Transcript Introduction to Operations and Supply Chain Management

Managing Quality
• Quality defined
• Total cost of quality
• Strategic Quality
– Total quality management (TQM)
– Continuous improvement tools
• Quality assurance
– Statistical quality control
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Definitions of Quality
• ASQ:
– The characteristics of a product or service that bear on
its ability to satisfy stated or implied needs
– A product or service free from defects
• Joseph Juran
– Fitness for use
• How would you evaluate the quality of the
following?
– Golf shirt
– Used car
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Defensive Quality
• Quality analyzed in economic terms
Total Cost of Quality:
$ Failure Costs
$ Appraisal Costs
$ Prevention Costs
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Total Cost of Quality
— One View
Cost per defectfree unit of product
($)
Total Cost
of Quality
Minimum Total
Cost
Appraisal Costs
Prevention
Costs
100% Defects
Internal/External
Failure Costs
Q* = Optimal Quality
0% Defects
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Another View
The need
for
appraisal
and
prevention
costs fall
as defect
levels
decrease
Internal/External
Failure Costs
Total Cost
of Quality
Minimum Total
Cost
($)
Cost per defectfree unit of product
Appraisal and
Prevention Costs
100% Defects
0% Defects
Q* = Optimal Quality
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Dimensions of Quality
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Performance
Features
Idea:
Reliability
Firms can actually compete
Durability
by excelling on selected
Conformance
dimensions.
Aesthetics
Serviceability
Perceived Quality
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Total Quality Management
(TQM)
Managing the entire organization so that it
excels in all dimensions important to the
customer.
 Product development
 Marketing
 Manufacturing
 Support services
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TQM Principles
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Customer focus
Leadership involvement
Continuous improvement
Employee empowerment
Quality assurance (including SPC)
Strategic partnerships
Strategic quality plan
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Performance
Continuous Improvement (CI)
versus “Leaps” Forward
Time
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Common Improvement Tools
(See Textbook!)
• Process mapping
• Cause and effect diagrams (aka “Fishbone”
or Ishikawa diagrams)
• Check sheets
• Pareto analysis
• Run charts and scatter plots
• Bar graphs
• Histograms
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In the Text, It Was Noted That
Organizations Must ...
• Understand which quality dimensions are
important
• Develop products and services that will
meet users’ quality needs
• Put in place business processes capable
of meeting these needs
• Verify that business processes are
meeting the specifications
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Discovering “problems”
Inspect every item
Expensive to do
Testing can be destructive
Statistical techniques
Statistical process control (SPC)
Acceptance Sampling
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Statistical Process Control
• “Representative” samples
– good, but not perfect, picture
• Sampling by Variable
• Sampling by Attribute (good, bad, %?)
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Sampling by Variable
X-bar Chart: 3 Sigma Only
UCL = X + A2R
LCL = X - A2R
X-bar Chart: Any Sigma
UCL = X + ZσX
LCL = X - ZσX
R-Chart: 3 Sigma Only
UCL = D4R
LCL = D3R
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Sampling by Attribute I
p – chart: Any Sigma
UCL = p + Zσp,
LCL = p - Zσp
σp = √ p(1-p)/n
c-chart: Any Sigma
UCL = c + Z√ c
LCL = c - Z√ c
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Process Capability
Answers the Question:
Can the process provide
acceptable quality
consistently?
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Process Capability Ratio (Cp)
Upper Tolerance Limit – Lower Tolerance Limit
6σ
Where σ is the estimated
standard deviation for the
individual observations
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Shown Graphically:
Mean
LTL
3
UTL
3
Process Capability ratio of 1
(99.7% coverage)
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“Six Sigma Quality”
Mean
LTL
6
UTL
6
When a process operates with 6σ variation inside the tolerance
limits, only 2 parts out of a million will be unacceptable.
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Process Capability Index
(Cpk)
  LTL UTL   

Cpk  min 
,

3

3



• Used when the process is not precisely centered
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Type I and Type II Errors
• A Type I error occurs when a process that is in
control is falsely determined to be out of control.
Our control charts deal with Type I or α errors.
The probability of a Type I error lies in the tails of
the curve outside of the upper and lower control
limits.
• A Type II error occurs when a process that is not
in control is falsely determined to be in control.
We will not deal with Type II or β errors.
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The Big Picture
So how do TQM, continuous
improvement, and all these statistical
techniques “fit” together?
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3 Lines of Defense
1) PREVENT defects from occurring
 TQM and continuous improvement
2) DISCOVER problems early
 Process control charts
3) CATCH DEFECTS before used or
shipped
 inspection / acceptance sampling
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