Quality and performance

5 – 1Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.
Quality And PerformanceQuality And Performance
5

5 – 2
Meaning of Quality
 A term used by customers to describe theirA term used by customers to describe their
general satisfaction with a service orgeneral satisfaction with a service or
product.product.
 Webster’s Dictionary
 degree of excellence of a thing
 American Society for Quality
 totality of features and characteristics that
satisfy needs
 Consumer’s and producer’s perspective

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Meaning of Quality: Consumer’s Perspective
 Fitness for use
 how well product or
service does what it is
supposed to
 Quality of design
 designing quality
characteristics into a
product or service
 A Mercedes and a Ford are
equally “fit for use,” but with
different design dimensions

5 – 4
Dimensions of Quality: Manufactured Products
 Performance
 basic operating characteristics of a product; how well a car is
handled or its gas mileage.
 Features
 “extra” items added to basic features, such as a stereo CD or
a leather interior in a car.
 Reliability
 probability that a product will operate properly within an
expected time frame; that is, a TV will work without repair
for about seven years.
 Conformance
 degree to which a product meets pre–established standards

5 – 5
Dimensions of Quality: Manufactured Products
• Durability
– how long product lasts before replacement?
• Serviceability
– ease of getting repairs, speed of repairs, courtesy and
competence of repair person
• Aesthetics
– how a product looks, feels, sounds, smells, or tastes?
• Safety
– assurance that customer will not suffer injury or harm from a
product; an especially important consideration for
automobiles
• Perceptions
– subjective perceptions based on brand name, advertising, and
like

5 – 6
Dimensions of Quality: Service
 Time and timeliness
 how long must a customer wait for service, and is it
completed on time?
 is an overnight package delivered overnight?
 Completeness:
 is everything customer asked for provided?
 is a mail order from a catalogue company complete when
delivered?
 Courtesy:
 how are customers treated by employees?
 are catalogue phone operators nice and are their voices
pleasant?
 Consistency
 is same level of service provided to each customer each
time?
 is your newspaper delivered on time every morning?

5 – 7
Dimensions of Quality: Service
• Accessibility and convenience
– how easy is it to obtain service?
– does service representative answer you calls quickly?
• Accuracy
– is service performed right every time?
– is your bank or credit card statement correct every month?
• Responsiveness
– how well does company react to unusual situations?
– how well is a telephone operator at able to respond to a
customer’s questions?

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Meaning of Quality: Producer’s Perspective
 Quality of conformance
 Making sure product or service is produced
according to design
 if new tires do not conform to specifications, y
wobble
 if a hotel room is not clean when a guest checks in,
hotel is not functioning according to specifications of
its design

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Meaning of Quality: A Final Perspective
 Consumer’s and producer’s perspectives
depend on each other
 Consumer’s perspective: PRICE
 Producer’s perspective: COST
 Consumer’s view must dominate

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Fitness for
Consumer Use
Fitness for
Consumer Use
Producer’s PerspectiveProducer’s Perspective Consumer’s PerspectiveConsumer’s Perspective
Quality of ConformanceQuality of Conformance
• Conformance to
specifications
• Cost
Quality of DesignQuality of Design
• Quality characteristics
• Price
MarketingMarketingProductionProduction
Meaning of QualityMeaning of Quality
Meaning of Quality

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Cost of Quality
Defects: Any instance when a process fails to satisfy
its customer.
Types of Cost related with Quality
 Prevention costs are associated with preventing
defects before they happen.
 Appraisal costs are incurred when the firm
assesses the performance level of its processes.
 Internal failure costs result from defects that are
discovered during production of services or
products.
 External failure costs arise when a defect is
discovered after the customer receives the service
or product.

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Cost of Quality
 Cost of Achieving Good Quality
Prevention costs
 costs incurred during product design
Appraisal costs
 costs of measuring, testing, and analyzing
 Cost of Poor Quality
Internal failure costs
 include scrap, rework, process failure,
downtime, and price reductions
External failure costs
 include complaints, returns, warranty claims,
liability, and lost sales

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1.Prevention Costs
 Quality planning costs
 costs of developing and
implementing quality
management program
 Product-design costs
 costs of designing products
with quality characteristics
 Process costs
 costs expended to make
sure productive process
conforms to quality
specifications
 Training costs
 costs of developing and
putting on quality training
programs for employees and
management
 Information costs
 costs of acquiring and
maintaining data related to
quality, and development of
reports on quality
performance

5 – 14
2.Appraisal Costs
Inspection and testing
 costs of testing and inspecting materials, parts, and
product at various stages and at end of process
Test equipment costs
 costs of maintaining equipment used in testing quality
characteristics of products
Operator costs
 costs of time spent by operators to gar data for testing
product quality, to make equipment adjustments to
maintain quality, and to stop work to assess quality

