Statistical Process Control in

Services Industry
)Case Study(
‫السااليب الحاصائية في قطاع الخدمات‬
(‫)حاالة دراساية‬
Dr. Mahmoud El_Sherbiny

© 2002 Prentice-Hall, Inc. Chap 15-1

 Control Charts
 Monitors variation in data
 Exhibits trend -- make correction before process is
out of control
 A process -- A repeatable series of steps
leading to a specific goal

2
 Control Charts
(continued)

 Show when changes in data are due to:

 Special or assignable causes
 Fluctuations not inherent to a process
 Represents problems to be corrected
 Data outside control limits or trend
 Chance or common causes
 Inherent random variations
 Consist of numerous small causes of random
variability

3
 Process Control Chart
Graph of sample data plotted over time
Special
Cause
Variation 80
X
60 UCL Process
40 Mean Average
20
0 11
LCL 
1

Common Time
Cause
Variation

4
 Control Limits
UCL = Process Average + 3 Standard Deviations
LCL = Process Average - 3 Standard Deviations
X
UCL

+ 3 Process
Average
- 3
LCL

TIME
5
 Types of Error
 First Type:
 Belief that observed value represents special cause
when in fact it is due to common cause
 Second Type:
 Treating special cause variation as if it is common
cause variation

6
 Comparing Control
Chart Patterns
X X X

Common Cause Special Cause Downward Pattern:

Variation: No Points Variation: 2 Points No Points Outside
Outside Control Outside Control Control Limits but
Limits Limits Trend Exists

7
 When to Take Corrective Action
 Take corrective action when you observe
points outside the control limits or when a
trend has been detected
 Eight consecutive points above the center line (or
eight below)
 Eight consecutive points that are increasing
(decreasing)

8
 Out-of-control Processes
 When the control chart indicates an out-of-
control condition (a point outside the control
limits or exhibiting trend)
 Contains both common causes of variation and
assignable causes of variation
 The assignable causes of variation must be
identified
 If detrimental to the quality, assignable causes of
variation must be removed
 If increases quality, assignable causes must be
incorporated into the process design

9
 In-control Process
 When the control chart does not indicate any
out-of-control condition
 Contains only common causes of variation
 Sometimes said to be in a state of statistical
control
 If the common causes of variation is small, then
control chart can be used to monitor the process
 If the common causes of variation is too large, you
need to alter the process

10
 p Chart
 Control chart for proportions
 Is an attribute chart
 Shows proportion of nonconforming
(success) items
 e.g.: Count the number defective chairs and
divide by total chairs inspected
 Chair is either defective or not defective
 Used with equal or unequal sample sizes
over time
 Unequal sizes should not differ by more than
±25% from average sample size 11
 p Chart
Control Limits

� p (1 - p ) � p (1 - p )
LCLp = max �
0, p - 3 �UCLp = p + 3
� n � n
� �
Average Proportion of
Average Group Size Nonconforming Items
k # Defective
k

�n i
� Xi Items in
Sample i
n= i =1 p= i =1
k
# of Samples
k �n
i =1
i
Size of
Sample i
12
 p Chart
Example
You’re
You’re manager
manager of of aa
500-room
500-room hotel.
hotel.
You
You want
want toto achieve
achieve
the
the highest
highest level
level of
of
service.
service. For
For seven
seven
days,
days, you
you collect
collect
data
data on
on the
the
readiness
readiness ofof 200
200
rooms.
rooms. Is Is the
the
process
process inin control?
control?
13
 p Chart
Hotel Data
# Not
Day # Rooms Ready Proportion
1 200 16 0.080
2 200 7 0.035
3 200 21 0.105
4 200 17 0.085
5 200 25 0.125
6 200 19 0.095
7 200 16 0.080

