Managing Quality

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Managing Quality
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What Is Quality?

• We all know what we mean by quality
• Yet it is often difficult to define
• Sometimes it is easier to use examples to
  translate the ideas, like metaphors
• Example
• Name a QUALITY automobile

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Definitions of Quality

• American Society for Quality (ASQ) defines
  quality as the totality of features and
  characteristics of a product or service that
  bears on its ability to satisfy stated or implied
  needs
• We will accept the above as our working
  definition of quality

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Definitions of Quality (cont.)

• User-Based Quality lies in the eye of the
  beholder- quality is what the consumer says it
  is
• Manufacturing-Based Degree to which a product
  conforms to design specification- make it right
  the first time
• Product-Based Level of measurable product
  characteristic- a precise and measurable
  variable

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Dimensions of Quality for Goods
1. Performance- A products primary operating
characteristic. Examples are automobile
acceleration and a televisions picture
clarity 2. Features- Supplements to a products
basic functioning characteristics, such as power
windows on a car 3. Reliability- A probability of
not malfunctioning during a specified
period 4. Conformance- The degree to which a
products design and operating characteristics
meet established standards 5. Durability- A
measure of product life 6. Serviceability- The
speed and ease of repair 7. Aesthetics- How a
product looks, feels, tastes, and
smells 8. Perceived quality- As seen by a
customer
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Importance of Quality

• Costs market share
• Companys reputation
• Product liability
• International implications

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Malcom Baldrige Award

• Named after former Secretary of Commerce
• Established in 1988 by the U.S. government
• Designed to promote TQM practices
• Some criteria
• Senior executive leadership
• Strategic planning
• Management of process quality
• Quality results
• Customer satisfaction
• Recent winners
• Corning Inc., GTE, ATT, Eastman Chemical,
  Cadillac, Ritz-Carlton

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International Quality Standards

• Industrial Standard Z8101-1981 (Japan)
• Specification for TQM
• ISO 9000 series (Europe/EC)
• Common quality standards for products sold in
  Europe (even if made in U.S.)
• ISO 14000 series (Europe/EC)
• Standards for recycling, labeling etc.
• ASQC Q90 series MILSTD (U.S.)

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ISO 14000 series

• EC environmental standards
• Core elements
• Environmental management
• Auditing
• Performance evaluation
• Labeling
• Life-cycle assessment

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Joseph Juran on Quality (1992)

• Costs of poor quality are huge, but the amounts
  are not known with precision. In most companies,
  the accounting system provides only a minority of
  the information needed to quantify this cost of
  poor quality

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Philip Crosby on Quality (1980)

• The cost of quality is "the expense of
  nonconformance - the cost of doing things wrong"

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Armand Feigenbaum on Quality

• The originator of Total Quality Control at MIT
  (1963)
• Developed the idea of quality in source, that
  each worker (including white-collar) should be
  responsible for performing their jobs with
  perfect quality

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W. Edwards Deming on Quality

• Created a new quality philosophy with his 14
  principles (1950) emphasizing
• Do not sacrifice quality for the short term
• Production must be stable for quality
• Use of statistical process controls
• Kaizen
• Quality cannot be inspected into products
• Team work
• Workers must have the right tools
• Workers can only correct 15 of problems

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Demings Fourteen Points

• Create consistency of purpose
• Lead to promote change
• Build quality into the products
• Build long term relationships
• Continuously improve product, quality, and
  service
• Start training
• Emphasize leadership

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Demings Fourteen Points (cont.)

• Drive out fear
• Break down barriers between departments
• Stop haranguing workers
• Support, help, improve
• Remove barriers to pride in work
• Institute a vigorous program of education and
  self-improvement
• Put everybody in the company to work on the
  transformation

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Costs of Quality

• Prevention costs - reducing the potential for
  defects
• Appraisal costs - evaluating products
• Internal failure - of producing defective parts
  or service
• External costs - occur after delivery

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Total Quality Management (TQM)

• Encompasses entire organization, from supplier to
  customer
• Stresses a commitment by management to have a
  continuing, company-wide, drive toward excellence
  in all aspects of products and services that are
  important to the customer

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Flow of Activities to Achieve TQM

• Organizational Practices

Quality Principles
Employee Fulfillment
Customer Satisfaction
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Organizational Practices

• Leadership
• Mission statement
• Effective operating procedure
• Staff support
• Training
• Yields What is important and what is to be
  accomplished