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3.Internal Failure Costs
 Scrap costs
 costs of poor-quality products
that must be discarded,
including labor, material, and
indirect costs
 Rework costs
 costs of fixing defective
products to conform to quality
specifications
 Process failure costs
 costs of determining why
production process is
producing poor-quality products
 Process downtime costs
 costs of shutting down
productive process to fix
problem
 Price-downgrading costs
 costs of discounting poor-
quality products—that is,
selling products as “seconds”

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4.External Failure Costs
 Customer complaint costs
 costs of investigating and
satisfactorily responding to a
customer complaint resulting from
a poor-quality product
 Product return costs
 costs of handling and replacing
poor-quality products returned by
customer
 Warranty claims costs
 costs of complying with product
warranties
 Product liability costs
 litigation costs resulting
from product liability and
customer injury
 Lost sales costs
 costs incurred because
customers are
dissatisfied with poor
quality products and do
not make additional
purchases

5 – 17
Total Quality ManagementTotal Quality Management
TQM Wheel
Customer
satisfaction
Total quality management
(TQM) is a philosophy
that
stresses three principles
for
achieving high levels of
process performance
and
quality:
1. Customer satisfaction
2. Employee involvement
3. Continuous
improvement in
performance

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1.Customer Satisfaction1.Customer Satisfaction
Customers, internal or external, are satisfied when their
expectations regarding a service or product have been met
or exceeded.
 Conformance: How a service or product conforms to
performance specifications.
 Value: How well the service or product serves its intended
purpose at a price customers are willing to pay.
 Fitness for use: How well a service or product performs its
intended purpose.
 Support: Support provided by the company after a service
or product has been purchased.
 Psychological impressions: atmosphere, image, or
aesthetics

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2. Employee Involvement2. Employee Involvement
 Cultural Change
Defining customer for each employees
Philosophy of “quality at source”
 Teams- Small groups of people who have a common
purpose, set their own performance goals and
approaches, and hold themselves accountable for
success.
a) Problem-solving teams b) Special purpose team c) Self
managing teams
 Individual Development
Training
New work methods to experienced workers
Current practices to new workers
 Awards and Incentives

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3. Continuous Improvement3. Continuous Improvement
Continuous improvement is the philosophy of continually
seeking ways to improve processes based on a
Japanese concept called kaizen.
1. Train employees in the methods of statistical
process control (SPC) and other tools.
2. Make SPC methods a normal aspect of operations.
3. Build work teams and encourage employee
involvement.
4. Utilize problem-solving tools within the work
teams.
5. Develop a sense of operator ownership in the
process.

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The Deming WheelThe Deming Wheel
Figure 5.2 – Plan-Do-Study-Act Cycle
1. Plan
Identify problem
and develop plan
for improvement.
2. Do
Implement plan on
a test basis.
3. Study/Check
Assess plan; is it
working?
4. Act
Institutionalize
improvement;
continue cycle.

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Six SigmaSix Sigma
Six Sigma is a comprehensive and flexible system for
achieving, sustaining, and maximizing business
success by minimizing defects and variability in
processes.
 A process for developing and delivering near perfect
products and services
 Measure of how much a process deviates from
perfection
 3.4 defects per million opportunities
 Champion
an executive responsible for project success

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Six SigmaSix Sigma
X X
X
X
X
X
X
X X
XXX
XX X
X
X
Process average OK;
too much variation
Process variability OK;
process off target
Process
on target with
low variabilityReduce
spread
Center
process
X
X
X
X
X
X
X
X
X
Figure 5.3 – Six-Sigma Approach Focuses on Reducing Spread and Centering the Process

5 – 24
Six Sigma Improvement ModelSix Sigma Improvement Model
Control
Improve
Analyze
Measure
Define
Figure –Six Sigma Improvement Model
1. Define Determine the
current process
characteristics critical to
customer satisfaction and
identify any gaps.
2. Measure Quantify the work
the process does that affects
the gap.
3. Analyze Use data on
measures to perform
process analysis.
4. Improve Modify or redesign
existing methods to meet
the new performance
objectives.
5. Control Monitor the process
to make sure high
performance levels are
maintained.

