1. Lecture 30 Total Quality Management (Continued) Books Introduction to Materials Management, Sixth Edition, J. R. Tony Arnold, P.E., CFPIM, CIRM, Fleming College, Emeritus, Stephen N. Chapman, Ph.D., CFPIM, North Carolina State University, Lloyd M. Clive, P.E., CFPIM, Fleming College Operations Management for Competitive Advantage, 11th Edition, by Chase, Jacobs, and Aquilano, 2005, N.Y.: McGraw-Hill/Irwin. Operations Management, 11/E, Jay Heizer, Texas Lutheran University, Barry Render, Graduate School of Business, Rollins College, Prentice Hall

2. Objectives Variables and attributes Control charts for variables Parameters Control charts for attributes Tolerances Process capability Understanding continuous improvement Deming 14 points TQM Seven quality tools Maintenance and reliability Reliability Product failure rate Providing redundancy Maintenance cost Total productive maintenance

3. Variables and Attributes Attributes data refers to quality characteristics that either conform to specification or do not (examples: visual inspection for color, missing parts, scratches, go-no-go gauging) Either the part is within tolerance or it is not.

4. Control Charts for Variables The purpose of control charts is to help distinguish between chance variations and variations due to assignable causes. Variables are characteristics that have continuous dimensions. Control charts for the mean, (x-bar), and the range, (R), are used to monitor processes that have continuous dimensions.

5. Control Charts for Variables The x-bar chart tells whether changes have occurred in the central tendency of a process. 3The R-chart values indicate that a gain or loss in uniformity has occurred.

6. Parameters Two basic parameters used: – Mean - measure of central tendency – Range - measure of dispersion The range is defined as the difference between the largest and smallest items in one sample.

7. Control Charts for Attributes Attributes are typically classified as defective or nondefective. Two kinds of attribute control charts: ¬Those that measure the percent defective in a sample - p-charts. ­Those that count the number of defects per unit of output - c-charts.

8. Tolerances Tolerances are limits of deviation from perfection and are established by the product design engineers to meet a particular design function Both the USL and LSL are related to the product specification and are independent of any process.

9. Two Types of Defect Excessive Spread, Incapable Process –Range –Standard deviation Mean Shift Both the USL and LSL are related to the product specification and are independent of any process.

10. Variables and Attributes Variables data can be measured on a continuous scale (examples: weight, dimensions, pH, temperature, pressure, etc.)

11. Process Capability The capability of the process is not related to the product specifications A process must be selected that can meet the specifications Processes can produce defects in two ways, by having too big a spread or by a shift in the average

12. Model for Improvement Customer Need: What Results will meet the customer need? Current Knowledge: How well do we meet the customer need? What are the measures and processes? Cycle for Learning and Improvement: Plan a specific change that results in improvement. Test the change on a small scale. Study and learn from the test results. Act to implement the change. Plan Act StudyTest Customer Need Current Knowledge

13. Understanding the Continuous Improvement Process There is variation in everything. Reducing variation improves systems. We are all in the system. Teamwork is vital to improve systems. A few simple tools will help. Management must lead, but improvement is everyone’s responsibility!

14. Deming’s 14 Points 1. Create constancy of purpose for improvement of product and service. 2.Adopt the new philosophy. 3.Cease dependence on inspection to achieve quality. 4.End the practice of awarding business on the basis of price tag alone. 5.Improve constantly and forever every process for planning, production, and service. 6.Institute training on the job. 7.Adopt and institute leadership.

15. Deming’s 14 Points 8. Drive out fear. 9.Break down barriers between staff areas. 10.Eliminate slogans, exhortations, and targets for the work force. 11.Eliminate numerical quotas for the work force and numerical goals for management. 12.Remove barriers that rob people of pride of workmanship. (annual rating system). 13.Institute a vigorous program of education and self-improvement for everyone. 14.Put everybody in the company to work to accomplish the transformation.

16. TQM “No manufacturer that I know of possesses enough knowledge and manpower to work effectively with more than one vendor for any item.” W. Edwards Deming, Out of the Crisis

17. The Limitations of Inspection Boredom Fatigue Unclear instructions Noise Laziness

18. Seven Quality Tools Process flow diagrams Checklists Check sheets Pareto charts Histograms Cause and Effect (fishbone) Diagrams Run charts

19. How do I know when to adjust? Statistical Process Control A tool for making economical decisions on when to make adjustments A tool with some statistical foundation

20. Maintenance and Reliability

21. Strategic Importance of Maintenance and Reliability  Failure has far reaching effects on a firm’s  Operation  Reputation  Profitability  Dissatisfied customers  Idle employees  Profits becoming losses  Reduced value of investment in plant and equipment

22. Maintenance and Reliability  The objective of maintenance and reliability is to maintain the capability of the system while controlling costs  Maintenance is all activities involved in keeping a system’s equipment in working order  Reliability is the probability that a machine will function properly for a specified time

23. Important Tactics  Reliability 1.Improving individual components 2.Providing redundancy  Maintenance 1.Implementing or improving preventive maintenance 2.Increasing repair capability or speed

24. Maintenance Strategy Employee Involvement Information sharing Skill training Reward system Employee empowerment Maintenance and Reliability Procedures Clean and lubricate Monitor and adjust Make minor repair Keep computerized records Results Reduced inventory Improved quality Improved capacity Reputation for quality Continuous improvement Reduced variability

25. Reliability Improving individual components R s = R 1 x R 2 x R 3 x … x R n whereR 1 = reliability of component 1 R 2 = reliability of component 2 and so on

