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Quality management


Topic-16 Quality management 1. Given Confidence Level (1- ): ( =5%, 10%..) Z = f( ) From Normal Distribution Table Examples: =5% (1- )= 95% Z=1.96 =3% (1 ... – PowerPoint PPT presentation

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Title: Quality management

  • Quality management

Quality Management
  • Whats quality? Different people have different
    ideas about quality. There is no clear definition
    on the term of quality.
  • From customer quality is often associated with
  • From producer quality is the conformance to
    design specification.
  • From salesman quality is related to

Quality Management (II)
  • Quality is a relative concept usually refers to
  • fitness-to-use
  • Excellence
  • Satisfactory of customer/..
  • Examples
  • If you want to buy a PC computer, ..
  • When you order a telephone service

Development of Quality Management
  • Before 1960s (inspection oriented)
  • Up to 1900s individual operator inspection
  • Early 1900s foreman quality control through
  • After 1940s statistical quality control (SQC
    based on the progress of statistic theory and
    control theory, focused on the techniques of

Development of Quality Management (II)
  • After 1960s(management oriented)
  • 4. Early 1960s preventive quality, MGT
  • 5. 1970s total quality control (TQC) theory and
    practice. (quality is free if you do right at
    first place)
  • 6. After 1980s strategic quality MGTquality is
    competitive weapon put quality into strategic

Development of Quality Management (III)
  • From reactive, inspection-oriented to preventive
  • From control-in to build-in to manage-in

Changing Quality Assumption
  • From
  • Reactive
  • Inspection
  • AOL
  • Product Oriented
  • Blame Placing
  • Quality vs. Operations
  • Cost or Quality
  • Operations Only
  • Hunches on Cost of Quality
  • Predominantly Blur-Collar
  • Defects should be hidden
  • Quality dept has Quality Problem
  • Subordinated to MGT Team
  • General manager not evaluated on Quality
  • Quality Costs more
  • Quality is technical
  • To
  • Proactive
  • Prevention
  • Zero Defect
  • Organization Oriented
  • Problem solving
  • Quality and Operations
  • Cost and Quality
  • Product design, Process Design, and Operations
  • Formal reporting on cost of quality
  • Predominantly White-Collar Cost
  • Defects should be highlighted
  • Purchasing, RD, Marketing has Quality Problem
  • Part of the MGT Team
  • Quality Performance is part of
  • General manager review
  • Quality costs less
  • Quality is managerial
  • Quality first

Measurement of Quality
  • A. Design Quality vs. Conformance Quality
  • B. Traditional view
  • Conformance
  • Fitness to Use
  • Excellence

Design and Conformance Quality
  • Design Quality Output goals and specifications
    Output goals results form strategic decisions
    that establish output characteristics based upon
    the complex relationship among customer needs,
    output value, potential demand, marketing
    strategies and profitability.
  • Output specifications translations output
    characteristics into concrete specifications for
  • Conformance Quality meeting output
    specifications Operations in concerned primarily
    with conformance to output specifications and
    with ensuring that output specifications create
    the desired output characteristics

Traditional Definition of Quality
  • 1. Conformance to requirements according to
    this view, product quality is synonymous with
    meeting specifications. This critical issue is
    whether the final product conforms to the design
    and performance standards that have content or
    validity of these standards.
  • 2. Fitness for use this approach is more
    user-oriented. Different users have different
    needs, and to the extent that a product is
    designed and manufactured to meet those needs, it
    is of high quality.
  • 3. Innate excellence excellence is both
    absolute and universally recognizable. This
    definition reflects the belief that through
    styles and tastes change, there is something
    enduring about works of high quality. They
    provide a standard against which other products
    are judged.

Eight dimensions of product quality
  • 1. Performance
  • The primary operating characteristics of a
    product. For an automobile, these would be traits
    like acceleration, handling, cruising speed, and
    comfort for a television set. They would include
    sound and picture clarity, color, and ability to
    receive distant stations.
  • 2. Product Features
  • The bells and whistles that are often
    added to spice them up free drinks on a lengthy
    plane flight, permanent press as well as cotton
    cycles on a washing machine, and automatic tuners
    on a color television set are all secondary to
    basic product or services being offered.

