1. 1 Managing Quality Quality defined Total cost of quality Strategic Quality –Total quality management (TQM) –Continuous improvement tools Quality assurance –Statistical quality control

2. 2 Definitions of Quality ASQ: –The characteristics of a product or service that bear on its ability to satisfy stated or implied needs –A product or service free from defects Joseph Juran –Fitness for use How would you evaluate the quality of the following? –Golf shirt –Used car

3. 3 Defensive Quality Quality analyzed in economic terms  Total Cost of Quality: $ Failure Costs $ Appraisal Costs $ Prevention Costs

4. 4 Total Cost of Quality — One View

5. 5 Another View The need for appraisal and prevention costs fall as defect levels decrease

6. 6 Dimensions of Quality Performance Features Reliability Durability Conformance Aesthetics Serviceability Perceived Quality Idea: Firms can actually compete by excelling on selected dimensions.

7. 7 Total Quality Management (TQM) Managing the entire organization so that it excels in all dimensions important to the customer.  Product development  Marketing  Manufacturing  Support services

8. 8 TQM Principles Customer focus Leadership involvement Continuous improvement Employee empowerment Quality assurance (including SPC) Strategic partnerships Strategic quality plan

9. 9 Continuous Improvement (CI) versus “Leaps” Forward Performance Time

10. 10 Common Improvement Tools (See Textbook!) Process mapping Cause and effect diagrams (aka “Fishbone” or Ishikawa diagrams) Check sheets Pareto analysis Run charts and scatter plots Bar graphs Histograms

11. 11 In the Text, It Was Noted That Organizations Must... Understand which quality dimensions are important Develop products and services that will meet users’ quality needs Put in place business processes capable of meeting these needs Verify that business processes are meeting the specifications

12. 12 Inspect every item Expensive to do Testing can be destructive Statistical techniques Statistical process control (SPC) Acceptance Sampling Discovering “problems”

13. 13 Statistical Process Control “Representative” samples –good, but not perfect, picture Sampling by Variable Sampling by Attribute (good, bad, %?)

14. 14 Sampling by Variable X-bar Chart: 3 Sigma Only UCL = X + A 2 RLCL = X - A 2 R X-bar Chart: Any Sigma UCL = X + Zσ X LCL = X - Zσ X R-Chart: 3 Sigma Only UCL = D 4 RLCL = D 3 R

15. 15 Sampling by Attribute I p – chart: Any Sigma UCL = p + Zσ p, LCL = p - Zσ p σ p = √ p(1-p)/n c-chart: Any Sigma UCL = c + Z√ c LCL = c - Z√ c

16. 16 Process Capability Answers the Question: Can the process provide acceptable quality consistently?

17. 17 Process Capability Ratio (C p ) Upper Tolerance Limit – Lower Tolerance Limit 6σ6σ Where σ is the estimated standard deviation for the individual observations

18. 18 Shown Graphically: Process Capability ratio of 1 (99.7% coverage)

19. 19 “Six Sigma Quality” When a process operates with  6σ variation inside the tolerance limits, only 2 parts out of a million will be unacceptable.

20. 20 Process Capability Index (C pk ) Used when the process is not precisely centered

21. 21 Type I and Type II Errors A Type I error occurs when a process that is in control is falsely determined to be out of control. Our control charts deal with Type I or α errors. The probability of a Type I error lies in the tails of the curve outside of the upper and lower control limits. A Type II error occurs when a process that is not in control is falsely determined to be in control. We will not deal with Type II or β errors.

22. 22 The Big Picture So how do TQM, continuous improvement, and all these statistical techniques “fit” together?

23. 23 3 Lines of Defense 1)PREVENT defects from occurring  TQM and continuous improvement 2)DISCOVER problems early  Process control charts 3)CATCH DEFECTS before used or shipped  inspection / acceptance sampling