14
 p Chart
Control Limits Solution
k k 16 + 7 +...+ 16
�n i
1400
�X i
121
n= i =1
= = 200 p= i =1
k
= = .0864
k 7 1400
�n
i =1
i

p �3
(
p 1- p ) = .0864 �3
.0864 ( 1 - .0864 )
n 200
= .0864 �.0596 or ( .0268,.1460 )
15
 p Chart
Control Chart Solution
P UCL
0.15
0.10 Mean p
0.05 LCL
0.00
1 2 3 4 5 6 7
Day
Individual points are distributed around p without any
pattern. Any improvement in the process must come from
reduction of common-cause variation, which is the
responsibility of the management.
16
 p Chart in PHStat
 PHStat | control charts | p chart …

 Excel spreadsheet for the hotel room example

Microsoft Excel
Worksheet

17
 Understanding Process Variability:
Red Bead Example
Four Workers (A, B, C, D) spent three days to collect
beads, at 50 beads per day. The expected number of
red bead to be collected per day per worker is 10 or
20%.
Worker Day 1 Day 2 Day 3 All Days
A 9 (18%) 11 (12%) 6 (12%) 26 (17.33%)
B 12 (24%) 12 (24%) 8 (16%) 32 (21.33%)
C 13 (26%) 6 (12%) 12 (24%) 31(20.67%)
D 7 (14%) 9 (18%) 8 (16%) 24 (16.0%)
Totals 41 38 34 113
18
 Understanding Process Variability:
Example Calculations
Average Day 1 Day 2 Day 3 All Days
_
X 10.25 9.5 8.5 9.42
p 20.5% 19% 17% 18.83%

113 p (1 - p ) .1883(1 - .1883)

p= = .1883 p �3 = .1883 �3
50(12) n 50
= .1883 �.1659
LCL = .1883 - .1659 = .0224
UCL = .1883 +.1659 = .3542
19
 Understanding Process Variability:
Example Control Chart
UCL

.30
_
.20 p

.10
LCL
0 A1 B1 C1 D1 A2 B 2 C2 D2 A3 B3 C3 D3

20
 Morals of the Example
1. Variation is an inherent part of any process.
2. The system is primarily responsible for
worker performance.
3. Only management can change the system.
4. Some workers will always be above average,
and some will be below.

21
 The c Chart
 Control chart for number of nonconformities
(occurrences) in a unit (an area of
opportunity)
 Is an attribute chart
 Shows total number of nonconforming items
in a unit
 e.g.: Count number of defective chairs
manufactured per day
 Assume that the size of each subgroup unit
remains constant
22
 c Chart Control Limits

LCLc = c - 3 c UCLc = c + 3 c

Average Number of
Occurrences
k

�c i # of occurrences in sample i
c= i =1

k
# of Samples

23
 c Chart: Example
You’re
You’re manager
manager of of aa
500-room
500-room hotel.
hotel.
You
You want
want toto achieve
achieve
the
the highest
highest level
level of
of
service.
service. For
For seven
seven
days,
days, you
you collect
collect
data
data on
on the
the
readiness
readiness ofof 200
200
rooms.
rooms. Is Is the
the
process
process inin control?
control?
24
 c Chart: Hotel Data
# Not
Day # Rooms Ready
1 200 16
2 200 7
3 200 21
4 200 17
5 200 25
6 200 19
7 200 16

25
 c Chart:
Control Limits Solution

�c i
16 + 7 + L + 19 + 16
c= i =1
= = 17.286
k 7
LCLc = c - 3 c = 17.286 - 3 17.285 = 4.813
UCLc = c + 3 c = 29.759

26
 c Chart:
Control Chart Solution
c UCL
30
20
c
10 LCL
0
1 2 3 4 5 6 7
Day
c
Individual points are distributed around without any
pattern. Any improvement in the process must come
from reduction of common-cause variation, which is the
responsibility of the management.
27
 Variable Control Charts:
R Chart
 Monitors variability in process
 Characteristic of interest is measured on
numerical scale
 Is a variables control chart
 Shows sample range over time
 Difference between smallest and largest values in
inspection sample
 e.g.: Amount of time required for luggage to be
delivered to hotel room