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3.4 DPMO3.4 DPMO
67,000 DPMO
cost = 25% of
sales
67,000 DPMO
cost = 25% of
sales
DEFINEDEFINE CONTROLCONTROLIMPROVEIMPROVEANALYZEANALYZEMEASUREMEASURE
Six Sigma: DMAIC

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Six Sigma EducationSix Sigma Education
 Green Belt: An employee who achieved the first level
of training in a Six Sigma program and spends part
of his or her time teaching and helping teams with
their projects.
 Black Belt: An employee who reached the highest level
of training in a Six Sigma program and spends all of
his or her time teaching and leading teams involved
in Six Sigma projects.
 Master Black Belt: Full-time teachers and mentors to
several black belts.

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Six Sigma EducationSix Sigma Education
Black Belt
 project leader
Master Black Belt
a teacher and mentor for
Black Belts
Green Belts
project team members

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International Quality Documentation StandardsInternational Quality Documentation Standards
ISOISO
90009000
ISO 9000:2000 addresses quality
management by specifying what the
firm does to fulfill the customer’s
quality requirements and applicable
regulatory requirements while
enhancing customer satisfaction and
achieving continual improvement of its
performance
Companies must be certified by an
external examiner
Assures customers that the
organization is performing as they say
they are
.

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QUALITY MANAGEMENT SYSTEM
CONTINUAL IMPROVEMENT OF THE
Management
responsibility
Resource
management
Value adding activities
Information
Key:
ISO9001:2000
Model of a process-based quality management system.
Measurement,
analysis and
improvement
Customer
Customer
Satisfaction
Product
realization
Input
Output
ProductRequirements

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ISOISO
1400014000
ISO 14000:2004 documents a firm’s
environmental program by specifying
what the firm does to minimize harmful
effects on the environment caused by its
activities
The standards require companies to keep
track of their raw materials use and their
generation, treatment, and disposal of
hazardous wastes
Companies are inspected by outside,
private auditors on a regular basis
Generally, ISO 13485 includes Generally,
ISO 13485 includes both ISO 9001
requirements and both ISO 9001
requirements and new medical devices
and related new medical devices and
related services requirements.

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TL 9000 Quality Management System :In 1998, QuEST
Forum developed the TL 9000 Quality Management System to
meet the supply chain quality requirements of the worldwide
telecommunications industry. Through TL 9000, it set out to
achieve the following goals:
 Establish and maintain a common set of telecom QMS
requirements, which reduces the number of standards for the
industry
 Foster a system that protects the integrity and use of telecom
products hardware, software and services
 Define effective cost and performance-based measurements to
guide progress and evaluate the results of QMS
implementation
 Drive continual improvement and enhance customer
relationships
 Leverage the industry conformity assessment process

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 External benefits are primarily increased sales opportunities
 ISO certification is preferred or required by many corporate
buyers
 Internal benefits include improved profitability, improved
marketing, reduced costs, and improved documentation and
improvement of processes

5 – 33Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.
Malcolm Baldrige National Quality AwardMalcolm Baldrige National Quality Award
 The Malcolm Baldrige National Quality Award
promotes, recognizes, and publicizes quality strategies
and achievements by outstanding organizations
 It is awarded annually after a rigorous application and
review process
 Award winners report increased productivity, more
satisfied employees and customers, and improved
profitability

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1. Category 1 ─ Leadership 120 points
2. Category 2 ─ Strategic Planning 85 points
3. Category 3 ─ Customer and Market Focus 85 points
4. Category 4 ─ Measurement, Analysis, and
Knowledge Management 90 points
5. Category 5 ─ Human Resource Focus 85 points
6. Category 6 ─ Process Management 85 points
7. Category 7 ─ Business Results 450 points
Malcolm Baldrige National Quality Award
Named after the late secretary of commerce, a strong
proponent of enhancing quality as a means of reducing
the trade deficit. The award promotes, recognizes, and
publicizes quality strategies and achievements.

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Deming Prize
 Dr. Deming was in Japan giving lectures on statistical
process control and was recorded for distribution and
profit.
 Funds were donated to JUSE
 Kenichi Koyanagi, the managing director of the Japanese
Union of Scientists and Engineers (JUSE), used those funds to
create the Deming
 prize to individuals or organizations in 1951.
 The purpose of the Deming Prize was to recognize those
who excelled in quality control and as a way of driving
quality control. It was also established to thank Dr.
Deming for his accomplishments and impact in the
Japanese industry.
 Award available to individuals and organizations, whereas
others do not (such as Baldrige only for organizations)

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Deming Prize
Concentrates on :
 Policy
 Organization and operations
 Collection and use of
information
 Analysis
 Planning for future
 Education and training
 Quality assurance
 Quality effects
 Standardization
 Control

5 – 37
Other Awards for Quality
 National individual awards
 Armand V. Feigenbaum
Medal
 Deming Medal
 E. Jack Lancaster Medal
 Edwards Medal
 Shewart Medal
 Ishikawa Medal
 International awards
 European Quality Award
 Canadian Quality Award
 Australian Business
Excellence Award
 Deming Prize from Japans

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Statistical Process ControlStatistical Process Control
Statistical process control is the application of statistical
techniques to determine whether a process is delivering
what the customer wants.
Acceptance sampling is the application of statistical
techniques to determine whether a quantity of material
should be accepted or rejected based on the inspection or
test of a sample.
Variables: Service or product characteristics that can be
measured, such as weight, length, volume, or time.
Attributes: Service or product characteristics that can be
quickly counted for acceptable performance.