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Quality Principles

• Customer focus
• Continuous improvement
• Employee empowerment
• Benchmarking
• Just-in-time
• Tools of TQM
• Yields How to do what is important and to be
  accomplished

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Employee Fulfillment

• Empowerment
• Organizational commitment
• Yields Employees attitudes that they can
  accomplish what is important and to be
  accomplished

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Customer Satisfaction

• Winning orders
• Repeat customers
• Yields An effective organization with a
  competitive advantage

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Concepts of TQM

• Continuous improvement
• Employee empowerment
• Benchmarking
• Just-in-time (JIT)
• Taguchi concepts
• Knowledge of TQM tools

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Continuous Improvement

• Represents continual improvement of process
  customer satisfaction
• Involves all operations work units
• Kaizen

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Shewharts PDCA Model
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Employee Empowerment

• Getting employees involved in product process
  improvements
• 85 of quality problems are due to process
  material
• Techniques
• Support workers
• Let workers make decisions
• Build teams quality circles

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Quality Circles

• Group of 6-12 employees from same work area
• Meet regularly to solve work-related problems
• 4 hours/month
• Facilitator trains helps with meetings

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Benchmarking

• Selecting best practices to use as a standard
  for performance
• Determine what to benchmark
• Form a benchmark team
• Identify benchmarking partners
• Collect and analyze benchmarking information
  Examine everyone who performs similar activities
• Determine who does it best
• Set the best as the standard the benchmark
• Take action to match or exceed the benchmark

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Best Practices in Customer Service

• Make it easy for clients to complain
• Respond quickly to complaints
• Resolve complaints on the first contact
• Use computers to manage complaints
• Recruit the best for customer service jobs

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Just-in-Time (JIT)

• Relationship to quality
• JIT cuts cost of quality
• JIT improves quality
• Better quality means less inventory and better,
  easier-to-employ JIT system
• Requires zero defects
• Allows for no underage or overage

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Just-in-Time (JIT)

• Pull system of production/purchasing
• Customer starts production with an order
• Involves vendor partnership programs to improve
  quality of purchased items
• Reduces all inventory levels
• Inventory hides process material problems
• Improves process product quality

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Just-In-Time (JIT) Example
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Just-In-Time (JIT) Example
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Six Major Tools for TQM

• Quality Function Deployment
• Taguchi techniques
• Pareto charts
• Process charts
• Cause-and-effect diagrams
• Statistical process controls

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Quality Function Deployment

• Determines what will satisfy the customer
• Translates those customer desires into the target
  design
• Allows the company to assess its product
  offerings in relation to those of its rivals
• Formal process aids in continuous improvement

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House of Quality
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Taguchi Techniques

• Experimental design methods to improve product
  process design
• Identify key component process variables
  affecting product variation
• Taguchi Concepts
• Quality robust design
• Quality loss function
• Target-oriented quality

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Quality Robustness

• Ability to produce products uniformly and
  consistently regardless of adverse manufacturing
  and environmental conditions
• Put robustness in House of Quality matrices
  beside functionality

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Quality Loss Function

• Shows social cost () of deviation from target
  value
• Assumptions
• Most measurable quality characteristics (e.g.,
  length, weight) have a target value
• Deviations from target value are undesirable
• Equation L D2C
• L Loss ()
• D Deviation
• C Cost

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Target-Oriented Quality
Quality Loss Function (a)
High loss
Unacceptable
Loss (to producing organization, customer, and
society)
Target-oriented quality yields more product in
the best category
Poor
Fair
Good
Best
Target-oriented quality brings products toward
the target value
Low loss
Conformance-oriented quality keeps product within
three standard deviations
Frequency
Distribution of specifications for product
produced (b)
Lower
Target
Upper
Specification
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Target-Oriented Quality Example
A study found U.S. consumers preferred Sony TVs
made in Japan to those made in the U.S. Both
factories used the same designs specifications.
The difference in quality goals made the
difference in consumer preferences.
Japanese factory (Target-oriented)
U.S. factory (Conformance-oriented)
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Tools of TQM

• Tools for generating ideas
• Check sheet
• Scatter diagram
• Cause and effect diagram
• Tools to organize data
• Pareto charts
• Process charts (Flow diagrams)
• Tools for identifying problems
• Histograms
• Statistical process control chart

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Tools of TQM (cont.)
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Pareto Analysis of Wine Glass Defects (Total
Defects 75)
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16
5
4
3
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Process Chart

• Shows sequence of events in process
• Depicts activity relationships
• Has many uses
• Identify data collection points
• Find problem sources
• Identify places for improvement
• Identify where travel distances can be reduced

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Process Chart Example
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Cause and Effect Diagram

• Used to find problem sources/solutions
• Other names
• Fish-bone diagram, Ishikawa diagram
• Steps
• Identify problem to correct
• Draw main causes for problem as bones
• Ask What could have caused problems in these
  areas? Repeat for each sub-area.