28
 R Chart
Control Limits

UCLR = D4 R From
Table

LCLR = D3 R
k

�R i
Sample Range at
Time i or
R= i =1 subgroup i
k # Samples

29
 R Chart Example
You’re
You’re manager
manager of of aa
500-room
500-room hotel.hotel. YouYou
want
want to to analyze
analyze the the
time
time itit takes
takes toto deliver
deliver
luggage
luggage to to the
the room.
room.
For
For 77 days,
days, you you collect
collect
data
data on
on 55 deliveries
deliveries
per
per day.
day. Is Is the
the
process
process in in control?
control?
30
R Chart and Mean Chart
Hotel Data
Sample Sample
Day Average Range
1 5.32 3.85
2 6.59 4.27
3 4.88 3.28
4 5.70 2.99
5 4.07 3.61
6 7.34 5.04
7 6.79 4.22

31
 R Chart
Control Limits Solution
k

�R i
3.85 + 4.27 + L + 4.22
R= i =1
= = 3.894
k 7

UCLR = D4 �
R = 2.114 �
3.894 = 8.232
From Table
LCLR = D3 �
R = 0�
3.894 = 0 E.11 (n = 5)

32
 R Chart
Control Chart Solution

Minutes UCL
8
6 _
4 R
2
LCL
0
1 2 3 4 5 6 7
Day

33
 Variables Control Charts:
Mean Chart (The X Chart)
 Shows sample mean over time
 Compute mean of inspection sample over
time
 e.g.: Average luggage delivery time in hotel
 Monitors process average
 Must be preceded by examination of the R
chart to make sure that the process is in-
control

34
 Mean Chart
Computed
From
UCLX = X + A2 R Table
Sample
Mean at
LCLX = X - A2 R Time i

k k Sample

�X i �R i
Range
at Time i
X= i =1
and R = i =1

k k # Samples

35
 Mean Chart Example
You’re
You’re manager
manager of of aa
500-room
500-room hotel.hotel. YouYou
want
want to to analyze
analyze the the
time
time itit takes
takes toto deliver
deliver
luggage
luggage to to the
the room.
room.
For
For seven
seven days,
days, youyou
collect
collect data
data onon five
five
deliveries
deliveries per per day.
day. Is Is
the
the process
process in in control?
control?
36
R Chart and Mean Chart
Hotel Data
Sample Sample
Day Average Range
1 5.32 3.85
2 6.59 4.27
3 4.88 3.28
4 5.70 2.99
5 4.07 3.61
6 7.34 5.04
7 6.79 4.22

37
 Mean Chart
Control Limits Solution
k

�X i
5.32 + 6.59 + L + 6.79
X = i =1
= = 5.813
k 7 From
k
Table E.9
�R i
3.85 + 4.27 + L + 4.22 (n = 5)
R= i =1
= = 3.894
k 7
UCLX = X + A2 �
R = 5.813 + 0.577 �
3.894 = 8.060
LCLX = X - A2 �
R = 5.813 - 0.577 �
3.894 = 3.566
38
 Mean Chart
Control Chart Solution

Minutes
UCL
8 __
6 X
4
2 LCL
0
1 2 3 4 5 6 7
Day

39
 R Chart and Mean Chart in
PHStat
 PHStat | control charts | R & Xbar charts …

 Excel spreadsheet for the hotel room example

Microsoft Excel
Worksheet

40
 Process Capability
 Process capability is the ability of a process to
consistently meet specified customer-driven
requirement
 Specification limits are set by management in
response to customers’ expectations
 The upper specification limit (USL) is the
largest value that can be obtained and still
conform to customers’ expectations
 The lower specification limit (LSL) is the
smallest value that is still conforming

41
 Estimating Process Capability
 Must first have an in-control process
 Estimate the percentage of product or service
within specification
 Assume the population of X values is
approximately normally distributed with mean
estimated by X and standard deviation
estimated by R / d 2

42
 Estimating Process Capability
(continued)

 For a characteristic with an LSL and a USL


P(an outcome will be within specification)
= P(LSL < X < USL)
�LSL - X USL - X �
= P� <Z< �
� R / d2 R / d2 �
� �
 Where Z is a standardized normal random variable