  • 3. Reliability
  • A reliable product is one that can be
    count on the odds of its failing within a
    specific period is small. Two common measures of
    reliability are the mean time to first failure
    (MTFF) and the mean time between failures (MTBF).
  • 4. Conformance
  • This is a measure of consistency a reflection
    on how well a product matches up against
    pre-established specifications. This is an
    especially important element of service business.
    Incorrect bank statements, lost mail, or delayed
    airline flight are often cited as examples or
    deteriorating quality.

  • 5. Durability
  • This dimension is a characteristic of
    physical products alone. Durability thus reflects
    the economic or physical life of a product it is
    commonly measured by the number of hours, or
    miles that a product can be used before
    replacement is required.
  • 6. Serviceability
  • Serviceability refers to the speed of
    repair which is therefore an important
    independent element in maintaining a quality
    image. For example, caterpillar Tractors
    guarantee that replacement parts will be shipped
    anywhere in the world within 48 hours has
    undoubtedly enhanced its reputation for quality.

  • 7. Aesthetics
  • This is a subjective dimension. How a
    product looks, feels, sounds, tastes, or smells
    is clearly a matter of personal judgment. That
    these elements affect buying behavior is
    certain-witness the attention paid to the
    superior fits and finishes of Japan automobiles
  • 8. Perception of Quality
  • Not only the most subjective dimension but
    also based on advertising or on the excellence of
    other produced by the company. It shapes first
    impressions, which are critical in assessing an
    unknown product. For example, the strong quality
    image of Maytags new line of dishwashers-
    initially based on the performance of its laundry
    equipment, rather than on any solid evidence of
    superior reliability or durability of this
    particular product- is a perfect example (halo

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Eight Dimensions of Quality
  • 1. Features (secondary characteristics)
  • 2. Performance (user defined)
  • 3. Reliability
  • 4.Durability
  • 5.Conformance
  • 6.Serviceability
  • 7. Aesthetics
  • 8. Perceived quality
  • Many quality problems result from different
    viewing of quality

Examples of Dimension of Quality
Measures Measures Measures
Dimension Product Example Stereo Amplifier Service Example Checking Account at Bank
Performance Signal-to-noise ratio, power Time to process customer requests
Feature Remote control Automatic bill paying
Reliability Mean time to failure Variability of time to process request
Durability Useful life (with repair) Keeping pace with industry trends
Serviceability Ease of repair Resolutions of errors
Response Courtesy of dealer Courtesy of teller
Aesthetics Oak-finished cabinet Appearance of bank lobby
Reputation Consumer Reports ranking Advice of friends, years in business
The Gurus
  • 1. Deming Management is responsible
  • 2. Juran Quality trilogy
  • 3. Feigenbaum Total quality control (TQC)
  • 4. Ishikawa Total company involvement
  • 5. Crosby Quality is free

Setting Goals
  • If management decides it can live with a 10
    defective rate, it will get a 10 defect rate. A
    company gets what it asks for. Management must
    take the lead.
  • Philip Crosby
  • Management Consultant
  • Wall Street Journal

  • Quality is only as good as the customer says it
    is, not what the numbers on an engineers
    quality-control charts show.
  • Armand V. Feigernbaum
  • General Systems Company

A Competitive Advantage
  • U.S. managers have traditionally viewed quality
    control as a defensive strategy to control cost.
    Management must learn that quality is a
    competitive strategy that separates the winner
    from losers.
  • David Garvin
  • Wall Street Journal

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Strategic Importance of Quality
  • A firm must select a focused number of dimensions
    of quality to compete in marketplace
  • A firm must define the quality from customers
    satisfaction which not only at time of sales but
    over product lifetime.
  • A firm must put quality into their strategic

Strategic Importance of Quality (II)
  • 1. Positioning products in the market in terms of
    the dimensions of quality selected
  • 2. Linking quality profitability and overall
    business strategy to respond competitive needs
  • 3. Developing a companywide continuous quality
    improvement plan.

