Quality and Operations Management: Understanding Key Concepts and Impacts

1. BA339 Quality and Operations Management Dr. David Raffo Tel: 725-8508, Fax: 725-5850 Email: davidr@sba.pdx.edu

2. Customer Customer Requirements Marketing & Sales Product Design Planning Forecasting Capacity Schedule Process Design Distribution Whse & transport, by channel Order Entry Production Quality Control Materials Management Supply Chain Management, Purchasing, Inventory Control Overview of Operations Management Support from Accounting, Finance, Human Resources, Information Systems

3. Quality Management • What does the term quality mean? • Quality is the ability of a product or service to consistently meet or exceed customer expectations.

4. Dimensions of Quality • Performance - main characteristics of the product/service • Aesthetics - appearance, feel, smell, taste • Special features - extra characteristics • Conformance - how well product/service conforms to customer’s expectations • Safety - Risk of injury • Reliability - consistency of performance

5. Dimensions of Quality (Cont’d) • Durability - useful life of the product/service • Perceived Quality - indirect evaluation of quality (e.g. reputation) • Service after sale - handling of customer complaints or checking on customer satisfaction

6. Table 9-1 Examples of Quality Dimensions

7. Table 9-1 Examples of Quality Dimensions (Cont’d)

8. Determinants of Quality Ease of use Design Conform-ance to design Service

9. The Consequences of Poor Quality • Loss of business • Liability • Productivity • Costs

10. Costs of Quality • Failure Costs - costs incurred by defective parts/products or faulty services. • Internal Failure Costs • Costs incurred to fix problems that are detected before the product/service is delivered to the customer. • External Failure Costs • All costs incurred to fix problems that are detected after the product/service is delivered to the customer.

11. Costs of Quality (continued) • Appraisal Costs • All product and/or service inspection costs. • Prevention Costs • All TQ training, TQ planning, customer assessment, process control, and quality improvement costs to prevent defects from occurring

12. Table 9-6 Key Contributors to Quality Management

13. Quality Awards Baldrige Award Deming Prize

14. Table 9-7 Malcolm Baldrige National Quality Award • 1.0 Leadership (110 points) • 2.0 Strategic Planning (80 points) • 3.0 Customer and Market Focus (80 points) • 4.0 Information and Analysis (80 points) • 5.0 Human Resource Development and Management (100 Points) • 6.0 Process Management (100 points) • 7.0 Business Results (450 points) • TOTAL POINTS = 1000

15. The Deming Prize • Honoring W. Edwards Deming • Japan’s highly coveted award • Main focus on statistical quality control

16. Quality Certification • ISO 9000 • Set of international standards on quality management and Quality assurance, critical to international Business • ISO 9000 series standards, briefly, require firms to document their quality-control systems at every step (incoming raw materials, product design, in-process monitoring and so forth) so that they’ll be able to identify those areas that are causing quality problems and correct them.

17. Quality Tools

18. Seven Basic Quality Tools • Check sheets • Flowcharts • Scatter diagrams • Histograms • Pareto analysis • Cause-and-effect diagrams • Run Diagrams • Control charts

19. Check Sheet Monday • Billing Errors • Wrong Account • Wrong Amount • A/R Errors • Wrong Account • Wrong Amount

20. Flow Chart SymbolsExhibit 4- 9

21. Scatter Diagram : Cure timeExhibit 4-17

22. Histogram: Machine Setup Time Exhibit 4-12

23. Number of defects Offcenter Smeared print Missing label Other Loose Pareto Analysis 80% of the problems may be attributed to 20% of the causes.

24. Fishbone Chart - Truck Delivery Failures Exhibit 4-15

25. Diameter Time (Hours) Run Chart

26. Run Diagram : Outer Diameters Exhibit 4-18

27. 1020 UCL 1010 1000 990 LCL 980 970 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Figure11-9 Control Chart

28. Normal Curve TM 4-15

29. 1 2 3 4 Figure 10-9 Observations from Sample Distribution UCL LCL Sample number

30. Samplingdistribution Processdistribution Mean Figure 10-4 Sampling Distribution

31. Samplingdistribution Processdistribution Mean Lowercontrollimit Uppercontrollimit Figure 10-6 Control Limits Specification Limits

32. Control Charts

33. SPC: Control Limits TM 4-8

34. Control Chart Uses • Decision making tools • Provide timely information on recently produced parts. • Helps determine process capability • Problem solving tools • Help locate and investigate causes of questionable quality • Aid operator in monitoring process

35. Control Chart Uses • Aid in process design and improvement • Data from current process can be evaluated against design targets • Help study changes made to process (with skilled interpretation)

36. Common Measures • Manufacturing - length, height, viscosity, color, temperature, and velocity • Service - # of errors, # of incorrect trx., delivery times, checkout times, cycle time, • Software - effort, deliverable dates, # defects by type, etc.

37. and R Charts TM 4-9

38. Process Control Chart FactorsExhibit 4-22

39. and R Charts

40. and R Charts

41. Developing a Control Chart 1. Take 20-30 random samples of size n where n depends on type of control chart 2. For each sample calculate sample statistic such as X-bar, R or p. 3. Plot the sample statistics sequentially

42. Developing a Control Chart 4. Calculate grand means and control limits 5. Evaluate results and recalculate control limits if necessary.

43. Common Causes of Variation • Procedures not suited to requirements • Poor product design • Machines out of order • Machines not suited to requirements • Barriers that rob the worker of the right to do a good job and take pride in his or her work

44. Common Causes of Variation • Poor instruction and/or supervision of workers • Poor lighting • Incoming materials not suited to requirements • Vibration

45. Are You Out-of-Control? A process exhibits a lack of control if: • any single value falls outside of the control limits. • any two out of three consecutive points fall in one of the A zones or beyond on the same side of the centerline. • four out of five consecutive points fall in one of the B zones or beyond on the same side of the centerline. • eight or more consecutive points lie on one side of the centerline. [10/11; 12/14; 14/17; or 16/20]

46. Are You Out-of-Control? • eight or more consecutive points move upward in value or if eight or more consecutive points move downward in value. • there are an unusually small number of runs above or below the centerline (sawtooth pattern). • thirteen consecutive points within the C zone.

47. Control Chart for Attributes • p-Chart - Control chart used to monitor the proportion of defectives in a process • c-Chart - Control chart used to monitor the number of defects per unit

48. Table 10-3 Use of p-Charts • When observations can be placed into two categories. • Good or bad • Pass or fail • Operate or don’t operate • When the data consists of multiple samples of several observations each

49. p-Chart Exhibit 4-26

50. Statistical Process Control • Variations and Control • Random variation: Natural variations in the output of process, created by countless minor factors • Assignable variation: A variation whose source can be identified