Quality Management

Defining Quality
The ability of a product (a good or a service) to
consistently meet or exceed customer expectations
Perfection
Consistency
Conformance to specifications
Eliminating waste
Doing things right the first time
Delighting or pleasing customers
Compliance with policies and procedures
Q=P/E P-Performance
E-Expectations

Dimensions of Quality:
Manufactured Products
Performance
Features
Reliability
Conformance
Durability
Serviceability
Aesthetics
Safety
Brand Equity or Reputation



Service Quality
Determined by:
Reliability
Responsiveness
Competence
Access
Courtesy
Communication
Credibility
Security
Understanding/knowing the Customer
Tangibles
Meaning of Quality
Customer-Driven Quality Cycle


measurement and feedback
Customer needs and expectations
(expected quality)
Identification of customer needs
Translation into product/service specifications
(design quality)
Output (actual quality)
Customer perceptions (perceived quality)
PERCEIVED QUALITY is a comparison of ACTUAL
QUALITY to EXPECTED QUALITY
Gurus of Modern Quality Management
W. Edwards Deming (14 points, special vs.
Common variation
Joseph M. Juran (Fitness for use, Quality Trilogy)
Philip B. Crosby (quality is free, zero defects)
Kaoru Ishikawa (cause and effect diagram, quality
circles)
Genichi Taguchi (loss function)
Cost of Quality
Cost of Achieving Good Quality
Prevention costs
costs incurred during product design
Appraisal costs
costs of measuring, testing, and analyzing
Cost of Poor Quality
Internal failure costs
include scrap, rework, process failure, downtime, and price
reductions
External failure costs
include complaints, returns, warranty claims, liability, and lost
sales
Prevention Costs
Quality planning costs
costs of developing and
implementing quality
management program
Product-design costs
costs of designing products
with quality characteristics
Process costs
costs expended to make sure
productive process conforms
to quality specifications
Training costs
costs of developing and
putting on quality training
programs for employees and
management
Information costs
costs of acquiring and
maintaining data related to
quality, and development and
analysis of reports on quality
performance

Appraisal Costs
Inspection and testing
costs of testing and inspecting materials, parts, and product
at various stages and at end of process
Test equipment costs
costs of maintaining equipment used in testing quality
characteristics of products
Operator costs
costs of time spent by operators to gather data for testing
product quality, to make equipment adjustments to
maintain quality, and to stop work to assess quality
Internal Failure Costs
Scrap costs
costs of poor-quality products
that must be discarded, including
labor, material, and indirect costs
Rework costs
costs of fixing defective products
to conform to quality
specifications
Process failure costs
costs of determining why
production process is producing
poor-quality products
Process downtime costs
costs of shutting down
productive process to fix
problem
Price-downgrading costs
costs of discounting poor-
quality productsthat is,
selling products as seconds
External Failure Costs
Customer complaint costs
costs of investigating and
satisfactorily responding to a
customer complaint resulting from a
poor-quality product
Product return costs
costs of handling and replacing poor-
quality products returned by
customer
Warranty claims costs
costs of complying with product
warranties
Product liability costs
litigation costs resulting
from product liability and
customer injury
Lost sales costs
costs incurred because
customers are dissatisfied
with poor-quality products
and do not make additional
purchases
Principles of Total Quality
Management
Customer and stakeholder focus
Process orientation
Continuous improvement and learning
Employee engagement and teamwork
Management by fact
Visionary leadership and a strategic
orientation

13
A Vision and Philosophical commitment to the
consumers to offer the highest quality, lowest cost
products

A Metric that demonstrates quality levels at 99.9997%
performance for products and processes

A Benchmark of the product and process capability for
comparison to best in class