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Ishikawa Diagram Example
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Ishikawa Diagram Example
Method
Manpower
Main Cause
Too many defects
Material
Machinery
Main Cause
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Ishikawa Diagram Example
Method
Manpower
Drill
Overtime
Too many defects
Wood
Steel
Lathe
Material
Machinery
Sub-Cause
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Ishikawa Diagram Example
Method
Manpower
Material
Machinery
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Airline Customer Service Example
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Statistical Process Control (SPC)

• Uses statistics control charts to tell when to
  adjust process
• Developed by Shewhart in 1920s
• Involves
• Creating standards (upper lower limits)
• Measuring sample output (e.g. mean wgt.)
• Taking corrective action (if necessary)
• Done while product is being produced

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Control Chart Purposes

• Show changes in data pattern
• e.g., trends
• Make corrections before process is out of control
• Show causes of changes in data
• Assignable causes
• Data outside control limits or trend in data
• Natural causes
• Random variations around average

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SPC Charts

• Control charts are used to indicate when a
  production process may have changed to the degree
  to affect quality
• Variable charts (X, R) track variations in
  measurements within samples
• Attribute charts (p, c) track whether attributes
  exist within samples

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Control Chart Types
Continuous Numerical Data
Categorical or Discrete Numerical Data
Control
Charts
Variable
Attribute
Charts
Charts
R
p
c
X
Chart
Chart
Chart
Chart
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SPC Quality Characteristics

• Characteristics that either exist, or do not
• Classify products as either good or bad, or
  count defects
• e.g., radio works or does not
• Categorical or discrete random variables

• Characteristics that you measure, e.g., weight,
  length
• May be in whole or in fractional numbers
• Continuous random variables

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Statistical Process Control Steps
Produce Good
Start
Provide Service
No
Assign.
Take Sample
Causes?
Yes
Inspect Sample
Stop Process
Create
Find Out Why
Control Chart
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Process Control Chart
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Control Chart Example
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Patterns in Control Charts
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?X Chart

• Type of variables control chart
• Interval or ratio scaled numerical data
• e.g., dimensions, weight, etc.
• Shows sample means over time
• Monitors process average
• Example Weigh samples of coffee compute means
  of samples Plot

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?X Chart Control Limits
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R Chart

• Type of variables control chart
• Interval or ratio scaled numerical data
• Shows sample ranges over time
• Difference between smallest largest values in
  inspection sample
• Monitors variability in process
• Example Weigh samples of coffee compute ranges
  of samples Plot

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R Chart Control Limits
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Control Chart Factors (p. 227)
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X and R Charts Example

• A control process consists of 12 samples (with 20
  units in a sample) with different means and
  sample ranges

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X and R Charts Example

• Construct
• X Chart
• R Chart
• Use the following factors
• A2 0.18
• D3 0.41
• D4 1.59
• Is the process in control?

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POM for Windows Results
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POM for Windows X Chart
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POM for Windows R Chart
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p Chart

• Type of attributes control chart
• Nominally scaled categorical data
• e.g., good-bad
• Shows of nonconforming items
• Example Count defective chairs divide by
  total chairs inspected Plot
• Chair is either defective or not defective

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p Chart Control Limits
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c Chart

• Type of attributes control chart
• Discrete quantitative data
• Shows number of nonconformities (defects) in a
  unit
• Unit may be chair, steel sheet, car etc.
• Size of unit must be constant
• Example Count defects (scratches, chips etc.)
  in each chair of a sample of 100 chairs Plot

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c Chart Control Limits
Use 3 for 99.7 limits
Defects in Unit i
Units Sampled
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p and c Charts Example (p. 231)

• Data entry clerks key in thousands of records
  each day. Samples of the work of 20 clerks are
  shown here. 100 records by each clerk were
  carefully examined to make sure they contained no
  errors. Construct a control chart with a 99.7
  level of confidence.
• Is the process in control?

