Chapter 6/6s: Quality Management

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Department
Food Agricultural and Resource Economics
Course
FARE 3310
Professor
Getu Hailu
Semester
Fall

Description
Quality Management  Many production and service processes suffer from quality problems o E.g. airlines lose baggages, computer manufactures ship laptops with defective disk drives, pharmacies distribute wrong medications to patients etc.  In addition to these quality problems directly visible to consumer, many quality problems remain invisible  Although hidden to consumer have profound impact on the economics of business processes  Quality: the ability of a good/service to consistently meet/exceed customer expectations Quality or Lack of Quality Impacts the Entire Organization Key Dimensions of Quality  Performance: technical capability  Durability: lifespan of product before it begins to deteriorate  Special Features: features that are merely nice to have  Serviceability: support after the initial sell of the product  Reliability: the likelihood of a product working properly  Aesthetics: psychological impressions  Conformance: the consistency with which the form meets the specifications  Perceived Quality  Safety  Value=Quality/Cost Costs of Quality  Prevention Costs: associates with reducing/avoiding the potential for defects BEFORE they happen  Appraisal Costs: associated with evaluating (e.g. assess and inspect) products, parts and services  Internal Failure: costs resulting from defects that are discovered DURING the production of a product/service  External Costs: arise when a defect is discovered AFTER the customer has received the product/service Total Quality Management  TQM is a philosophy that stresses THREE principles o Customer satisfaction o Employee involvement o Continuous improvement in quality  SEVEN concepts of TQM o Continuous improvement o Six sigma o Employee empowerment o Benchmarking o Just-in-time (JIT) o Taguchi concepts o Knowledge of TQM tools Six-Sigma and Three-Sigma  Technique to manage process variations that causes defects  Systematically works towards managing variation to eliminate those defects  Sigma o Statistical definitions of a process that is 99.9997% capable, 3.4 defects per million opportunities (DPMO) o Comprehensive system for achieving and sustaining business success o Designed to…  Reduce defects  Lower costs  Improve customer satisfaction Seven Tools of TQM  Tools for generating ideas o Check Sheet: form used to record the frequency of occurrence of certain product/service characteristics related to quality o Scatter diagrams: a plot of two variables showing whether they are related o Cause and effect diagrams: diagram that relates key quality problem to its potential causes  Tools to organize the data o Pareto charts: bar chart on which factors are plotted in decreasing order of frequency along the horizontal line o Flowcharts (Process Diagram): diagram that presents a process/system using annotated boxes and interconnected lines  Tools for identifying problems o Histogram: summarization of data measured on a continuous scale showing frequency distribution of some quality characteristic (the central tendency/dispersion of the data) o Statistical process control chart: application of statistical techniques to determine whether the output of a process conforms to the product/service design  Graphic presentations of data over time that show upper/lower limits for the process we want to control  Constructed in such that new data can be quickly compared with past performance data o Statistical Quality Control: best companies design quality into process (e.g. undertaking continuous improvement Six Sigma quality projects) which reduce need for inspections/tests  Least progressive companies rely on receiving/shipping inspections and tests  Uses statistical techniques/sampling in monitoring/testing the quality of goods and services o Statistical Process Control: provide a statistical signal when assignable causes of variation are present AND to help detect/eliminate assignable causes of variation  If sample results fall outside the limits operator stops process and takes corrective measures  SPC concerned with statistical evaluation of the product in the production process  To do SPC…  Operator takes periodic samples from the process and compares them with predetermined limits  If sample results fall within limits operator allows the process to continue Two Types of Variations  Process variation is the ROOT CAUSE of all quality problems  Two types of variations… o Natural/Chance or Common Variation: refers to constant variation reflecting pure randomness in the process o Special or Assignable Variation: non-random variability in process output; variation whose cause can be identified (e.g. excessive tool wear, defective materials, human errors) Controlling Variations  Main task in quality control is to distinguish assignable from random variations  HOW? o Complete Inspection: used when the costs of passing defects to the next workstation or to external customers outweigh the inspection costs o Sampling: well-planned sampling plan can approach the same degree of protection as complete inspection Samples  To measure the process we take samples and analyze the sample statistics following these steps… 1. Samples of the product (e.g. five boxes of cereal taken off filling line) vary from each other in weight 2. After enough samples are taken from a stable process they form a pattern called a distribution 3. Many types of distributions (e.g. Normal (bell-shaped) distribution) but distributions do differ in terms of central tendency (MEAN), standard deviation or variance, and shape 4. If only natural causes of variation are present the output of a process from a distribution that is stable over time and is predictable 5. If assignable causes are present, the process output is NOT stable over time and is NOT predictable Quality Measurement: TYPES OF DATA  Variables: product/service characteristics (like weight, length, volume, time) that CAN be measures o Characteristics that can take any real value o May be in whole or fractional numbers o Continuous random variables  Attributes: product/service characteristics that can quickly counted for acceptable quality (e.g. yes or no) o Defect-related characteristics o Classify products as either good or bad count defects o Categorical or discrete random variables Central Limit Theorem (CLT)  Theoretical foundation of x -charts  States that…regardless of the distribution of the population of all parts/services the distributions of sa
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