ABIOT TSEGAYE(BA, MBA, PHD) 1

DEFINING QUALITY
There are various definitions of quality. The common are:
1. Conformance to specifications
 Does product/service meet targets and tolerances defined by
designers?
2. Fitness for use
 Evaluates performance for intended use
3. Value for price paid
 Evaluation of usefulness vs. price paid
4. Support services
 Quality of support after sale
5. Psychological
 Ambiance, prestige, friendly staff

ABIOT TSEGAYE(BA, MBA, PHD) 2

Manufacturing quality vs. Service quality

Manufacturing quality focuses on tangible

product features
Conformance, performance, reliability,
features
Service organizations produce intangible
products that must be experienced
Quality often defined by perceptional factors
like courtesy, friendliness, promptness,
waiting time, consistency

ABIOT TSEGAYE(BA, MBA, PHD) 3

COST OF QUALITY – 4 CATEGORIES

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 Quality Management Philosophy
 QM Focuses on identifying quality problem root causes
 Encompasses the entire organization
 Involves the technical as well as people
 Relies on seven basic concepts of
 Customer focus

 Continuous improvement

 Employee empowerment

 Use of quality tools

 Product design

 Process management

 Managing supplier quality

ABIOT TSEGAYE(BA, MBA, PHD) 5

 Ways of improving quality

Plan-Do-Study-Act Cycle (PDSA)

Also called the “Deming Wheel” after originator
Circular, never ending problem solving process
Seven Tools of Quality Control
Tools typically taught to problem solving teams
Quality Function Deployment
Used to translate customer preferences to design

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 Seven tools of quality control
1. Cause-and-Effect Diagrams
2. Flowcharts
3. Checklists
4. Control Charts
5. Scatter Diagrams
6. Pareto Analysis
7. Histograms

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 Cause-and-effect diagrams
Called Ishikawa or Fishbone Diagram
Focused on solving identified quality problem

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 Flowcharts
Used to document the detailed steps in a process
Often the first step in Process Re-Engineering

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 Checklist
• Simple data check-off sheet designed to identify
type of quality problems at each work station; per
shift, per machine, per operator

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 Control Charts
• Important tool used in Statistical Process Control
• The UCL and LCL are calculated limits used to show
when process is in or out of control

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 Scatter Diagrams
• A graph that shows how two variables are related to one
another
• Data can be used in a regression analysis to establish
equation for the relationship

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 Pareto Analysis
 Technique that displays the degree of importance for each element
 Named after the 19th century Italian economist; often called the 80-20 Rule
 Principle is that quality problems are the result of only a few problems e.g.
80% of the problems caused by 20% of causes

ABIOT TSEGAYE(BA, MBA, PHD) 13

 Histograms
• A chart that shows the frequency distribution of observed
values of a variable like service time at a bank drive-up
window
• Displays whether the distribution is symmetrical (normal) or
skewed

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 Statistical Quality/Process Control
• Statistical quality/process control (SQC/SPC) is
defined as the use of statistical techniques to control a
process or production method.
• Statistical quality control (SQC) is defined as the
application of the 7 statistical and analytical tools (7-
QC) to monitor process outputs (dependent variables).
• Statistical process control (SPC) is the application of
the same 7 tools to control process inputs (independent
variables).

ABIOT TSEGAYE(BA, MBA, PHD) 15

 Statistical quality/process control methods
1. Descriptive statistics:
 Used to describe distributions of data
2. Statistical Process Control (SPC):
 Used to determine whether a process is
performing as expected
3. Acceptance sampling:
 Used to accept or reject entire batches by
only inspecting a few items

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 Types of Data
1. Variable level data:
 Can be measured using a continuous scale
 Examples: length, weight, time, & temperature
2. Attribute level data:
 Can only be described by discrete characteristics
 Example: defective & not defective

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 Control Charts for variable data
1. Mean (x-bar) charts
 Tracks the central tendency (the average
value observed) over time
2. Range (R-bar) charts:
 Tracks the spread of the distribution over
time (estimates the observed variation)

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 Mean (X-bar) chart computations

x 1  x 2  ... x n 
x   x

n n

UCL x
 x  z x

LCL x
 x  z x

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Range (R-bar) chart computations

 R  R  R ... Rn 
 R  
 3 

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 X-double bar computation Example
Assume the standard deviation of the process is given as 1.13 ounces.
Management wants a 3-sigma chart (only 0.26% chance of alpha error).
Observed values shown in the table are in ounces

