Total Quality Management – Class Activity

1. Total Quality Management – Class Activity Prepared by: Bhakti Joshi Date: January 16, 2013

2. Class Activity • 10 groups – 3 students • Production worker • Inspector 1 stands behind the worker • Inspector 2 manages the specification criteria • Recorder reporting measurements

3. Setup • Quality target = 10 • Worker shoots 10 times (production of 10 units) • Rs 10 is the cost if shot outside the spec

4. Recording data

5. Taguchi Loss Function Loss = (Each Shot – Mean Shot)2 C C = Cost to correct /tolerance2 Cost to correct = Rs 10 *number of times one defected Tolerance = each shot cannot fall more than two times outside the specs or outside the table Calculate Loss??

6. Questions • What are the sources of variability? • How could variability be reduced • Are the specifications and processes capable? • Who is more accurate • Who is most precise • Who generated the minimum loss using the specifications? • Who scored the best?

7. Taguchi Methods: Example • Company C received an average of 10 complaints per month last year. In November they received 15 complaints (y). Management sets an acceptable level at 2 (tolerance). • It costs the company Rs.500 directly per complaint to correct the problems. They also determined the cost in lost sales to be Rs. 1000. Thus, the total cost to correct complaints equals Rs. 1500

8. Characteristics of the Company • Customer satisfaction • Quality loss as loss to society quantified through “Quality Loss Function” • Variations from optimal measure results in a loss • Product Design • Equipment: No breakdowns • Specific jobs defined • Policies and Procedures – know-how

9. Formulae • L(y) = k(y-m)2 L(y) = Loss k = constant = cost to correct tolerance2 y = reported value m = mean value (average)

10. Calculation k = Rs1500/22 = Rs375.0 L(y) = 375.0 (15-10)2 = 375.0 (5)2 = 375.0 (25) = Rs. 9375.0 is loss for the month of November

11. Characteristics of Taguchi Methods • Broadly, purpose of Taguchi methods is quality improvement and control • An ideal situation should be known in terms of costs, sales, demand or supply • But mostly are used during development of product/service designs and supporting variations • Aim is to determine errors by identifying variations (or quality loss) • Variations between ideal and existing must be reduced

12. Concept of Quality Loss • Use of statistical analysis for quantification • Used as a quality control tool to quantify quality during experiments and trial-errors especially in R&D • Aims to reduce product variability with a system for developing specifications and designing them into a product or process.

13. Criticism • Constant?? • Ideal?? • Mostly considered in designing aspect… But is it good??

14. Learning curve … is based on the principle that all jobs are performed more efficiently as greater experience is gained in respective jobs – A book by Gopalakrishnan titled, “Purchasing and Materials Management” • Did you try different ways of flipping coins? • Which ways worked or didn’t work? • What would have been ideal?

15. Learning Curve: Meaning • Originally developed by T.P. Wright in 1936 • Graphical representation of changing rate of learning • Rate of learning is measured on people, tools and processes but mostly people • Related to time or cost or performance • Affects individuals and the organisation

16. Learning Curve: Measurement Y = aXb Log Y = log a + b log X Y = the cumulative average time (or cost) per unit X = the cumulative number of units produced a = time (or cost) required to produce the first unit b = slope of the function (log of learning rate/log of 2)

17. Learning Curve

18. Interpretation of the curve • 80% or 0.8 is the learning factor (‘b’) • If the learning is 80%, then to produce the 2nd unit of the product will take only 80% of the time of the first unit and the 3rd unit will take 80% of the time of the second unit and so on….

19. Example 1: Unit Cost of Hours worked

20. Example 2 Y = aXb

21. Interpretation of Formula • When ‘b’ reaches unity, implies learning is slower • ‘b’ is generally higher for labour-intensive work and lower for capital-intensive • For most labour-intensive manufacturing ‘b’ ranges from 70% – 90% • Could be considered for bargaining contractual wages and costs

22. Learning Curve: Application and Effects • Labour efficiency: Learning short-cuts, more dexterous, becoming confident, less errors • Standardisation, specialisation and methods improvements: Standardised methods leading to efficiency • Technology-driven learning • Better use of equipment • Changes in resource mix • Product redesign • Network building and use-cost reductions • Shared experience effects

23. Email: bhaktij@gmail.comWebsite: www.headscratchingnotes.net