A practical application of statistical Tools and Methods to
help measure, analyze, improve, and control the
process
What is Six Sigma?
Process
mean
Lower
specification
Upper
specification
1350 ppm
1350 ppm
1.7 ppm 1.7 ppm
+/- 3 Sigma
+/- 6 Sigma
3 Sigma and 6 Sigma Quality
Chapter 15 SSSssSeven Tools of Quality Management
1. Flowcharts: process mapping to identify the sequence
of activities or flow of materials/information in a process.
2. Run Charts and Control Charts: line graph with data
plotted over time; control charts include control limits.
3. Check sheets: simple tools for data collection, ensure
completeness.
4. Histograms: graphically represents frequency of values
within a specified group.
5. Pareto Analysis: separates vital few from the trivial
many causes; provides direction for selecting project
improvement.
6. Cause-and-Effect Diagrams: represents chain of
relationships; often called a fishbone diagram.
7. Scatter Diagrams: graphical component of regression
analysis.
Seven QC Tools
Phases of Quality Assurance
Acceptance
sampling
Process
control
Continuous
improvement
Inspection of lots
before/after
production
Inspection and
corrective
action during
production
Quality built
into the
process
The least
progressive
The most
progressive
Statistical Process Control (SPC)
A methodology for monitoring a process to
identify special causes of variation and signal
the need to take corrective action when
appropriate
SPC relies on control charts
SPC: Basic Forms of Variation
Assignable variation is caused by factors
that can be clearly identified and
possibly managed
- Random variation is inherent in the
production process

Types of Control Charts
Either attributes or variables can be
measured and compared to standards.
Attributes are characteristics that are
classified into one of two categories, usually
defective (not meeting specifications) or non-
defective (meeting specifications).
Variables are characteristics that can be
measured on a continuous scale (weight,
length, etc.).

Control Chart Applications
Establish state of statistical control
Monitor a process and signal when it goes out of
control
Determine process capability
Commonly Used Control Charts
Variables data
x-bar and R-charts
x-bar and s-charts
Attribute data
For defectives (p-chart, np-chart)
For defects (c-chart, u-chart)
Example of x-bar and R charts: Step 1. Calculate sample means, sample ranges, mean of
means, and mean of ranges.
Sample Obs 1 Obs 2 Obs 3 Obs 4 Obs 5 Avg Range
1 10.68 10.689 10.776 10.798 10.714 10.732 0.116
2 10.79 10.86 10.601 10.746 10.779 10.755 0.259
3 10.78 10.667 10.838 10.785 10.723 10.759 0.171
4 10.59 10.727 10.812 10.775 10.73 10.727 0.221
5 10.69 10.708 10.79 10.758 10.671 10.724 0.119
6 10.75 10.714 10.738 10.719 10.606 10.705 0.143
7 10.79 10.713 10.689 10.877 10.603 10.735 0.274
8 10.74 10.779 10.11 10.737 10.75 10.624 0.669
9 10.77 10.773 10.641 10.644 10.725 10.710 0.132
10 10.72 10.671 10.708 10.85 10.712 10.732 0.179
11 10.79 10.821 10.764 10.658 10.708 10.748 0.163
12 10.62 10.802 10.818 10.872 10.727 10.768 0.250
13 10.66 10.822 10.893 10.544 10.75 10.733 0.349
14 10.81 10.749 10.859 10.801 10.701 10.783 0.158
15 10.66 10.681 10.644 10.747 10.728 10.692 0.103
Averages 10.728 0.220400
Example of x-bar and R charts: Step 2. Determine Control Limit Formulas and Necessary
Tabled Values
x Chart Control Limits
UCL = x + A R
LCL = x - A R
2
2
R Chart Control Limits
UCL = D R
LCL = D R
4
3
n A2 D3 D4
2 1.88 0 3.27
3 1.02 0 2.57
4 0.73 0 2.28
5 0.58 0 2.11
6 0.48 0 2.00
7 0.42 0.08 1.92
8 0.37 0.14 1.86
9 0.34 0.18 1.82
10 0.31 0.22 1.78
11 0.29 0.26 1.74
Example of x-bar and R charts: Steps 3&4. Calculate x-bar Chart and Plot Values
10.601
10.856
= ) .58(0.2204 - 10.728 R A - x = LCL
= ) .58(0.2204 - 10.728 R A + x = UCL
2
2
=
=
10.550
10.600
10.650
10.700
10.750
10.800
10.850
10.900
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Sample
M
e
a
n
s
UCL
LCL
Example of x-bar and R charts: Steps 5&6. Calculate R-chart and Plot Values
0
0.46504
= =
= =
) 2204 . 0 )( 0 ( R D = LCL
) 2204 . 0 )( 11 . 2 ( R D = UCL
3
4
0 . 0 0 0
0 . 1 0 0
0 . 2 0 0
0 . 3 0 0
0 . 4 0 0
0 . 5 0 0
0 . 6 0 0
0 . 7 0 0
0 . 8 0 0
1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5
S a m p l e
R
UCL
LCL
For a process to be in control
No points outside control limits
The number of points above and below the
center line is about the same
The points seem to fall randomly above and
below the center line
Most points, but not all are near the center
line, and only a few are close to the control
limits
Typical Out-of-Control Patterns
Point outside control limits
Sudden shift in process average
Cycles
Trends
Hugging the center line
Hugging the control limits
Instability
Capability Versus Control
Control
Capability
Capable


