Quality Management - Professor: Eyran Gisches PDF

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Professor: Eyran Gisches...

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Chapters 9 & 10

MIS 373

Lecture Notes

Quality Management & Quality Control o Quality  The ability of a product or service to consistently meet or exceed customer expectations o Dimensions of Product (Good) Quality  Performance  Main functional characteristics of the product  Aesthetics  Appearance, feel, smell, taste  Special features  Extra characteristics  Conformance  How well the product conforms to design specifications  Reliability  Dependable performance  Durability  Ability to perform over time  Perceived quality  Indirect evaluation of quality (reputation)  Serviceability  Handling of complaints or repairs o Dimensions of Service Quality  Convenience  The availability and accessibility of the service  Reliability  Ability to perform a service dependably, consistently, and accurately  Responsiveness  Willingness to help customers in unusual situations and to deal with problems  Time  The speed with which the service is delivered  Assurance  Knowledge exhibited by personnel and their ability to convey trust and confidence  Courtesy  The way customers are treated by employees  Tangibles  The physical appearance of facilities, equipment, personnel, and communication materials  Consistency  The ability to provide the same level of good quality repeatedly o Benefits of Good Quality

Chapters 9 & 10

MIS 373

Lecture Notes

 Enhanced reputation (for quality)  Increased market share  Ability to charge higher prices  Greater customer loyalty  Lower liability costs  Fewer production or service problems  Lower production costs  Higher profits o Consequences of Poor Quality  Loss of business  Lower productivity  High failure costs  Liability o Costs of Quality  Prevention Costs  Cost of preventing defects from occurring  Planning, administration, working with vendors, training, quality assurance, design and production.  Appraisal Costs  Costs of activities designed to ensure quality or uncover defects  Inspectors, testing, test equipment, labs, quality audits, quality control, field testing  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

o Process Variability

Chapters 9 & 10

MIS 373

Lecture Notes

Variability always exists in the output of a process. Type of Variation  Random variation:  Natural variation in the output of a process - created by countless minor factors  Assignable Variation:  Nonrandom variation  Whose cause can be identified  Two basic questions concerning Variability:  1. Is the process In-Control?  Are the variations random?  If nonrandom variation is present, the process is said to be unstable.  2. What is the process Capability? o Quality Control  A process that evaluates output relative to a standard and takes corrective action when output doesn’t meet standards  If results are acceptable no further action is required  Unacceptable results call for correction action  Appraisal cost o Inspection  An appraisal activity that compares goods or services to a standard  Inspection issues:  1. What to inspect  Count number of times defect occurs  Measure the value of a characteristic  2. Where in the process to inspect  Typical Inspection Points:  Raw materials and purchased parts  Finished products  Before a costly operation  Before an irreversible process  3. How much to inspect and how often  Full Inspection vs. Sampling  SEE graph above  Costly, possibly destructive, and disruptive – non value-adding o Basic (TQM) Quality Tools  

Chapters 9 & 10

MIS 373

Lecture Notes

o Statistical Process Control (SPC)  Statistical evaluation of the outputs of a process  1. Periodically taking samples of process output (out of all the outputs)  2. Computing sample statistics such as:  Sample average  The number of occurrences of some outcome  3. Sample statistics are used to judge the randomness of process variation  Decide if:  a process is “in control”  or  if it is “out of control” and corrective action is needed o Sampling Distribution  1. Take a sample of n units  2. Calculate a sample statistic (e.g., the average)  3. Check if the sample statistic is “normal” – falls within its control limits (for the statistic)

Chapters 9 & 10

MIS 373

Lecture Notes

o X-bar Chart

o Control Charts: The Voice of the Process  Control Chart  A time ordered plot of sample statistics obtained from an ongoing process (e.g. sample means), used to distinguish between random and nonrandom variability  Control limits  The dividing lines between random and nonrandom deviations from the mean of the distribution  Upper and lower control limits define the range of acceptable variation

o Observations from Sample Distribution

o Control Chart: Example

Chapters 9 & 10

MIS 373

Lecture Notes

o X-Bar (sample avg.) Chart Control Limits: Example

o Errors  Type I error  Narrow control limits (low z)  Concluding a process is not in control when it actually is.  Manufacturer’s Risk  Type II error  Wide control limits (high z)  Concluding a process is in control when it is not.  Consumer’s Risk

o Control Charts for Variables  Data that are measured

Chapters 9 & 10

MIS 373

Lecture Notes

“x- bar” charts (Mean)  Used to monitor the central tendency of a process.  R charts (Range)  Used to monitor the process dispersion o Control Charts for Attributes  Data that are counted.  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 o P-Chart  Units can be placed into two categories:  Good / Bad  Pass / Fail  Operate / Not-operate  Data consists of many samples of multiple (n) units each o P-Chart Control Limits 

Chapters 9 & 10

MIS 373

Lecture Notes

o Control Charts  Every process displays variation in performance: normal or abnormal  Control charts monitor process to identify abnormal variation  Do not tamper with a process that is “in control” with normal variation  Correct an “out of control” process with abnormal variation  Control charts may cause false alarms – too narrow - (or missed signals – too wide) by mistaking normal (abnormal) variation for abnormal (normal) variation

o Process Capability  Once a process has been determined to be stable, it is necessary to determine if the process is capable of producing outputs that arewithin an acceptable range  Specifications  Range of acceptable values established by engineering design or customer requirements [US,LS]  Process Capability  The inherent variability of process output (process width) relative to the variation allowed by the design specification (specification width)  Capability Ratios: Cpk, Cp, S Upper Spec−Lower Spec  Sigma Capability Ratio for a Centered Process: S= 2σ

o Six Sigma

Sigma Capability Ratio for a Centered Process:

S=

Upper Spec−Lower Spec =6 2σ

Chapters 9 & 10

MIS 373

Lecture Notes

A methodology for improving quality, reducing costs, and increasing customer satisfaction  Statistically  Having no more than 3.4 defects per million  Conceptually  Sustained quality improvement that requires commitment from the entire organization ("Champions", "Master Black Belts", "Black Belts", "Green Belts", “Yellow belts”)  Every manufacturing and business processes have characteristics that can be measured, analyzed, improved and controlled.  Continuous efforts to achieve stable and predictable process results (i.e., reduce process variation/defects)  Process Improvement  DMAIC: Define, Measure, Analyze, Improve, Control o Basic Quality Tools  Scatter Diagram  A graph that shows the degree of relationship between two variables  Cause-and-Effect Diagram  A diagram used to organize a search for the cause(s) of a problem; also known as a fishbone diagram 

o Improving Process Capability

Chapters 9 & 10

MIS 373

Lecture Notes

o Operations Strategy  Customers are very concerned with quality of goods and services  Quality is a strategic imperative.  Requires:  Careful Product and Service design  Quality assurance & control  Increase Capability  Quality improvement is a never-ending journey  organizational members should understand & participate  Quality throughout the entire supply chain, not just the organization itself o “Quality is Free”  Spending money on prevention saves even more money on failure costs.  It is possible to have high quality and (relatively) low cost at the same time.  “Quality is free” (Crosby), and firms should get it “right the first time.” CLICKER QUESTIONS 1. Recalls are examples of: a. External Failure Costs 2. What is NOT a typical inspection point? a. After about 50% of the product is completed 3. Operating a control-room at the casino is part of: a. Appraisal Costs 4. Concluding a process is NOT in control when it actually IS, may happen when: a. Control limits are too narrow 5....