Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. U N I T. 2 RESOURCE PLANNING WORKFORCE CUSTOMER RELATIONSHIPS CAPACITY FACILITIES INVENTORY MANAGING RESOURCES TO CREATE VALUE three four JUST-IN-TIME MANAGEMENT TOTAL QUALITY MANAGEMENT SUPPLY CHAIN MANAGEMENT CONSTRAINT MANAGEMENT INTEGRATIVE MANAGEMENT FRAMEWORKS one FOUNDATIONS FOR SUCCESS Introduction PROFITABILITY VALUE STRATEGY PROCESSES & CAPABILITIES COST QUALITY TIMELINESS COMPONENTS OF VALUE two
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. C H A P T E R 7 Quality L E A R N I N G O B J E C T I V E S ▬ Define quality from a customer’s perspective. ▬ Describe the relationships between quality and value as well as quality and profitability. ▬ Compare proactive and reactive approaches to quality management. ▬ Describe the costs of quality. ▬ Explain the function of the general-purpose quality analysis tools. ▬ Describe an make computations for process capability. ▬ Describe how acceptance sampling works and the role of the operating characteristics curve. ▬ Understand the Kano model. ▬ Explain how six sigma quality relates to process capability. ▬ Describe serve quality applications, including service blueprinting and moment-of-truth analysis. ▬ Describe how “recovery” applies to quality failures.
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Product and Service Quality Defined Quality is defined by the customer. Quality has a key role in customer perception of value. Exhibit 7.1 The Role of Quality in The Resource/ Profit Model
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Dimensions of Quality Dimensions of product quality
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Dimensions of Quality Dimensions of Service Quality
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Service and Quality Dimensions Combined Exhibit 7.4 Dimensions of Service and Product Quality Combined Reel Operations 7.1
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Proactive versus Reactive Quality Management Prevention of defects reduces costs. Reel Operations 7.2
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Cost of Quality All of the costs associated with maintaining the quality of goods and services. External failure costs (including recovery costs). Internal failure costs Appraisal costs (inspection and testing) Prevention costs Exhibit 7.5 Cost of Quality as a Company Moves from External Failures toward Prevention
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Quality Tools Flowcharts Exhibit 7.6 Flowchart
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Quality Tools Run Charts Exhibit 7.7 Run Chart
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Quality Tools Cause and Effect Diagrams Exhibit 7.8 Cause and Effect Diagram
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Quality Tools Pareto Charts Exhibit 7.9 Pareto Chart
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Example 7.1 Pareto Analysis Complete a Pareto analysis on the following data.
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Example 7.1 Pareto Analysis Solution Excel Tutor 7.1
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Example 7.1 Pareto Analysis Solution (continued) Exhibit 7.12 Pareto Chart for Complaints by Room Area
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Example 7.1 Pareto Analysis Solution (continued) Exhibit 7.13 Pareto Chart for Complaints by Type
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Quality Tools Check Sheets Exhibit 7.15 Check Sheet
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Quality Tools Scatter Diagrams Exhibit 7.16 Scatter Diagram
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Quality Tools Reel Operations 7.3 Control Charts Distinguishing between random fluctuation and fluctuation due to an assignable cause. X-bar chart Upper and lower control limits. Exhibit 7.17 Process Control Chart Data Gathering Process
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Statistical Process Control Exhibit 7.18 Process Control Chart for Soft Drink Can
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Statistical Process Control Capability Index: quantifying the relationship between control limits and customer specifications C p and C pk Interactive Model 1.2
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Example 7.2 Capability Index Calculation Customer specification: or – NTRU process mean is.375 with a standard deviation of.0024 Is the NTRU process capable of meeting customer’s specifications? Solution: C p = – = (0.0024) No, the process is not capable of meeting customer specifications Excel Tutor 7.2
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Statistical Process Control C pk Capability Index For shifting process means Exhibit 7.19 Process Shifted Downward From Center
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Example 7.3: C pk Calculation Customer specification: or Standard deviation of process at Customer specification limits at.373 and.377 Solution: Cpk = min[ – 0.373, – ] = min [3.333, 1.111] = The process is still capable. Excel Tutor 7.3
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. R-charts Provide monitoring of variability within the sample. Always paired with X-bar charts. Interactive Model 7.1
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Example 7.4 X-bar and R-chart Construction Using the data in Exhibit 7.21, construct X-bar and R-charts.
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Example 7.4 X-bar and R-chart Construction Solution: =- UCL = X + A 2 R =1,000 + (0.577)(8.8) =1, =- LCL = X - A 2 R =1,000 - (0.577)(8.8) =
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Example 7.4 X-bar and R-chart Construction Solution: Exhibit 7.22 X-bar Chart for Example 7.3
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Example 7.4 X-bar and R-chart Construction R-chart control limits _ UCL = D 4 R = (8.8) = _ LCL = D 3 R = 0(8.8) = 0
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Example 7.4 X-bar and R-chart Construction Exhibit 7.23 R-Chart for Example 7.3 Excel Tutor 7.4
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Nonrandom Patterns on Control Charts
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Acceptance Sampling Acceptable Quality Level (AQL) Lot tolerance percent defective (LTPD) Producer’s risk Consumer’s risk Operating Characteristics Curve Exhibit 7.25 Operating Characteristics Curve
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Moving Beyond Customer Satisfaction The Kano Model Six Sigma Quality Exhibit 7.26 Process Capability for Three Sigma Quality
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Six Sigma Quality Exhibit 7.27 Process Capability for Six Sigma Quality
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Service-oriented Quality Improvement Service Blueprinting Moment-of-Truth Analysis Enhancers, standard expectations, detractors. Customer Relationship Management
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Service Blueprinting Fail Points Wait Points Line of Visibility Exhibit 7.28 Service Blueprint of Oil Change Service
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Recovery A plan to save a customer from defecting when a failure takes place.
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Total Quality Management A culture of doing it right the first time. Includes internal and external customers.