Not Capable
In Control Out of Control
IDEAL
Process Capability
Process Capability is the inherent ability of a
process to produce similar items that can be
controlled for a sustained period of time, given
a certain set of conditions. The process limits
are compared to a set of given specification
limits.
The purpose of process capability study is to
determine the limits within which a process
operates and thereby to reduce its variability
Process Capability Index
The process capability index, Cp is
defined as the ratio of the specification
width to the natural tolerance of the
process. Cp relates the natural variation
of the process with the design
specifications in a single, quantitative
measure.
Process Capability Index
C
p
=
UTL - LTL
6o
C
pl
, C
pu
}
UTL -
3o
C
pl
=
- LTL
3o
C
pk
= min{
C
pu
=
Process Capability
This is a one-sided Capability Index
Concentration on the side which is closest to the
specification - closest to being bad
)
`

=
o o 3
;
3
X UTL LTL X
Min C
pk
What do we Need?
LSL USL
LSL USL
LSL USL
Off-Target, Low Variation
High Potential Defects
Good Cp but Bad Cpk
On Target
High Variation
High Potential Defects
No so good Cp and Cpk

On-Target, Low Variation
Low Potential Defects
Good Cp and Cpk
Variation reduction and process
centering create processes with
less potential for defects.
The concept of defect reduction
applies to ALL processes (not just
manufacturing)
Values of C
pk
C
pk
>= 1.33 would imply that the process both
in control and is capable
1.00 <= C
pk
<1.33 Process capable but might
not be in control
C
pk
< 1 Process in control but not capable or
both not in control and not capable

3-sigma Process
(centered)
Cp = 1.0
Cpk = 1.0
2,700 ppm
Spec Limits
3-sigma Process
(shifted 1.5 std. dev.)
Cp = 1.0
Cpk = 0.5
ppm = 66,811
(about 1.83-sigma)
Spec Limits
Process Capability
A customer service call center wants to ensure that the
majority of customers calls are answered within a
reasonable amount of waiting time. Based on the
customer surveys, the company found that the waiting
time that the customer considers acceptable is up to a
maximum of 40 seconds. A large sample of current
customer calls was monitored and it was found that the
mean and standard deviation of the waiting time was 31
second and 4.5 seconds respectively. Calculate the
Process capability index and comment on it. Also
determine the percentage calls with waiting time of
more than 38 seconds


Charts for Attributes
Fraction nonconforming (p-chart)
Fixed sample size
Variable sample size

