OPERATIONS MANAGEMENT: Creating Value Along the Supply Chain, Canadian Edition Robert S. Russell, Bernard W. Taylor III, Ignacio Castillo, Navneet Vidyarthi CHAPTER 3 SUPPLEMENT Acceptance Sampling

Lecture Outline Single-Sample Attribute Plan Operating Characteristic Curve Developing a Sampling Plan with Excel Average Outgoing Quality Double - and Multiple-Sampling Plans

Acceptance Sampling Accepting or rejecting a production lot based on the number of defects in a sample Not consistent with TQM or Zero Defects philosophy producer and customer agree on the number of acceptable defects a means of identifying not preventing poor quality percent of defective parts versus PPM Sampling plan provides guidelines for accepting a lot

Single–Sample Attribute Plan Single sampling plan N = lot size n = sample size (random) c = acceptance number d = number of defective items in sample If d ≤ c, accept lot; else reject

Producer’s and Consumer’s Risk AQL or acceptable quality level proportion of defects consumer will accept in given lot  or producer’s risk probability of rejecting a good lot LTPD or lot tolerance percent defective limit on the number of defectives the customer will accept β or consumer’s risk probability of accepting a bad lot

Producer’s and Consumer’s Risk Sampling Errors Good Lot Bad Lot Accept Reject No Error Type I Error Producer’ Risk Type II Error Consumer’s Risk

Operating Characteristic (OC) Curve Shows probability of accepting lots of different quality levels with a specific sampling plan Assists management to discriminate between good and bad lots Exact shape and location of the curve is defined by the sample size (n) and acceptance level (c) for the sampling plan

OC Curve

Developing a Sampling Plan with OM Tools ABC Company produces mugs in lots of 10,000. Quality contracts require producer’s risk of 0.05 with an AQL of 1% defective and a consumer’s risk of 0.10 with a LTPD of 5% defective. What size sample and what acceptance number should ABC use to achieve performance measures called for in the sampling plan? N = 10,000 α = 0.05 β = 0.10 AQL = 1% LTPD = 5% n = ? C=?

Average Outgoing Quality (AOQ) Expected number of defective items that will pass on to customer with a sampling plan Average outgoing quality limit (AOQL) maximum point on the curve worst level of outgoing quality

AOQ Curve

Double-Sampling Plans Take small initial sample If # defective ≤ lower limit, accept If # defective > upper limit, reject If # defective between limits, take second sample Accept or reject based on 2 samples Less costly than single-sampling plans

Multiple-Sampling Plans Uses smaller sample sizes Take initial sample If # defective ≤ lower limit, accept If # defective > upper limit, reject If # defective between limits, resample Continue sampling until accept or reject lot based on all sample data

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