Introduction to operations and supply chain management 3e bozarth chapter 05

 Describe the different costs of quality, including internal and external failure, appraisal, and prevention costs..  Calculate process capability ratios and indices and set up contr

Managing Quality

Chapter 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

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

 Conformance perspective – A quality perspective focused

on whether or not a product was made or a service was

Eight Dimensions of Quality

Quality Dimension Examples

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 a product or service reaches

Total Cost of Quality

Traditional View

Total Cost of Quality

Zero Defects View

Total Quality 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.

Total Quality Management

Total Quality 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.

Total Quality Management

Total Quality 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 term.

short-Process Capability

Answers the Question:

Can the process provide

acceptable quality consistently?

Process Capability Ratio (Cp)

Cp = Upper Tolerance Limit – Lower Tolerance Limit

6σ

Where σ is the estimated standard deviation for the individual observations

Process Capability Ratio (Cp) – Measures whether or not a process is potentially capable of

meeting certain quality standards

Normal Distribution

Process Capability Values

Process Capability Index

min LTL UTL

Cpk

Process Capability Index (Cpk) – Measures whether or not a process is capable of meeting certain quality standards and is centered between the specification limits.

Six Sigma Quality

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.

Six Sigma Quality

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.

 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.

Continuous Variable

Measurements

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 track sample proportions.

Step 1 – Sampling the Process

Step 2 – Calculate the Mean

and Range for each sample

Step 3 – Calculate control limits

Step 3 – Calculate control limits

Step 4 – Plot the Data

Figure 5.8

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 of

late deliveries and call this value p For example:

 Average all of the 15 sample proportions For

p = (8 late)/(50 deliveries) = 0.16

Sampling by Attribute

 Calculate the standard deviation for the p chart as follows:

042

0

) 1

Sampling by Attribute

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

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

 Consumer’s risk

 Probability of accepting a bad lot

 Producer’s risk

 Probability of rejecting a good lot

 Operating characteristics (OC) curve



Producer’s and Consumer’s Risk

Traditional View of 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.

Taguchi’s Quality 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.

applicable regulatory requirements.

Managing Quality

Case Study

Dittenhoefer’s Fine China

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