Traditional View of How Much to Inspect
Optimal Level of Inspection
Annual cost ()
Total Quality Control Cost
Cost of Scrap, Rework, and Detecting Defects
Cost of Defective Products to Customers
Percent of Products Inspected
The Japanese versus the North American Quality

True Benefits
Perceived Benefits
10 Defective
Towards 0 Defective
Less No. of Defects
North American Approach to quality
Japanese Approach to quality
  • In the 1990s, made in the USA will become a
    symbol of world-class quality again. When 30 of
    U.S. products were failures, versus 3 for Japan,
    that was an enormous difference. But at failures
    of 0.3 and 0.03, itll be difficult for anyone
    to tell.
  • J.M. Juran
  • Juran Institute

Improvements in the U.S. Industry
  • The U.S. industry is making great strides,
    particularly in auto and electronics.
  • David Garvin
  • In 1985 American car owners reported 50 more
    problems than Japanese car owners. In 1987 this
    was only 36. The quality gap may be wiped out
  • The Columbus Dispatch

Quality Cost vs. Profits
  • Costs of Quality
  • Preventing cost
  • Appraisal costs
  • Internal failure costs
  • External failure costs

Quality Cost vs. Profits (II)
  • Profits from quality
  • Market gains-improved quality-increased market
    share and higher price-increased profit.
  • Cost savings-improved reliability/conformance-redu
    ced/scrap rework/liability warranty-increased

Quality Cost Report
Costs Associated with Quality Management
Cost Category As Quality Increases, Costs Comments
Prevention Increase Costs are associated with preventing defects before they happen.
Appraisal Decrease Costs are incurred in assessing the level if quality attained by the operating systems.
Internal failure Decrease Costs result from yield losses and the need to rework
External failure Decrease Costs include those of warranty repairs, loss of market share, and lawsuits
Product Liability- A Quality Issue
  • What is Product Liability?
  • Examples
  • Auto Vehicles/ Garage Door Openers
  • Bicycle Breakers/ Sport Equipment
  • Hot Water Heaters
  • Children Toys
  • Health Care

Property Damage Personal Injury
Major Causes of Liability Allegations
  • Defect in product design 35
  • Failure to warn 24
  • Defect in construction 23
  • Incorrect labeling 19
  • Foreseeable misuse 6
  • Others 9

Major Causes of Liability Allegations (II)
  • Major design defects
  • Risks are not reduced to the minimum
  • No adequate warning/protection devise
  • Fail to perform intended function safety
  • Create unreasonable dangerous side effects
  • Fail to minimize avoidable consequence of misuse.
  • ..

Reduce Product Liability
  • Reduce the risk through better design
  • Anticipate product misuse
  • Proper selection of components/parts
  • Enforce quality control procedures
  • Provide sufficient installation /maintenance
    /operating instructions
  • Add all warning to potential damages
  • Offer safety devise when necessary
  • Involve CEO/top management in risk reduction
  • Monitor legal development in product design

  • A customer is the most important visitor on our
    premise. He is not dependent on us we are
    dependent on him. He is not an interruption on
    our work he is the PURPOSE of it. He is not an
    outsider to our business he is part of it. We
    are not doing him a favor by serving him he is
    doing us a favor by giving us an opportunity to
    do so.
  • ltA Quote from 40 years agogt

Understanding Total Quality Management (TQM)
  • TQM is an organizational wide quality control
    program involving
  • All functional areas
  • All people
  • With continuous quality improvement attempt
    and customer satisfaction oriented

Understanding TQM (II)
  • TQM considering all factors which influence
    quality including
  • ---RM/Parts quality
  • ---Machine/Eqmt quality
  • ---Peoples quality
  • ---Organizations quality

Understanding TQM (III)
  • TQC Principles
  • --Small Lotsize Production Principle
  • --Shop Floor Cleanliness Principle
  • --Less-than-full-capacity Scheduling Principle
  • --

