Chapter 5 notes Cost of quality o Defect when a process fails to satisfy a customer o 4 Categories of quality costs 1 Prevention associated with preventing defects before they even happen Must invest more time effort and money 2 Appraisal when the firm assess the performance level of its processes Inversely related to prevention costs 3 Internal Failure Costs Defects that are discovered during the production of a service or product o Rework o Scrap 4 External Failure Costs service or product Warranty and litigation costs Ethics o 3 deceptive business practices Arise when a defect is discovered after the customer receives the 1 The conduct of the provider is intentional and motivated by a desire to exploit the customer 2 The provider conceals the truth based upon what is actually know to the provider 3 the transaction is intended to generate a deprotonate economic benefit for the provider at the expense of the customer All erode the ability to compete and in the future TQM total quality management o 1 Customer Satisfaction Dimensions of quality Conformance to specification Value Fitness for Use Support Psychological impressions o 2 Employee involvement Cultural change Internal customer External customer Quality at the source o Philosophy whereby defects are caught and corrected where they were created Teams use employee empowerment o 1 Quality Circles Problem solving teams o 2 Special purpose teams o 3 Self managed team o 3 Continuous improvement in performance Based on philosophy of Kaizen Goal is to reduce waste Should act before major problem Plan do study act cycle Six Sigma has different focus than TQM o Driven by close understanding of customer needs o 5 step procedure DMAIC 1 Define 2 Measure 3 Analyze 4 Improve 5 Control Acceptance Sampling o Application of statistical techniques to determine if a quantity of material form a supplier should be accepted or rejected based on the inspection or test of one or more samples Limits the buyers risk of rejecting good quality materials or accepting bad quality materials AQL Statistical process control o Key to measuring if process is delivering what customers want o Variation of Outputs Measure performance 1 By its variables characteristics that can be measured o Weight length volume time 2 Attributes can be counted o Less time and effort o Indicates it changed but not by how much Sampling Complete inspection Sampling plan o Sample size Sampling Distributions o 2 basic categories of variation Common causes of variation Random Assignable causes Can be identified and eliminated o Control charts Type1 error when the employee concludes that the process is out of control based on a sample result that falls outside the control limits when in fact it was due to pure randomness Type II error process is in control and only random is present when actually the process is out of statistical control Statistical Prices Control Methods o R Chart Range chart used to monitor process variability Control limits are UCL D Rbar LCL D Rbar o X bar chart Used to see whether the process is generating output which is on average consistent with its past performance Control Limits o UCL xbar A Rbar o LCL xbar A2 Rbar Control charts for attributes o P chart generated by the process o C charts Used for controlling the proportion of defective services or products Used for controlling the number of defects when more than one defect can be present in a service or product Ex Car accident at intersection Process capability o Refers to the ability of the process to meet the design specifications for a service Where design specs are expressed as a nominal value and a tolerance