Time 1 Time 2 Time 3

Observation 1 15.8 16.1 16.0
Observation 2 16.0 16.0 15.9
Observation 3 15.8 15.8 15.9
Observation 4 15.9 15.9 15.8
Sample means 15.875 15.975 15.9

15.87515.97515.9
Center line (x-double bar) Control limits: x 15.92
3

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 R-bar computation Example
Assume the standard deviation of the process is given as 1.13 ounces.
Management wants a 3-sigma chart (only 0.26% chance of alpha error).
Observed values shown in the table are in ounces
Time 1 Time 2 Time 3
Observation 1 15.8 16.1 16.0
Observation 2 16.0 16.0 15.9
Observation 3 15.8 15.8 15.9
Observation 4 15.9 15.9 15.8
Sample means 15.875 15.975 15.9
Sample ranges 0.2 0.3 0.2

Range line (R-bar) Control limits: 


0 . 2  0 . 3  0 . 2


 R 3
0 . 233 
 

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 Control chart factors
F a c to r fo r x -C h a r t F a c to r s fo r R -C h a r t
S a m p l e S i z e (n )
A2 D3 D4
2 1.88 0.00 3 .27
3 1.02 0.00 2 .57
4 0.73 0.00 2 .28
5 0.58 0.00 2 .11
6 0.48 0.00 2 .00
7 0.42 0.08 1 .92
8 0.37 0.14 1 .86
9 0.34 0.18 1 .82
10 0 .31 0.22 1 .7 8
11 0 .29 0.26 1 .7 4
12 0 .27 0.28 1 .7 2
13 0 .25 0.31 1 .6 9
14 0 .24 0.33 1 .6 7
15 0 .22 0.35 1 .6 5

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 X-Bar Chart Computations
(using A2 factors)

Using R-bar

UCL x
 x  A2 R  15 . 92  0 . 73 0 . 233  16 . 09
LCL x
 x  A2 R  15 . 92  0 . 73 0 . 233  15 . 75

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 R-bar chart computations
(using D3 & D4 factors)

UCL R  RD 4  0 . 233 2 . 28   0 . 53

LCL R  RD 3  0233 0   0

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 Control charts for attribute data

p-Charts:
Track the proportion defective in a
sample
c-Charts:
Track the average number of defects per
unit of output

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 Process Capability
 A measure of the ability of a process to meet preset design
specifications:
 Determines whether the process can do what we are asking it to
do
 Design specifications (a/k/a tolerance limits):
 Preset by design engineers to define the acceptable range of
individual product characteristics (e.g.: physical dimensions,
elapsed time, etc.)
 Based upon customer expectations & how the product works (not
statistics!)

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 Capability Indexes
specification width USL  LSL
Centered Process (Cp):
Cp  
process width 6

 USL     LSL 
Any Process (Cpk): C pk  min  ; 
 3 3 

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 Example
 Design specifications call for a target value of 16.0 +/-0.2 microns (USL
= 16.2 & LSL = 15.8)
 Observed process output has a mean of 15.9 and a standard deviation of
0.1 microns

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 Computations
USL  LSL 16 . 2  15 . 8 0 .4
Cp : Cp     0 . 66
6 6 0 . 1  0 .6

 USL     LSL 
C  min  or 
3 3
pk
 
Cpk:  16 . 2  15 . 9 15 . 9  15 . 8 
 min  or 
 3 0 . 1  3 0 . 1  
 0 .3 0 .1 
 min  or   min 1 or 0 . 33  0 . 33
 0 . 3 0 . 3 

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 REFERENCES
Stevenson, William J., (2018) Operations management. Thirteenth edition
McGraw-Hill Education, New York, NY.
Chase, R.B., Jacobs, F.R. and Aquilano, N.J. (2006) Operations Management for
Competitive Advantage with Global Cases. McGraw-Hill/Irwin, Boston.
Gaither & Frazier, Operations Management, Cengage, New Delhi
Panner Selvem, Production and Operation Management, Prentice Hall of India.
Chunnawals, Production & 9*/89Operation Management Himalaya, Mumbai
Kanishka Bedi, Production & Operation Management, University Press.
Upendra Kachru: Operation Management, Excel Publications.
Adam, E.E& Ebert; R.J. Production and Operation Management, 6th Ed., Prentice
Hall
Chary , S.N.Production and Operation Management, New Delhi, Tata McGraw Hill