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POM for Windows Results
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POM for Windows p Chart
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Deciding Which Chart to Use

• Using an X and R chart
• Observations are variables
• Collect 20-25 samples of n4, or n5, or more
  each from a stable process and compute the mean
  for the X chart and range for the R chart.
• Track samples of n observations each.

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Deciding Which Chart to Use

• Using the P-Chart
• We deal with fraction, proportion, or percent
  defectives
• Observations are attributes that can be
  categorized in two states
• Have several samples, each with many observations
• Assume a binomial distribution unless the number
  of samples is very large then assume a normal
  distribution.
• Using a C-Chart
• Observations are attributes whose defects per
  unit of output can be counted
• The number counted is often a small part of the
  possible occurrences
• Assume a Poisson distribution
• Defects such as number of blemishes on a desk,
  number of typos in a page of text, flaws in a
  bolt of cloth

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Inspection

• Involves examining items to see if an item is
  good or defective
• Detect a defective product
• Does not correct deficiencies in process or
  product
• Issues
• When to inspect
• Where in process to inspect

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When and Where to Inspect

• At the suppliers plant while the supplier is
  producing
• At your facility upon receipt of goods from the
  supplier
• Before costly or irreversible processes
• During the step-by-step production processes
• When production or service is complete
• Before delivery from your facility
• At the point of customer contact

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What Is Acceptance Sampling?

• Form of quality testing used for incoming
  materials or finished goods
• e.g., purchased material components
• Procedure
• Take one or more samples at random from a lot
  (shipment) of items
• Inspect each of the items in the sample
• Decide whether to reject the whole lot based on
  the inspection results

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What Is an Acceptance Plan?

• Set of procedures for inspecting incoming
  materials or finished goods
• Identifies
• Type of sample
• Sample size (n)
• Criteria (c) used to reject or accept a lot
• Producer (supplier) consumer (buyer) must
  negotiate

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Operating Characteristics Curve

• Shows how well a sampling plan discriminates
  between good bad lots (shipments)
• Shows the relationship between the probability of
  accepting a lot its quality

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AQL LTPD

• Acceptable quality level (AQL)
• Quality level of a good lot
• Producer (supplier) does not want lots with fewer
  defects than AQL rejected
• Lot tolerance percent defective (LTPD)
• Quality level of a bad lot
• Consumer (buyer) does not want lots with more
  defects than LTPD accepted

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Producers Consumers Risk

• Producer's risk (?)
• Probability of rejecting a good lot
• Probability of rejecting a lot when fraction
  defective is AQL
• Consumer's risk (ß)
• Probability of accepting a bad lot
• Probability of accepting a lot when fraction
  defective is LTPD

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An Operating Characteristic (OC) Curve Showing
Risks
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Average Outgoing Quality
Where Pd true percent defective of the lot
Pa probability of accepting the
lot N number of items in the
lot n number of items in the
sample
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TQM In Services

• Service quality is more difficult to measure than
  for goods
• Service quality perceptions depend on
• Expectations versus reality
• Process and outcome
• Types of service quality
• Normal Routine service delivery
• Exceptional How problems are handled

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Goods vs. Services
Good
Service

• Can be resold
• Can be inventoried
• Some aspects of quality measurable
• Selling is distinct from production

• Reselling unusual
• Difficult to inventory
• Quality difficult to measure
• Selling is part of service

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Goods vs. Services (cont.)
Good
Service

• Product is transportable
• Site of facility important for cost
• Often easy to automate
• Revenue generated primarily from tangible product

• Provider, not product is transportable
• Site of facility important for customer contact
• Often difficult to automate
• Revenue generated primarily from intangible
  service

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Determinants of Service Quality

• Reliability consistency and dependability
• Responsiveness willingness/readiness of
  employees to provide service timeliness
• Competence possession of skills and knowledge
  required to perform service
• Access approachability and ease of contact
• Courtesy politeness, respect, consideration,
  friendliness of contact personnel

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Determinants of Service Quality

• Communication keeping customers informed in
  languages they understand
• Credibility trustworthiness, believability,
  honesty
• Security freedom from danger, risk or doubt
• Understanding/knowing the customer making the
  effort to understands the customers needs
• Tangibles the physical evidence of the service