Quality Management in Services
  • Since many services are intangible it is
    difficult to determine their quality
  • Customers set their own standards for services
  • Perceived quality of service affected by the
  • Performance of service employees determine in
    large part the quality of the services

Improving Quality Through TQM
  • Purchasing considerations
  • Buyer must emphasize quality, delivery, and price
  • Work with the supplier to obtain defect-free
  • Specifications must be clear and realistic
  • Allow time to identify qualified suppliers
  • Improve communication between purchasing,
    engineering, quality control, and other
  • Product and Service Design
  • Design changes can increase defect rates
  • Stable design reduce quality problems
  • Stable design may become obsolete in the

Improving Quality Through TQM (II)
  • Process Design
  • New equipment con overcome quality problems
  • Concurrent engineering ensures that production
    requirements and process capabilities are
  • Quality Function Deployment (QFD)
  • Voice of the customer- What do customers need and
  • Competitive analysis- How well are we serving
  • Voice of the engineer- What technical measures
    relate to our customers need?
  • Correlation- What are the relationships between
    the voice of the customer and the voice of the
  • Technical comparison- How does our product or
    service performance compare to that of our
  • Trade-offs- What are the potential technical

Improving Quality through TQM (III)
  • Benchmarking
  • Planning- identify process, leader, performance
  • Analysis- measure gap, identify causes
  • Integration- establish goals and resource
  • Action- develop teams, implement plan, monitor
    progress, return to step I
  • Tools for improving quality
  • Flow diagrams
  • Process charts
  • Checklist- record the frequency of occurrence
  • Histograms- summarize data on a continuous scale
  • Bar charts- bar height represents the frequency
    of occurrence
  • Pareto charts- a bar chart organized in
    decreasing order
  • Scatter diagrams- a plot of two variables showing
    whether they are related
  • Cause-and-effect, fishbone, or Ishakawa diagram
  • Graphs- a variety of pictorial formats, such as
    line graphs and pie chats

Malcom Baldrige National Quality Award
  • Established in 1987
  • Named for secretary of commerce Malcom Baldrige
  • Improved quality as a means of reducing the trade
  • Learn strengths and weaknesses and find ways to
    improve operations
  • Seven criteria

Criteria for Performance Excellence
  • Category 1Leadership 120 points
  • Category 2Strategic Planning 85 points
  • Category 3Customer and Market Focus 85 points
  • Category 4Information and Analysis 90 points
  • Category 5Human Resource Focus 85 points
  • Category 6Process Management 85 points
  • Category 7Business Results 450 points

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International Quality Documentation Standards
  • What is ISO 9000?
  • Certified companies are listed in a directory
  • Compliance with ISO 9000 standards indicates
    quality claims can be documented
  • ISO 14000- an environment management system
  • Standards require that companies keep track of
    their raw materials use and the generation,
    treatment, and disposal of hazardous wastes
  • Companies must prepare a plan for ongoing
    improvement in environmental performance
  • Standards cover the following areas
  • Environmental management system
  • Environmental performance evaluation
  • Environmental labeling
  • Life cycle assessments
  • Benefits of ISO Certification
  • External- potential sales advantage
  • Internal- provides guidance in staring the TQM

New Trends in TQM
  • World-Class Practice
  • --Quality begins when business strategy is
  • --Quality is the weapon of choice to capture
    global markets
  • --Quality drives the productivity machine
  • --Not depending on inspection to catch defects
    concentrating on doing things right the first
  • --Committing tremendous resources to put in place
    TQM programs aimed at continuous improvement