26. Overall System Reliability Reliability of the system (percent) Average reliability of each component (percent) ||||||||| 10099989796 100 100 – 80 80 – 60 60 – 40 40 – 20 20 – 0 0 – n = 10 n = 1 n = 50 n = 100 n = 200 n = 300 n = 400

27. RsRsRsRs R3R3R3R3.99 R2R2R2R2.80 Reliability Example R1R1R1R1.90 Reliability of the process is R s = R 1 x R 2 x R 3 =.90 x.80 x.99 =.713 or 71.3%

28. Product Failure Rate (FR) Basic unit of measure for reliability FR(%) = x 100% Number of failures Number of units tested FR(N) = Number of failures Number of unit-hours of operating time Mean time between failures MTBF = 1 FR(N)

29. Failure Rate Example 20 air conditioning units designed for use in NASA space shuttles operated for 1,000 hours One failed after 200 hours and one after 600 hours FR(%) = (100%) = 10% 220 FR(N) = =.000106 failure/unit hr 2 20,000 - 1,200 MTBF = = 9,434 hrs 1.000106

30. Failure Rate Example 20 air conditioning units designed for use in NASA space shuttles operated for 1,000 hours One failed after 200 hours and one after 600 hours FR(%) = (100%) = 10% 220 FR(N) = =.000106 failure/unit hr 2 20,000 - 1,200 MTBF = = 9,434 hr 1.000106 Failure rate per trip FR = FR(N)(24 hrs)(6 days/trip) FR = (.000106)(24)(6) FR =.153 failures per trip

31. Providing Redundancy Provide backup components to increase reliability +x Probability of first component working Probability of needing second component Probability of second component working (.8)+(.8)x (1 -.8) =.8 +.16 =.96

32. Redundancy Example A redundant process is installed to support the earlier example where R s =.713 R1R1R1R1 0.90 R2R2R2R2 0.80 R3R3R3R3 0.99 = [.9 +.9(1 -.9)] x [.8 +.8(1 -.8)] x.99 = [.9 + (.9)(.1)] x [.8 + (.8)(.2)] x.99 =.99 x.96 x.99 =.94 Reliability has increased from.713 to.94

33. Maintenance  Two types of maintenance  Preventive maintenance – routine inspection and servicing to keep facilities in good repair  Breakdown maintenance – emergency or priority repairs on failed equipment

34. Implementing Preventive Maintenance  Need to know when a system requires service or is likely to fail  High initial failure rates are known as infant mortality  Once a product settles in, MTBF generally follows a normal distribution  Good reporting and record keeping can aid the decision on when preventive maintenance should be performed

35. Computerized Maintenance System Output Reports Inventory and purchasing reports Equipment parts list Equipment history reports Cost analysis (Actual vs. standard) Work orders –Preventive maintenance –Scheduled downtime –Emergency maintenance Data entry –Work requests –Purchase requests –Time reporting –Contract work Data Files Personnel data with skills, wages, etc. Equipment file with parts list Maintenance and work order schedule Inventory of spare parts Repair history file

36. Maintenance Costs  The traditional view attempted to balance preventive and breakdown maintenance costs  Typically this approach failed to consider the true total cost of breakdowns  Inventory  Employee morale  Schedule unreliability

37. Maintenance Costs Total costs Breakdown maintenance costs Costs Maintenance commitment Traditional View Preventive maintenance costs Optimal point (lowest cost maintenance policy)

38. Maintenance Costs Costs Maintenance commitment Full Cost View Optimal point (lowest cost maintenance policy) Total costs Full cost of breakdowns Preventive maintenance costs

39. Maintenance Cost Example Should the firm contract for maintenance on their printers? Number of Breakdowns Number of Months That Breakdowns Occurred 02 18 26 3 4 Total: 20 Total: 20 Average cost of breakdown = $300

40. Maintenance Cost Example 1.Compute the expected number of breakdowns Number of Breakdowns Frequency Frequency 0 2/20 =.1 2 6/20 =.3 1 8/20 =.4 3 4/20 =.2 ∑ Number of breakdowns Expected number of breakdowns Corresponding frequency =x = (0)(.1) + (1)(.4) + (2)(.3) + (3)(.2) = 1.6 breakdowns per month

41. Maintenance Cost Example 2.Compute the expected breakdown cost per month with no preventive maintenance Expected breakdown cost Expected number of breakdowns Cost per breakdown =x = (1.6)($300) = $480 per month

42. Maintenance Cost Example 3.Compute the cost of preventive maintenance Preventive maintenance cost Cost of expected breakdowns if service contract signed Cost of service contract = + = (1 breakdown/month)($300) + $150/month = $450 per month Hire the service firm; it is less expensive

43. Increasing Repair Capabilities 1.Well-trained personnel 2.Adequate resources 3.Ability to establish repair plan and priorities 4.Ability and authority to do material planning 5.Ability to identify the cause of breakdowns 6.Ability to design ways to extend MTBF

44. How Maintenance is Performed Operator Maintenance department Manufacturer’s field service Depot service (return equipment) Preventive maintenance costs less and is faster the more we move to the left Competence is higher as we move to the right

45. Total Productive Maintenance (TPM)  Designing machines that are reliable, easy to operate, and easy to maintain  Emphasizing total cost of ownership when purchasing machines, so that service and maintenance are included in the cost  Developing preventive maintenance plans that utilize the best practices of operators, maintenance departments, and depot service  Training workers to operate and maintain their own machines

46. Establishing Maintenance Policies  Simulation  Computer analysis of complex situations  Model maintenance programs before they are implemented  Physical models can also be used  Expert systems  Computers help users identify problems and select course of action

47. End of Lecture 30