1 managing quality quality defined total cost of quality strategic quality –total quality...

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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

Q* = Optimal Quality

($)

Cost per defect-free unit of product

Appraisal Costs

100% Defects 0% Defects

Internal/ExternalFailure Costs

PreventionCosts

Total Costof Quality

Minimum TotalCost

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Another View

The need for

appraisal and

prevention costs fall as defect

levels decrease

($)

Cost per defect-free unit of product

100% Defects 0% DefectsQ* = Optimal Quality

Internal/ExternalFailure Costs

Appraisal andPrevention Costs

Total Costof Quality Minimum Total

Cost

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Dimensions of Quality

• Performance• Features• Reliability• Durability• Conformance• Aesthetics• Serviceability• Perceived Quality

Idea:

Firms can actually competeby excelling on selecteddimensions.

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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

• Customer focus

• Leadership involvement

• Continuous improvement

• Employee empowerment

• Quality assurance (including SPC)

• Strategic partnerships

• Strategic quality plan

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Continuous Improvement (CI) versus “Leaps” Forward

Per

form

ance

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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Inspect every itemExpensive to do

Testing can be destructive

Statistical techniques

Statistical process control (SPC) Acceptance Sampling

Discovering “problems”

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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 estimatedstandard deviation for the individual observations

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Shown Graphically:

Process Capability ratio of 1(99.7% coverage)

LTL UTLMean

3 3

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“Six Sigma Quality”

LTL UTLMean

6 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)

• Used when the process is not precisely centered

3,

3min

UTLLTLCpk

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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 Defense1) 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