Managing Quality

Chapter 5
 5
Chapter Objectives
Be able to:
Discuss the various definitions and
dimensions of quality and why quality is
important to operations and supply chains.
Describe the different costs of quality,
including internal and external failure,
appraisal, and prevention costs.
Describe what TQM is, along with its seven
core principles.
Calculate process capability ratios and indices
and set up control charts for monitoring
continuous variables and attributes.
Describe the key issues associated with
acceptance sampling, as well as the use of OC
curves.
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Distinguish between Taguchis quality loss
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5
Quality Defined
Quality The characteristics of a
product or service that bear on its
ability to satisfy stated or implied
needs; a product or service that is
free of deficiencies.
Value perspective A quality perspective that
holds that quality must be judged, in part, by
how well the characteristics of a particular
product or service align with the needs of a
specific user.
Conformance perspective A quality
perspective focused on whether or not a
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product
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Hall made or a service was performed
5 Dimensions of Quality
Eight
Performance
Features
Reliability
Durability
Conformance
Aesthetics
Serviceability
Perceived Quality

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Quality Dimension
5
Examples

Table
5.1
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 5
Total Cost of Quality
Prevention costs Costs an
organization incurs to actually
prevent defects from occurring to
begin with.
Appraisal costs Costs a company
incurs for assessing its quality levels.
Internal failure costs Costs caused
by defects that occur prior to delivery
to the customer.
External failure costs Costs incurred
by defects that are not detected until
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Total Cost of Quality
5
Traditional View

Figure
5.2
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Total Cost of Quality
5
Zero Defects View

Figure
5.3
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Total Quality
5
Management
Total Quality Management -
A managerial approach in which
an organization is managed so
that it excels in all quality
dimensions that are important to
customers.

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Total Quality
5
Management
Customer focus
Leadership involvement
Continuous improvement
Employee empowerment
Quality assurance
Strategic partnerships
Strategic quality plan

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Total Quality
5
Management
Customer focus
Each employee has a customer whether
internal or external to the company.
Leadership involvement
Must be top down, throughout the
company.
If not, major cause of TQM failures.
Continuous improvement
There is always room for improvement.
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Total Quality
5
Management
Employee empowerment
Giving employees the responsibility for
managing quality.

Quality assurance
Quality Function Deployment (QFD) discussed
in Chapter 15
Statistical quality control (SQC), also called
statistical process control (SPC)

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Total Quality
5
Management
Supplier Partnerships
The commitment between firms and
supply chain partners must be the
same.

Strategic Quality Plan

Sets a broad set of objectives.
Should establish measurable goals for
the short-term.
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5
Process Capability

Answers the
Question:
Can the process
provide acceptable
quality consistently?

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 Process Capability Ratio
5
(Cp)
cess Capability Ratio (Cp) Measures whether or not a process is potentially capa
meeting certain quality standards

Cp = Upper Tolerance Limit Lower Tolerance Limit

6

Where is the estimated

standard deviation
for the individual observations

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5
Normal Distribution

Figure
5.4
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Process Capability
5
Values

Figure
5.5
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 5
Process Capability Index
Process Capability Index (Cpk) Measures whether or not a process is capable o
meeting certain quality standards and is centered between the specification limi

LTL UTL
Cpk min ,
3 3

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5 Sigma Quality
Six
To achieve Six Sigma quality, the
variability
of a process must be reduced to
the point
that the process capability ratio is
greater
than or equal to 2.

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5 Sigma Quality
Six

Figure
5.6
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5
Control Charts
Control Chart A specialized run
chart that helps an organization
track changes in key measures
over time.
Continuous variable A variable that
can be measured along a continuous
scale.
Attribute The presence or absence of a
particular characteristic.

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5
Sampling
Sampling Using carefully
selected samples to get a fairly
good idea of how well a process
is working.
Good sample:
Every outcome has an equal chance of
being selected into the sample.
The sample size is large enough to not
be swayed by any single observation.
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Continuous Variable
5
Measurements

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5
Control Charts
X chart - A specific type of control
chart for a continuous variable that is
used to track the average value for
future samples.
R chart A specific type of control
chart for a continuous variable that is
used to track how much the individual
observations within each sample vary.
p chart A specific type of control
chart for attributes that is used to
trackCopyright
sample proportions.
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Step 1 Sampling the
5
Process
Observation
Sample 1 2 3 4 5
1 136 137 144 141 138
2 143 138 140 140 139
3 140 141 144 137 135
4 139 140 141 139 141
5 137 138 143 140 138
6 142 141 140 139 138
7 143 141 143 140 140
8 139 139 141 140 136
9 140 138 143 141 139
10 139 141 142 140 136
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Step 2 Calculate the
5
Mean
and Range
Sample
for
R
each sample
1 139.2 8
2 140 5
3 139.4 9
4 140 2
5 139.2 6
6 140 4
7 141.4 3
8 139 5
9 140.2 5
10 139.6 6

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Step 3
5
Calculate control limits

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Step 3
5
Calculate control limits

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5 4 Plot the Data
Step

Sampl R
e
11 141.2 8
12 142 9
13 144 12
14 140 5
15 139.6 4
16 140.8 5
Figure 5.8

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5
Sampling by Attribute
Gonzo Pizza is interested in tracking the
proportion (%) of late deliveries
Like before, you take several samples of
say, 50 observations each when things
are typical
For each sample, you calculate the
proportion
p = (8 of late deliveries
late)/(50 and=call
deliveries) 0.16this
value p. For example:

Average all of the

15 sample
proportions.
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5
Sampling by Attribute
Calculate the standard deviation
for the p chart as follows:

p (1 p )
Sp 0.042
n

Where n = size of each sample = 50

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5
Sampling by Attribute

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5
Sampling by Attribute
Although text says to go ahead with
control charts, consider that it is probably
too early to develop them since the
process is not yet in control (i.e., late
deliveries are too high a percentage at
present).
A more practical approach would be:
First, fix the more obvious problem(s)
Then take new samples
Then put in place control charts

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5
Acceptance Sampling
Some definitions
Acceptable quality level (AQL)
Maximum defect level for 100% customer acceptance
Lot tolerance percent defective
(LTPD)
Highest defect level customer will tolerate
Consumers risk
Probability of accepting a bad lot
Producers risk
Probability of rejecting a good lot
Operating characteristics (OC) curve
Probability of accepting a lot given the actual fraction
defective in the entire lot and the sampling plan being
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Producers and Consumers
5
Risk

Figure
5.10
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Traditional View of
5
the Cost of Variability

There is no failure cost associated with units that fall

within the tolerance limits, while units outside the
tolerance limits immediately result in failure costs.
Figure
5.12
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Taguchis Quality
5
Loss Function

Any deviation from the target value results in some

failure cost.
As long as there is variability in the process, there is
room for improvement.
Figure
5.13
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 5 9000 Family
ISO
ISO 9000- A family of standards
supported by the International
Organization for
Standardization.
Goals:
Meet the customers quality
requirements and applicable regulatory
requirements.
Enhance customer satisfaction.
Achieve continual improvement of 5 - 38
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Managing Quality
Case Study
Dittenhoefers Fine
China

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Printed in the United States of America.

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