1. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-1 Operations Management Managing Quality Chapter 6

2. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-2 Definitions of Quality  ASC: Product characteristics & features that affect customer satisfaction  User-Based: What consumer says it is  Manufacturing-Based: Degree to which a product conforms to design specification  Product-Based: Level of measurable product characteristic

3. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-3 Costs of Quality  Prevention costs - reducing the potential for defects  Appraisal costs - evaluating products  Internal failure - of producing defective parts or service  External costs - occur after delivery

4. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-4 TQM Encompasses entire organization, from supplier to customer Stresses a commitment by management to have a continuing, company-wide, drive toward excellence in all aspects of products and services that are important to the customer.

5. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-5 Deming’s Fourteen Points  Create consistency of purpose  Lead to promote change  Build quality into the products  Build long term relationships  Continuously improve product, quality, and service  Start training  Emphasize leadership

6. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-6 Deming’s Points - continued  Drive out fear  Break down barriers between departments  Stop haranguing workers  Support, help, improve  Remove barriers to pride in work  Institute a vigorous program of education and self- improvement  Put everybody in the company to work on the transformation

7. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-7 Quality Loss Function

8. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-8 A study found U.S. consumers preferred Sony TV’s made in Japan to those made in the U.S. Both factories used the same designs & specifications. The difference in quality goals made the difference in consumer preferences. Japanese factory (Target-oriented) U.S. factory (Conformance- oriented) Target Specification Example

9. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-9 Quality Loss Function; Distribution of Products Produced Low loss High loss Frequency Lower Target Upper Specification Loss (to producing organization, customer, and society) Quality Loss Function (a) Unacceptable Poor Fair Good Best Target-oriented quality yields more product in the “best” category Target-oriented quality brings products toward the target value Conformance-oriented quality keeps product within three standard deviations Distribution of specifications for product produced (b)

10. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-10 PDCA Cycle 4.Act: Implement the plan 1.Plan: Identify the improvement and make a plan 3.Check: Is the plan working 2.Do: Test the plan

11. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-11 Tools of TQM  Tools for generating ideas  Check sheet  Scatter diagram  Cause and effect diagram  Tools to organize data  Pareto charts  Process charts (Flow diagrams)  Tools for identifying problems  Histograms  Statistical process control chart

12. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-12 Seven Tools for TQM

13. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-13 Pareto Analysis of Wine Glass Defects (Total Defects = 75) 72%16%5%4%3%

14. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-14  Shows sequence of events in process  Depicts activity relationships  Has many uses  Identify data collection points  Find problem sources  Identify places for improvement  Identify where travel distances can be reduced Process Chart

15. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-15  Uses statistics & control charts to tell when to adjust process  Developed by Shewhart in 1920’s  Involves  Creating standards (upper & lower limits)  Measuring sample output (e.g. mean wgt.)  Taking corrective action (if necessary)  Done while product is being produced Statistical Process Control (SPC)

16. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-16  Service quality is more difficult to measure than for goods  Service quality perceptions depend on  Expectations versus reality  Process and outcome  Types of service quality  Normal: Routine service delivery  Exceptional: How problems are handled TQM In Services

17. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-17 Goods versus Services  Can be resold  Can be inventoried  Some aspects of quality measurable  Selling is distinct from production  Reselling unusual  Difficult to inventory  Quality difficult to measure  Selling is part of service Good Service Good Service

18. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-18 Goods versus Services - continued  Product is transportable  Site of facility important for cost  Often easy to automate  Revenue generated primarily from tangible product  Provider, not product is transportable  Site of facility important for customer contact  Often difficult to automate  Revenue generated primarily from intangible service. Good Service

19. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-19 Operations Management Statistical Process Control Supplement 6

20. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-20  Measures performance of a process  Uses mathematics (i.e., statistics)  Involves collecting, organizing, & interpreting data  Objective: provide statistical signal when assignable causes of variation are present  Used to  Control the process as products are produced  Inspect samples of finished products Statistical Quality Control (SPC)

21. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-21  Characteristics for which you focus on defects  Classify products as either ‘good’ or ‘bad’, or count # defects  e.g., radio works or not  Categorical or discrete random variablesAttributesVariables Quality Characteristics  Characteristics that you measure, e.g., weight, length  May be in whole or in fractional numbers  Continuous random variables

22. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-22  Statistical technique used to ensure process is making product to standard  All process are subject to variability  Natural causes: Random variations  Assignable causes: Correctable problems  Machine wear, unskilled workers, poor material  Objective: Identify assignable causes  Uses process control charts Statistical Process Control (SPC)

23. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-23 Sampling Distribution of Means, and Process Distribution Sampling distribution of the means Process distribution of the sample

24. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-24 Process Control Charts

25. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-25  Show changes in data pattern  e.g., trends  Make corrections before process is out of control  Show causes of changes in data  Assignable causes  Data outside control limits or trend in data  Natural causes  Random variations around average Control Chart Purposes

26. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-26 As sample size gets large enough, sampling distribution becomes almost normal regardless of population distribution. Central Limit Theorem Theoretical Basis of Control Charts

27. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-27 Theoretical Basis of Control Charts Properties of normal distribution

28. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-28 Control Charts R Chart Variables Charts Attributes Charts X Chart P C Continuous Numerical Data Categorical or Discrete Numerical Data Control Chart Types

29. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-29  Type of variables control chart  Interval or ratio scaled numerical data  Shows sample means over time  Monitors process average  Example: Weigh samples of coffee & compute means of samples; Plot  X Chart

30. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-30 Control Chart for Samples of 9 Boxes Variation due to natural causes 17=UCL 16=Mean 15=LCL Variation due to assignable causes Out of control 1 2 3 4 5 6 7 8 9 10 11 12 Sample Number

31. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-31  X Chart Control Limits Range for sample i # Samples Mean for sample i From Table S6.1

32. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-32 Factors for Computing Control Chart Limits

33. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-33  Type of variables control chart  Interval or ratio scaled numerical data  Shows sample ranges over time  Difference between smallest & largest values in inspection sample  Monitors variability in process  Example: Weigh samples of coffee & compute ranges of samples; Plot R Chart

34. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-34 R Chart Control Limits Range for Sample i # Samples From Table S6.1

35. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-35 Steps to Follow When Using Control Charts 1.Collect 20 to 25 samples of n=4 or n=5 from a stable process and compute the mean. 2.Compute the overall means, set approximate control limits,and calculate the preliminary upper and lower control limits. If the process is not currently stable, use the desired mean instead of the overall mean to calculate limits. 3.Graph the sample means and ranges on their respective control charts and determine whether they fall outside the acceptable limits.

36. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-36 Steps to Follow When Using Control Charts - continued 4.Investigate points or patterns that indicate the process is out of control. Assign causes for the variations. 5.Collect additional samples and revalidate the control limits.

37. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-37 Mean and Range Charts Complement Each Other

38. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-38 Patterns to Look for in Control Charts

39. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-39 Deciding Which Control Chart to Use  Using an X and R chart:  Observations are variables  Collect 20-25 samples of n=4, or n=5, or more each from a stable process and compute the mean for the X chart and range for the R chart.  Track samples of n observations each.  Using the P-Chart:  We deal with fraction, proportion, or percent defectives  Observations are attributes that can be categorized in two states  Have several samples, each with many observations  Assume a binomial distribution unless the number of samples is very large – then assume a normal distribution.

40. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-40 Deciding Which Control Chart to Use  Using a C-Chart:  Observations are attributes whose defects per unit of output can be counted  The number counted is often a small part of the possible occurrences  Assume a Poisson distribution  Defects such as: number of blemishes on a desk, number of typos in a page of text, flaws in a bolt of cloth

41. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-41 Process Capability Ratio, C p

42. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-42 Process Capability C pk Assumes that the process is : under control normally distributed

43. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 6-43 Meanings of C pk Measures C pk = negative number C pk = zero C pk = between 0 and 1 C pk = 1 C pk > 1