Lecture Principle of inventory and material management - Lecture 29

Lecture 29 - Total Quality Management. The contents of this chapter include all of the following: Why quality is important, What is quality, dimensions of quality, why improve quality, statistical quality control, understanding variations, statistical process control, process capability, three sigma vs. six sigma, process control, data types.

Total Quality Management

Books

• Introduction to Materials Management, Sixth Edition, J. R. Tony Arnold, P.E., CFPIM, CIRM, Fleming  College, Emeritus, Stephen N. Chapman, Ph.D., CFPIM, North Carolina State University, Lloyd M.  Clive, P.E., CFPIM, Fleming College

• Operations Management for Competitive Advantage, 11th Edition, by Chase, Jacobs, and Aquilano, 2005,  N.Y.: McGraw­Hill/Irwin.

• Operations Management, 11/E, Jay Heizer, Texas Lutheran University, Barry Render, Graduate School of  Business, Rollins College, Prentice Hall

þ Maintenance of power generating plants

þ Every year each plant is taken off-line for 1-3

weeks maintenance

þ Every three years each plant is taken off-line

for 6-8 weeks for complete overhaul and turbine inspection

þ Each overhaul has 1,800 tasks and requires

72,000 labor hours

tasks each year

þ Every day a plant is down costs OUC

$110,000

and $600,000 per day

þ Preventive maintenance discovered a

cracked rotor blade which could have

destroyed a $27 million piece of

equipment

Quality means user satisfaction: that 

goods and services satisfy the needs and  expectations of the user.

Arnold

Why Improve Quality?

Improve Quality

Costs decrease because of less rework,

fewer mistakes, fewer delays, snags;

better use of machine-time and materials

Productivity improves Capture market with better quality and lower price

Stay in business Provide jobs and more jobs

As Quality Improves As Quality Improves

Productivity Declines Productivity Increases

Control

Chart:

Common Causes

Special Causes

Required

Action:

Change the Process

Fix the Process

Responsibility: Management

(94%)

Workers (6%)

• Process: “A ‘process’ is any set of conditions, or set of causes, 

which work together to produce a given result.  In its narrowest 

sense the term ‘process’ refers to the operation of a single cause.  In  its broadest sense it may refer to the operation of a very 

complicated ‘cause system.’  

Reference: Statistical Quality Control Handbook, Western Electric

• Statistical: With the help of numbers or data

• Quality: we study the characteristics of our process

• Control: In order to make it behave the way we want it to  behave.

Reference: Statistical Quality Control Handbook, Western Electric

• Variation exists in everything

• Understanding variation is the key to improving  quality

• Two Kinds of Variation

– Chance variation

– Assignable variation

Materials Methods

Manpower Machines Environment

Desired Effect

or Undesired

Effect PM

Training Motivation Process Doc.

Measurement

The operational definition of assignable variation is variation that causes out­of­control points on a control chart

Reference: Statistical Quality Control Handbook, Western Electric

Statistical Quality Control Unnatural Patterns or Variations 

Statistical Quality Control Tests for Unnatural Patterns

• Instability

– A single point falls outside of the 3 sigma control limits.

– Two out of three successive points fall in the outer one third of the control  limits.

– Four out of five successive points fall in the outer two thirds of the control  limits.

– Eight successive points fall on one side of the centerline.

• Systematic variable

– A long series of points are high, low, high, low without interruption.

Reference: Statistical Quality Control Handbook, Western Electric

• Chance variations are the many sources of 

variation within a process that is in statistical 

control.  They behave like a constant system of  random chance causes.

• If only natural causes of variation are present, the 

output of a process forms a distribution that is 

stable over time and is predictable.

Why use averages?

• To create a normal distribution

• Averages are more sensitive to change than individuals

Process distribution

Mean

The Process (2 of 2)

• The distribution of a process’ output has a mean,  , and a standard deviation,  ; it can have a wide variety 

of shapes

• When selecting a process to perform an operation, the inherent variability of process output should be 

compared to the range or tolerances allowed by the designer’s specifications 

Lower

A significant portion of the process output

falls outside of the specification width

In other words, is the process capable of

producing the item within

specifications?

Much of the process output fits within specification width

Almost all of the process output

fits within the specification width

process distribution

• The process capability index (cp) compares the design specifications with a measure of process variability 

σ 6

ion specificat

lower -

ion specificat

upper

=

width y

variabilit process

width ion

specificat

=

cp

­3 Sigma mean

1350 ppm 1350 ppm

Three­Sigma Quality vs. Six­Sigma Quality

Lower design specification

Upper design specification

Mean 95.5%

99.7%

Standard deviation

Normal Distribution

• Once a process is in operation, a goal is to maintain  the status quo, i.e., keep the process “ in control”

• What can make the process no longer be in control,  i.e., go “ out of control”?

– The presence of an assignable cause

• The presence of an assignable cause may cause the  process distribution to

– shift to the left or right, and/or

– increase the variability (flatten out)

upper design specification

Ti me

lower design specification

Process Control (2 of 6)

• If the process mean shifts, more of 

output falls outside the specifications

upper design specification

lower design specification

• How does management detect the presence of an 

assignable cause?

• Process output is monitored to detect any changes by inspecting the output of the process

• Inspection means assessing some characteristic of a unit of output

Much of the process output fits

within specification width

Lower

Specification

Upper Specification

Lower Specification

Upper Specification

Almost all of the process output fits within the specification width

Lower Specification

Upper Specification

A significant portion of the process output falls outside of the specification width

Process Capability

In other words, is the process capable of

producing the item?

A lot is accepted based on sampling

information

A lot is rejected based on sampling

information Lot quality is

Lot quality is

Normal variation due to chance Abnormal variation

due to assignable sources

Abnormal variation

due to assignable sources

UCL

LCL UCL

LCL

R-chart

Does not detect shift

(process mean is shifting upward) Sampling

Distribution

(process variability is increasing) Sampling

Distribution

End of Lecture 29