43
 Estimating Process Capability
(continued)

 For a characteristic with only a LSL


P(an outcome will be within specification)
= P(LSL < X )
�LSL - X �
= P� <Z�
� R / d2 �
� �
 Where Z is a standardized normal random variable

44
 Estimating Process Capability
(continued)

 For a characteristic with only a USL


P(an outcome will be within specification)
= P(X < USL)
� USL - X �
= P �Z < �
� R / d2 �
� �
 Where Z is a standardized normal random variable

45
 Process Capability
Example
You’re
You’re manager
manager of of aa
500-room
500-room hotel.
hotel. You You
have
have instituted
instituted aa policy
policy
that
that 99%
99% of of all
all luggage
luggage
deliveries
deliveries must
must be be
completed
completed within
within ten ten
minutes
minutes oror less.
less. For For
seven
seven days,
days, youyou collect
collect
data
data on
on five
five deliveries
deliveries
per
per day.
day. Is Is the
the process
process
capable?
capable?
46
 Process Capability:
Hotel Data
Sample Sample
Day Average Range
1 5.32 3.85
2 6.59 4.27
3 4.88 3.28
4 5.70 2.99
5 4.07 3.61
6 7.34 5.04
7 6.79 4.22

47
 Process Capability:
Hotel Example Solution
n=5 X = 5.813 R = 3.894 and d 2 = 2.326
P(A delivery is made within specification)
= P(X < 10)
� 10 - 5.813 �
= P �Z < �
� 3.894 / 2.326 �
= P( Z < 2.50) = .9938
Therefore, we estimate that 99.38% of the
luggage deliveries will be made within the ten
minutes or less specification. The process is
capable of meeting the 99% goal.
48
 Capability Indices
 Aggregate measures of a process’s ability to
meet specification limits.
 The larger (>1) the values, the more capable a
process is of meeting requirements
 Measure of process potential performance
USL - LSL specification spread

Cp = =
6 ( R / d2 ) process spread
 Cp>1 implies a process has the potential of having
more than 99.73% of outcomes within
specifications
49
 Capability Indices
(continued)

 Measures of actual process performance

 For one-sided specification limits

X - LSL
CPL =
3 ( R / d2 )

USL - X
CPU =
3( R / d2 )


 CPL (CPU) >1 implies that the process mean is

more than 3 standard deviation away from the lower
(upper) specification limit

50
 Capability Indices
(continued)

 For two-sided specification limits

 C pk = min ( CPL, CPU )
 Cpk = 1 indicates that the process average is 3
standard deviation away from the closest
specification limit.
 Larger Cpk indicates larger capability of meeting the
requirements

51
 Process Capability
Example
You’re
You’re manager
manager of of aa 500-
500-
room
room hotel.
hotel. You
You have
have
instituted
instituted aa policy
policy that
that all
all
luggage
luggage deliveries
deliveries must
must
be
be completed
completed within
within ten
ten
minutes
minutes oror less.
less. For
For
seven
seven days,
days, you
you collect
collect
data
data on
on five
five deliveries
deliveries
per
per day.
day. Compute
Compute an an
appropriate
appropriate capability
capability
index
index for
for the
the delivery
delivery
process.
process.
52
 Process Capability:
Hotel Data
Sample Sample
Day Average Range
1 5.32 3.85
2 6.59 4.27
3 4.88 3.28
4 5.70 2.99
5 4.07 3.61
6 7.34 5.04
7 6.79 4.22

53
 Process Capability:
Hotel Example Solution

n=5 X = 5.813 R = 3.894 and d 2 = 2.326

USL - X 10 - 5.813
CPU = = = 0.833672
3 ( R / d 2 ) 3 ( 3.894 / 2.326 )

Since there is only the upper specification limit, we

need to only compute CPU. The capability index for
the luggage delivery process is .8337, which is less
than 1. The upper specification limit is less than 3
standard deviation above the mean.
54