Service Quality Dimensions
Tangibles Appearance of physical facilities, equipment, personnel, and communication material
Reliability Ability to perform the promised service dependably and accurately
Responsiveness Willingness to help customers and provide prompt services
Assurance Knowledge and courtesy of employees and their ability to convey thrust and confidence
Empathy Caring, individualized attention the firm provides its customers
Conceptual Model of Service Quality
Words of mouth
Personal Needs
Past Experience
Expected Services
Gap 5
Perceived Services
Service Delivery
External Communication
Service Provider
Gap 4
Gap 3
Gap 1
Service Quality Specifications
Gap 2
Management Expectation of Service
Closing the Service Quality Gaps
  • There are 5 barriers to service quality
  • 1. customer expectation, management perception
  • 2. management perception, service quality
    specification gap
  • 3. service quality specifications, service
    delivery gap
  • 4. service delivery, external communications gap
  • 5. Customer expectation, customer perception gap

Sample 1
Out of 100 unit sample, how many defects must
we encounter before we conclude that the rate of
defects in the population is greater that 5? How
much confidence do we have in our answer- we
cant be positive since a sample was involved.
Sample 2
Is of defects in population less than 5?
Statistical Quality Control Techniques
  • 1.Acceptance Sampling apply for product lot
    inspection where a decision to accept or reject
    an entire lots is made based on a small sample
    inspection (Off-line, used in Job shop or Batch
    Shop systems).
  • You may make a type I error (reject a good one)
    or type II error (accept a bad one).
  • Based on confidence level selected sampling plan
    and sample size

Statistical Quality Control Techniques (II)
  • 2.Process Control apply for the continuous
    production process where a decision to continue
    or stop the production line is made based a
    process control chart that shows the results of a
    series of periodical sample inspection(On-line,
    used in Continuous Flow/Assembly Line systems).
  • Similar consideration two type errors, sampling
    plan and sample size.

The Inspection Process
  • Use of inspection to simply remove defectives is
    improper. It does nothing to prevent defects. You
    cannot inspect quality into a part.
  • Quality measurements
  • Variables a characteristic measured on a
    continuous scale
  • Adv telling the direction magnitude of
    corrections needed
  • Disadv precise measurements are required
  • Attributes a characteristic counted in discrete
  • Used to determine conformance to complex
    specifications, or when measuring variables is
    too costly
  • Adv quickly reveals when quality ha changed,
    provides an integer number of how many are
  • Disadv Doesnt show the direction and magnitude
    of correction are needed

The Inspection Process- II
  • Sampling
  • Complete inspection used when costs of failure
    are high relative to costs of inspection, or
    inspection is automated- some defects are not
    detected because of inspectors fatigue, or
    imperfect testing methods
  • Sampling plans used when- inspection costs are
    high, or inspection destroys the product, some
    defectives lots may be purchased and some good
    lots may be rejected when sample does not
    perfectly represent the population, or testing
    methods are imperfect
  • Sampling Plans include
  • Sample size, n random observations, and
  • Time between successive samples
  • Decision rules that determine when action should
    be taken
  • Sampling distributions- sample means are usually
    dispersed according to the normal probability

Quality Process Control Charts
  • Control charts- used to judge whether correction
    action is required
  • A sample characteristic ( a variable, an
    attribute, or a percentage) measured above the
    upper control limit (UCL) or below the lower
    control limit (LCL) indicates an potential am
    assignable cause
  • X-chart when quality is measured by a variable
    with a mean
  • P-chart when quality is measured by a percentage
    of defectives
  • R-chart when quality is measured by an attribute
    with a range

Quality Process Control Charts ( II)
  • Steps for using a control chart
  • Take a random sample, measure the quality
    characteristic, and calculate a variable of
    attribute measure
  • Plot the statistic if it falls outside the
    control limits, look for assignable causes
  • Eliminate the causes if it degrades quality.
    Incorporate the cause if it improves quality.
    Recalculate the control chart
  • Periodically repeat the procedure

Quality Process Control Charts (III)
  • Indicators of out of control conditions
  • A trend in the observations (the process is
  • A sudden or step change in the observation
  • A run of five or more observations on the same
    side of the mean (if we flip a coin and get
    heads five times in a row, we become suspicious
    of the coin or of the coin flipping procedure)
  • Several observations near the control limits
    (normally only 1 in 20 observations are more than
    2 standard deviations from the mean)
  • Two types of error can result from sampling
  • Type I errors- process declared out of control
    when in fact it really is in control
  • Type II error- process considered in control when
    in fact in it not