np-chart for number nonconforming

Charts for defects
c-chart
u-chart
Example of Constructing a p-Chart:
Required Data
1 100 4
2 100 2
3 100 5
4 100 3
5 100 6
6 100 4
7 100 3
8 100 7
9 100 1
10 100 2
11 100 3
12 100 2
13 100 2
14 100 8
15 100 3
Sample
No.
Size of
Sample
Number of
defectives
found in each
sample
Statistical Process Control Formulas:
Attribute Measurements (p-Chart)
p =
T o t al N u m b er o f D efe ct i v es
T o t al N u m b er o f O b s e rv at i o n s
n
s
) p - (1 p
=
p
p
p
z - p = LCL
z + p = UCL
s
s
Given:
Compute control limits:
1. Calculate the
sample proportions, p
(these are what can
be plotted on the p-
chart) for each sample
Sample n Defectives p
1 100 4 0.04
2 100 2 0.02
3 100 5 0.05
4 100 3 0.03
5 100 6 0.06
6 100 4 0.04
7 100 3 0.03
8 100 7 0.07
9 100 1 0.01
10 100 2 0.02
11 100 3 0.03
12 100 2 0.02
13 100 2 0.02
14 100 8 0.08
15 100 3 0.03
Example of Constructing a p-chart: Step 1
2. Calculate the average of the sample proportions
0.036 =
1500
55
= p
3. Calculate the standard deviation of the
sample proportion
.0188 =
100
.036) - .036(1
=
) p - (1 p
=
p
n
s
Example of Constructing a p-chart: Steps 2&3
4. Calculate the control limits
3(.0188) .036
UCL = 0.0924
LCL = -0.0204 (or 0)
p
p
z - p = LCL
z + p = UCL
s
s
Example of Constructing a p-chart: Step 4
Example of Constructing a p-Chart: Step 5
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Observation
p
UCL
LCL
5. Plot the individual sample proportions, the average
of the proportions, and the control limits
Problem Statement
XYZ Hospital surveys outgoing patients with a
patient satisfaction questionnaire. The monthly
number of patients surveyed varies. Control
charts are used to monitor the proportion of
unsatisfied patients for key questions. Use data
from the worksheet for responses to a question
on satisfaction with hospital meals.
Construct a control chart.
If points are outside the control limits, assume
that assignable causes have been determined.
Then construct a revised chart.
x

The Data
Sample

Value

Size

Sample

Value

Size

1

10

549

11

13

500

2

15

402

12

22

345

3

12

334

13

9

424

4

10

507

14

16

378

5

7

380

15

10

515

6

15

498

16

16

487

7

22

531

17

9

334

8

9

361

18

17

410

9

12

514

19

27

485

10

6

423

20

8

451

P-chart
The average sample size = 441.4, so
the approximate control limits,
based on total defects over total
items samples, are:
CL = 265 / 8828 = 0.030,
s
p
= 0.0081
UCL
p
= 0.030 + 3(0.0081) = 0.0543
LCL
p
= 0.0305 - 3(0.0082) = 0.0057


A Attribute (p) Chart
(approximate control limits)
0. 0000
0. 0100
0. 0200
0. 0300
0. 0400
0. 0500
0. 0600
0. 0700
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
Sample number
F
r
a
c
t
i
o
n

n
o
n
c
o
n
f
o
r
m
i
n
g
Fraction nonconforming
Lower control limit
Center line
Upper control limit
P-chart with approximate control limits
Attribute (p) Chart
0. 0000
0. 0100
0. 0200
0. 0300
0. 0400
0. 0500
0. 0600
0. 0700
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
Sample number
F
r
a
c
t
i
o
n

n
o
n
c
o
n
f
o
r
m
i
n
g
Fraction nonconforming
Lower control limit
Center line
Upper control limit
P-chart with exact control limits
Revised p-chart Calculations
When the initial p-chart was analyzed, it was found
to be out of control. After throwing out #12 and
#19, out-of-control values, assumed to have
stemmed from assignable causes, the sample
statistics and control limits were revised, as follows.
The revised average sample size = 444.33

CL = 216 / 7998 = 0.027
s
p
= 0.0077

UCL
p
= 0.027 + 3(0.0077) = 0.0501
LCL
p
= 0.027 - 3(0.0077) = 0.0039
Attribute (p) Chart
(approximate control limits)
0. 0000
0. 0100
0. 0200
0. 0300
0. 0400
0. 0500
0. 0600
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
Sample number
F
r
a
c
t
i
o
n

n
o
n
c
o
n
f
o
r
m
i
n
g
Fraction nonconforming
Lower control limit
Center line
Upper control limit
Control Chart Formulas
Control Chart Selection
Quality Characteristic
variable attribute
n>1?
n>=10
x and MR
no
yes
x and s
x and R
no
yes
defective defect
constant
sample
size?
p-chart with
variable sample
size
no
p or
np
yes
constant
sampling
unit?
c u
yes no