PowerPoint PresentationSlide 2Slide 3Slide 4Slide 5Slide 6Slide 7Slide 8Slide 9Slide 10Slide 11Slide 12Slide 13Slide 14Slide 15Slide 16Slide 17Slide 18Slide 19Slide 20Slide 21Slide 22Slide 23Slide 24Slide 25Slide 26Slide 27Slide 28Slide 29Slide 30ExampleSolutionExample (contd)Slide 34Slide 35Slide 36Slide 37Slide 38Slide 39Slide 40Slide 41Slide 42Slide 43Slide 44Slide 45Slide 46Slide 47Slide 48Slide 49Slide 50Slide 51Slide 52Slide 53Slide 54Quality ManagementQuality Management““It costs a lot to produce a bad product.It costs a lot to produce a bad product.””Norman AugustineNorman AugustineCost of quality1. Prevention costs2. Appraisal costs3. Internal failure costs4. External failure costs5. Opportunity costsHistory: how did we get here…•Deming and Juran outlined the principles of Quality Management.•Tai-ichi Ohno applies them in Toyota Motors Corp.•Japan has its National Quality Award (1951).•U.S. and European firms begin to implement Quality Management programs (1980’s).•U.S. establishes the Malcolm Baldridge National Quality Award (1987).•Today, quality is an imperative for any business.What is quality management all about?Try to manage all aspects of the organization in order to excel in all dimensions that are important to “customers”Two aspects of quality: features: more features that meet customer needs = higher qualityfreedom from trouble: fewer defects = higher qualityWhat does Total Quality Management encompass?TQM is a management philosophy:•continuous improvement•leadership development•partnership developmentCulturalAlignmentTechnical Tools(Process Analysis, SPC, QFD)CustomerDeveloping quality specificationsInput Process OutputDesignDesign qualityDimensions of qualityConformance qualityContinuous improvement philosophy1. Kaizen: Japanese term for continuous improvement. A step-by-step improvement of business processes.2. PDCA: Plan-do-check-act as defined by Deming.Plan DoAct Check3. Benchmarking : what do top performers do?Tools used for continuous improvement1. Process flowchartTools used for continuous improvement2. Run ChartPerformanceTimeTools used for continuous improvement3. Control Charts Performance MetricTimeTools used for continuous improvement4. Cause and effect diagram (fishbone)Environment Machine Man Method MaterialTools used for continuous improvement5. Check sheetItem A B C D E F G---------------------√ √ √√ √√ √√√√ √√ √ √√√√√√ √Tools used for continuous improvement6. HistogramFrequencyTools used for continuous improvement7. Pareto AnalysisA B C D E FFrequencyPercentage50%100%0%75%25%102030405060Summary of Tools1. Process flow chart2. Run diagram3. Control charts4. Fishbone5. Check sheet6. Histogram7. Pareto analysisCase: shortening telephone waiting time…•A bank is employing a call answering service•The main goal in terms of quality is “zero waiting time” - customers get a bad impression - company vision to be friendly and easy access•The question is how to analyze the situation and improve qualityThe current processCustomer BOperatorCustomer AReceivingPartyHow can we reduce waiting time?Makes customer waitAbsent receiving party Working system of operators Customer OperatorFishbone diagram analysisAbsentOut of officeNot at deskLunchtimeToo many phone callsAbsentNot giving receiving party’s coordinatesComplainingLeaving a messageLengthy talkDoes not know organization wellTakes too much time to explainDoes not understand customerDaily averageTotal numberA One operator (partner out of office) 14.3 172B Receiving party not present 6.1 73C No one present in the section receiving call 5.1 61D Section and name of the party not given 1.6 19E Inquiry about branch office locations 1.3 16F Other reasons 0.8 1029.2 351Reasons why customers have to wait(12-day analysis with check sheet)Pareto Analysis: reasons why customers have to waitA B C D E FFrequency Percentage0%49%71.2%10020030087.1%150250Ideas for improvement1. Taking lunches on three different shifts2. Ask all employees to leave messages when leaving desks3. Compiling a directory where next to personnel’s name appears her/his titleResults of implementing the recommendations A B C D E FFrequencyPercentage100%0%49%71.2%10020030087.1%100%B C A D E FFrequencyPercentage0%100200300Before……AfterImprovementIn general, how can we monitor quality…?1. Assignable variation: we can assess the cause2. Common variation: variation that may not be possible to correct (random variation, random noise)By observingvariation inoutput measures!Statistical Process Control (SPC)Every output measure has a target value and a level of “acceptable” variation (upper and lower tolerance limits)SPC uses samples from output measures to estimate themean and the variation (standard deviation)ExampleWe want beer bottles to be filled with 12 FL OZ ± 0.05 FL OZ Question:How do we define the output measures?In order to measure variation we need…The average (mean) of the observations:NiixNX11The standard deviation of the observations:NXxNii12)(What is the key assumption behind SPC?LESS VARIABILITY implies BETTER PERFORMANCE ! TargetLower spec Upper specHighLowCostPerformance MeasureCapability Index (Cpk)It shows how well the performance measure fits the design specification based on a given tolerance levelA process is k capable if LTLkXUTLkX and1and1 kLTLXkXUTLCapability Index (Cpk)Cpk < 1 means process is not capable at the k levelCpk >= 1 means process is capable at the k levelkXUTLkLTLXCpk,minAnother way of writing this is to calculate the capability index:Accuracy and ConsistencyWe say that a process is accurate if its mean is close to the target T.We say that a process is consistent if its standard deviationis low.XExample: Capability Index (Cpk)X = 10 and σ = 0.5LTL = 9UTL = 11667.05.031011or 5.03910min pkCUTLLTLXExampleConsider the capability of a process that puts pressurized grease in an aerosol can. The design specs call for an average of 60 pounds per square inch (psi) of pressure in each can with an upper tolerance limit of 65psi and a lower tolerance limit of 55psi. A sample is taken from production and it is found that the cans average 61psi with a standard deviation of 2psi. 1. Is the process capable at the 3 level?2. What is the probability of