THE DATA TABLE BELOW.
Week Number of
Complaints
1 3
2 2
3 3
4 1
5 3
6 3
7 2
8 1
9 3
10 1
Total 22
0 2.25 2.2 3 2.2 c c LCL
6.65 2.2 3 2.2 c c UCL
2.2
10
22
samples of #
complaints #
CL
c
c
= = = =
= + = + =
= = =
z
z
Solution:

C- CONTROL CHART
PROCESS CAPABILITY
Product Specifications
Preset product or service dimensions, tolerances
e.g. bottle fill might be 16 oz. .2 oz. (15.8oz.-16.2oz.)
Based on how product is to be used or what the customer expects
Process Capability Cp and Cpk
Assessing capability involves evaluating process variability relative
to preset product or service specifications
Cp assumes that the process is centered in the specification range


Cpk helps to address a possible lack of centering of the
process




6
LSL USL
width process
width ion specificat
Cp

= =
|
.
|

\
|

=
3
LSL
,
3
USL
min Cpk
RELATIONSHIP BETWEEN PROCESS
VARIABILITY AND SPECIFICATION
WIDTH
Three possible ranges for Cp

Cp = 1, as in Fig. (a), process
variability just meets
specifications

Cp 1, as in Fig. (b), process not
capable of producing within
specifications

Cp 1, as in Fig. (c), process
exceeds minimal specifications


One shortcoming, Cp assumes that
the process is centered on the
specification range

Cp=Cpk when process is centered




COMPUTING THE CP VALUE AT COCOA FIZZ: THREE BOTTLING
MACHINES ARE BEING EVALUATED FOR POSSIBLE USE AT THE FIZZ
PLANT. THE MACHINES MUST BE CAPABLE OF MEETING THE DESIGN
SPECIFICATION OF 15.8-16.2 OZ. WITH AT LEAST A PROCESS
CAPABILITY INDEX OF 1.0 (CP1)
Machine USL-LSL 6
A .05 .4 .3
B .1 .4 .6
C .2 .4 1.2
The table below shows the information
gathered from production runs on each
machine. Are they all acceptable?

Solution:
Machine A


Machine B



Machine C



1.33
6(.05)
.4
6
LSL USL
Cp = =

=
0.66
6(.1)
.4
6
LSL USL
Cp = =

=
0.33
6(.2)
.4
6
LSL USL
Cp = =

=
COMPUTING THE CPK VALUE AT
COCOA FIZZ
.33
.3
.1
Cpk
3(.1)
15.8 15.9
,
3(.1)
15.9 16.2
min Cpk
= =
|
|
.
|

\
|
=
Design specifications call for a
target value of 16.0 0.2 OZ.
(USL = 16.2 & LSL = 15.8)
Observed process output has
now shifted and has a of 15.9
and a
of 0.1 oz.




Cpk is less than 1, revealing that
the process is not capable






ACCEPTANCE SAMPLING
Definition: the third branch of SQC refers to the process of
randomly inspecting a certain number of items from a lot
or batch in order to decide whether to accept or reject
the entire batch
Different from SPC because acceptance sampling is
performed either before or after the process rather than
during
Sampling before typically is done to supplier material
Sampling after involves sampling finished items before
shipment or finished components prior to assembly
Used where inspection is expensive, volume is high, or
inspection is destructive


ACCEPTANCE SAMPLING PLANS
Goal of Acceptance Sampling plans is to determine the criteria for
acceptance or rejection based on:
Size of the lot (N)
Size of the sample (n)
Number of defects above which a lot will be rejected (c)
Level of confidence we wish to attain
There are single, double, and multiple sampling plans
Which one to use is based on cost involved, time consumed, and cost of
passing on a defective item
Can be used on either variable or attribute measures, but more
commonly used for attributes
CONSTRUCTION OF AN OC CURVE
An OC curve can be determined by using either the
Poisson distribution or the Thorndike chart. The Poisson
distribution can be used in all situations where desired
quality levels (p) is less than 0.10 (or if pn is less than 5)
and the lot size is at least 10 times the size of the
sample.
In a situation in which these conditions are not met,
the theoretically correct approach is to use the
binomial or the hyper geometric distribution.
However, for most industrial situations the Poisson
distribution can be used with serious loss of accuracy.

To use the Thorndike chart, the following procedure is
followed. For each possible value of the lot fraction
defective p, a pn is computed. The Thorndike chart is used
to find the probability of C or less defective units.
For example, for a log that is 5% defective (p=0.05) and a
sample size of 100 (n=100), i.e., pn=5, the probability of
selecting 2 or less defectives is found from the Thorndike
chart to be approximately 0.12. if the lot fraction defective
is 1% (p=0.01) and the sample size is 100 (n=100), i.e. pn=1,
the probability of selecting 2 or less defectives is found
from the Thorndike chart to be approximately 0.92. These
results give two points on the OC curve for the sampling
inspection plan where the sample size is 100 and the
acceptance number is 2. other points may be calculated
in the same way.
OPERATING CHARACTERISTICS (OC)
CURVES
OC curves are graphs which show
the probability of accepting a lot
given various proportions of
defects in the lot
X-axis shows % of items that are
defective in a lot- lot quality
Y-axis shows the probability or
chance of accepting a lot
As proportion of defects increases,
the chance of accepting lot
decreases
Example: 90% chance of
accepting a lot with 5% defectives;
10% chance of accepting a lot
with 24% defectives

