Total Quality Management – Class Activity Prepared by: Bhakti Joshi Date: January 16, 2013

Class Activity 10 groups – 3 students Production worker Inspector 1 stands behind the worker Inspector 2 manages the specification criteria Recorder reporting measurements

Setup Quality target = 10 Worker shoots 10 times (production of 10 units) Rs 10 is the cost if shot outside the spec

Recording data Wor ker Mea n Devi atio n A B

Taguchi Loss Function Worker Mean A B Loss = (Each Shot – Mean Shot) 2 C C = Cost to correct /tolerance 2 Cost to correct = Rs 10 *number of times one defected Tolerance = each shot cannot fall more than two times outside the specs or outside the table Calculate Loss??

Questions What are the sources of variability? How could variability be reduced Are the specifications and processes capable? Who is more accurate Who is most precise Who generated the minimum loss using the specifications? Who scored the best?

Taguchi Methods: Example Company C received an average of 10 complaints per month last year. In November they received 15 complaints (y). Management sets an acceptable level at 2 (tolerance). It costs the company Rs.500 directly per complaint to correct the problems. They also determined the cost in lost sales to be Rs Thus, the total cost to correct complaints equals Rs. 1500

Characteristics of the Company Customer satisfaction – Quality loss as loss to society quantified through “Quality Loss Function” – Variations from optimal measure results in a loss Product Design – Equipment: No breakdowns – Specific jobs defined – Policies and Procedures – know-how

Formulae L(y) = k(y-m) 2 L(y) = Loss k = constant = cost to correct tolerance 2 y = reported value m = mean value (average)

Calculation k = Rs1500/2 2 = Rs375.0 L(y) = (15-10) 2 = (5) 2 = (25) = Rs is loss for the month of November

Characteristics of Taguchi Methods Broadly, purpose of Taguchi methods is quality improvement and control An ideal situation should be known in terms of costs, sales, demand or supply But mostly are used during development of product/service designs and supporting variations Aim is to determine errors by identifying variations (or quality loss) Variations between ideal and existing must be reduced

Concept of Quality Loss Use of statistical analysis for quantification Used as a quality control tool to quantify quality during experiments and trial-errors especially in R&D Aims to reduce product variability with a system for developing specifications and designing them into a product or process.

Criticism Constant?? Ideal?? Mostly considered in designing aspect… But is it good??

Learning curve … is based on the principle that all jobs are performed more efficiently as greater experience is gained in respective jobs – A book by Gopalakrishnan titled, “Purchasing and Materials Management” Did you try different ways of flipping coins? Which ways worked or didn’t work? What would have been ideal?

Learning Curve: Meaning Originally developed by T.P. Wright in 1936 Graphical representation of changing rate of learning Rate of learning is measured on people, tools and processes but mostly people Related to time or cost or performance Affects individuals and the organisation

Learning Curve: Measurement Y = aX b Log Y = log a + b log X Y = the cumulative average time (or cost) per unit X = the cumulative number of units produced a = time (or cost) required to produce the first unit b = slope of the function (log of learning rate/log of 2)

Learning Curve

Interpretation of the curve 80% or 0.8 is the learning factor (‘b’) If the learning is 80%, then to produce the 2 nd unit of the product will take only 80% of the time of the first unit and the 3 rd unit will take 80% of the time of the second unit and so on….

Example 1: Unit Cost of Hours worked No. of Units Learning Factor unit value 75%80%85%90%

Example 2 Lots Number of Units in the Lot Labour Hours for each Lot Cumulative Units in the lot Cumulative Labour hours 1272=2= =2+4=6=72+111=183 Y = aX b

Interpretation of Formula When ‘b’ reaches unity, implies learning is slower ‘b’ is generally higher for labour-intensive work and lower for capital-intensive For most labour-intensive manufacturing ‘b’ ranges from 70% – 90% Could be considered for bargaining contractual wages and costs

Learning Curve: Application and Effects Labour efficiency: Learning short-cuts, more dexterous, becoming confident, less errors Standardisation, specialisation and methods improvements: Standardised methods leading to efficiency Technology-driven learning Better use of equipment Changes in resource mix Product redesign Network building and use-cost reductions Shared experience effects

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