Chart for Controlling Percent Defectives in
Control Chart Evidence for Investigation
Upper control limit
Central line
Lower control limit
  • One plot out above. Investigate for cause of poor
  • One plot out below. Investigate for cause of

Upper control limit
Central line
Lower control limit
Two plots near upper control. Investigate for
cause of poor performance.
Two plots near lower control. Investigate for
cause of improvement.
Upper control limit
Central line
Lower control limit
Run of 5 above central line. Investigate for
cause of sustained poor performance.
Run of 5 below central line. Investigate for
cause of sustained poor performance.
Quality Control Chart (P-chart)
  • Purposes Set three important parameters for
    process quality control.
  • 1. Average Defective Rate P
  • 2. Upper Control Limit UCL
  • 3. Lower Control Limit LCL

  • Formula

No. of Total Defectives found

Total No. of Units Examined
(ei-No. of defectives in ih sample)
(k- the number of samplings)
N nK
(n- sampling size for examining)
Standard deviation of P
P- must be in (percentage) n- sampling size
Construct Control Chart (II)
  • 1. Given Confidence Level (1-a) (a5, 10..)

Z f(a)
From Normal Distribution Table
Examples a5 (1- a) 95 Z1.96 a3 (1-
a) 97 Z2.17 a1 (1- a) 99 Z3.0
  • 2. Control Limits
  • UCL PZ sP
  • UCL PZ sP
  • 3. Construct a chart with (P, UCL, LCL)

Example Supplement p. 16-19
  • A) E 103, N 100 x 12 1200
  • So, P 103/1200 0.086
  • ?p p(1 p)/n1/2 .086 x (1
    0.086)/12 1/2
  • .081
  • Given ? 3, Z 2.17
  • UCL .086 2.17(.081) .262
  • LCL .086 - 2.17(.081) (-0.09) 0

Example Supplement p. 16-19 (II)
  • B) P1 1/12 .083, P2 2/12 .167
  • P3 5/12 .417 (gt .262
  • P4 0/12 0.0, P2 1/12 .083

Quality Control Chart
  • Primary purpose of control charts is to indicate
    at a glance when production process might have
    changed sufficiently to affect product quality
  • If the indication is that product quality has
    deteriorated or is likely to then corrective is
  • If the indication is that product quality is
    better than expected then it is important to find
    out why so that it can be maintained
  • Use of control charts is often referred to as
    statistical process control (SPC)

Operating Characteristic Curve
Figure I.3
Effects on n and c on OC Curves
Sampling Plan Changes Sampling Plan Changes Sampling Plan Changes OC Curve Changes OC Curve Changes
Acceptance Proportion (c/n) Acceptable Number of Defective Items (c) Sample Size (n) Producers Risk (a) Consumers Risk (ß)
Unchanged Increases Increases Decreases Decreases
Unchanged Decreases Decreases Increases Increases
Increases Increases Unchanged Decreases Increases
Increases Unchanged Decreases Decreases Increases
Decreases Decreases Unchanged Increases Decreases
Decreases Unchanged Increases Increases Decreases
Computers in quality control
  • Records about quality testing and results limit a
    firms exposure in the event of a product
    liability suit.
  • Have an information storage system that can tie
    the lot numbers of the suspected parts to the
    finial product model numbers
  • Have an information system that can track the
    model numbers of final products to customers.
  • With automation inspection and testing can be so
    inexpensive and quick that companies may be able
    to increase samples thus attaining more precision
    in both control charts and acceptance plans

World Class Practice in Quality Control
  • Statistical control charts are used extensively
    to provide feedback to everyone about quality
  • Where 100 inspection and testing are impractical
    uneconomical or impossible acceptance plans may
    be used to determine if lots of products are
    likely to meet customer expectations
  • The tread is toward 100 inspection and testing
    automated inspection and testing has made such an
    approach effective and economical
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