AQL, LTPD, CONSUMERS RISK () &
PRODUCERS RISK ()
AQL is the small % of defects that
consumers are willing to accept;
order of 1-2%
LTPD is the upper limit of the
percentage of defective items
consumers are willing to tolerate
Consumers Risk () is the chance
of accepting a lot that contains a
greater number of defects than
the LTPD limit; Type II error
Producers risk () is the chance a
lot containing an acceptable
quality level will be rejected; Type
I error

DEVELOPING OC CURVES
OC curves graphically depict the discriminating power of a sampling plan
Cumulative binomial tables like partial table below are used to obtain
probabilities of accepting a lot given varying levels of lot defectives
Top of the table shows value of p (proportion of defective items in lot), Left
hand column shows values of n (sample size) and x represents the
cumulative number of defects found

Table 6-2 Partial Cumulative Binomial Probability Table (see Appendix C for complete table)
Proportion of Items Defective (p)
.05 .10 .15 .20 .25 .30 .35 .40 .45 .50
n x
5 0 .7738 .5905 .4437 .3277 .2373 .1681 .1160 .0778 .0503 .0313
Pac 1 .9974 .9185 .8352 .7373 .6328 .5282 .4284 .3370 .2562 .1875
AOQ .0499 .0919 .1253 .1475 .1582 .1585 .1499 .1348 .1153 .0938
EXAMPLE CONSTRUCTING AN OC CURVE
Lets develop an OC curve for a
sampling plan in which a sample of
5 items is drawn from lots of N=1000
items
The accept /reject criteria are set
up in such a way that we accept a
lot if no more that one defect (c=1)
is found
Using Table 6-2 and the row
corresponding to n=5 and x=1
Note that we have a 99.74%
chance of accepting a lot with 5%
defects and a 73.73% chance with
20% defects

AVERAGE OUTGOING QUALITY
(AOQ)
With OC curves, the higher the quality of
the lot, the higher is the chance that it
will be accepted
Conversely, the lower the quality of the
lot, the greater is the chance that it will
be rejected
The average outgoing quality level of
the product (AOQ) can be computed
as follows: AOQ=(Pac)p
Returning to the bottom line in Table 6-2,
AOQ can be calculated for each
proportion of defects in a lot by using
the above equation
This graph is for n=5 and x=1 (same as
c=1)
AOQ is highest for lots close to 30%
defects
IMPLICATIONS FOR MANAGERS
How much and how often to inspect?
Consider product cost and product volume
Consider process stability
Consider lot size
Where to inspect?
Inbound materials
Finished products
Prior to costly processing
Which tools to use?
Control charts are best used for in-process production
Acceptance sampling is best used for inbound/outbound

SQC IN SERVICES
Service Organizations have lagged behind manufacturers in
the use of statistical quality control
Statistical measurements are required and it is more difficult to
measure the quality of a service
Services produce more intangible products
Perceptions of quality are highly subjective
A way to deal with service quality is to devise quantifiable
measurements of the service element
Check-in time at a hotel
Number of complaints received per month at a restaurant
Number of telephone rings before a call is answered
Acceptable control limits can be developed and charted

SERVICE AT A BANK: THE DOLLARS BANK COMPETES ON CUSTOMER
SERVICE AND IS CONCERNED ABOUT SERVICE TIME AT THEIR DRIVE-BY
WINDOWS. THEY RECENTLY INSTALLED NEW SYSTEM SOFTWARE WHICH
THEY HOPE WILL MEET SERVICE SPECIFICATION LIMITS OF 52 MINUTES
AND HAVE A CAPABILITY INDEX (CPK) OF AT LEAST 1.2. THEY WANT TO
ALSO DESIGN A CONTROL CHART FOR BANK TELLER USE.
They have done some sampling recently (sample size of 4
customers) and determined that the process mean has
shifted to 5.2 with a Sigma of 1.0 minutes.





Control Chart limits for 3 sigma limits





1.2
1.5
1.8
Cpk
3(1/2)
5.2 7.0
,
3(1/2)
3.0 5.2
min Cpk
= =
|
|
.
|

\
|
=
1.33
4
1.0
6
3 - 7
6
LSL USL
Cp =
|
|
.
|

\
|
=

minutes 6.5 1.5 5.0

4
1
3 5.0 z X UCL x x = + =
|
|
.
|

\
|
+ = + =
minutes 3.5 1.5 5.0
4
1
3 5.0 z X LCL x x = =
|
|
.
|

\
|
= =
SQC ACROSS THE ORGANIZATION
SQC requires input from other organizational
functions, influences their success, and are actually
used in designing and evaluating their tasks
Marketing provides information on current and future
quality standards
Finance responsible for placing financial values on SQC
efforts
Human resources the role of workers change with SQC
implementation. Requires workers with right skills
Information systems makes SQC information accessible for
all.