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SamplingSampling
 Sampling plan: A plan that specifies a sample size, the
time between successive samples, and decision rules
that determine when action should be taken.
 Sample size: A quantity of randomly selected
observations of process outputs.

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Sample Means and the Process DistributionSample Means and the Process Distribution
Sample statistics have their own distribution, which we call a
sampling distribution.

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Sampling DistributionsSampling Distributions
x =
xi
i =1
n
∑
n
Sample Mean
A sample mean is the sum of the observations divided by the
total number of observations.
where
xi = observations of a quality
characteristic such as time.
n = total number of observations
x = mean
The distribution of sample means can be
approximated by the normal distribution.

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Sample RangeSample Range
( )
1
2
−
−
=
∑
n
xxi
σ
The range is the difference between the largest observation in a
sample and the smallest.
The standard deviation is the square root of the variance of a
distribution.
where
σ = standard deviation of a sample
n = total number of observations
xi = observations of a quality characteristic
x = mean

5 – 43
Process DistributionsProcess Distributions
 A process distribution can be characterized by its location,
spread, and shape.
 Location is measured by the mean of the distribution and
spread is measured by the range or standard deviation.
 The shape of process distributions can be characterized as
either symmetric or skewed.
 A symmetric distribution has the same number of
observations above and below the mean.
 A skewed distribution has a greater number of observations
either above or below the mean.

5 – 44
Causes of VariationCauses of Variation
Two basic categories of variation in output include common causes
and assignable causes.
 Common causes are the purely random, unidentifiable sources
of variation that are unavoidable with the current process.
If process variability results solely from common causes of
variation, a typical assumption is that the distribution is
symmetric, with most observations near the center.
 Assignable causes of variation are any variation-causing
factors that can be identified and eliminated, such as a machine
needing repair.

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Assignable CausesAssignable Causes
Location Spread Shape

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Control ChartsControl Charts
 Control chart: A time-ordered diagram that is used
to determine whether observed variations are
abnormal.
A sample statistic that falls between the UCL and the LCL indicates
that the process is exhibiting common causes of variation; a statistic
that falls outside the control limits indicates that the process is
exhibiting assignable causes of variation.

5 – 47
Control Chart ExamplesControl Chart Examples

5 – 48
Type I and II ErrorsType I and II Errors
 Control charts are not perfect tools for detecting shifts in the
process distribution because they are based on sampling
distributions. Two types of error are possible with the use of
control charts.
 Type I error occurs when the employee concludes that the
process is out of control based on a sample result that falls
outside the control limits, when in fact it was due to pure
randomness.
 Type II error occurs when the employee concludes that the
process is in control and only randomness is present, when
actually the process is out of statistical control.

5 – 49
Statistical Process Control MethodsStatistical Process Control Methods
Control Charts for variables are used to monitor the mean and
variability of the process distribution.
R-chart (Range Chart) is used to monitor process variability.
x-chart is used to see whether the process is generating
output, on average, consistent with a target value set by
management for the process or whether its current
performance, with respect to the average of the performance
measure, is consistent with past performance.
If the standard deviation of the process is known, we can place UCL
and LCL at “z” standard deviations from the mean at the desired
confidence level.

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Calculating Three-Sigma LimitsCalculating Three-Sigma Limits

5 – 51
West Allis IndustriesWest Allis Industries
Example 6.1Example 6.1
West Allis is concerned about their production of a special metal
screw used by their largest customers. The diameter of the
screw is critical. Data from five samples is shown in the table
below. Sample size is 4. Is the process in statistical control?

5 – 52
West Allis Industries Control Chart Development
Sample Sample
Number 1 2 3 4 R x
1 0.5014 0.5022 0.5009 0.5027 0.0018 0.5018
2 0.5021 0.5041 0.5024 0.5020
3 0.5018 0.5026 0.5035 0.5023
4 0.5008 0.5034 0.5024 0.5015
5 0.5041 0.5056 0.5034 0.5039
Special Metal Screw
_
0.5027 – 0.5009 = 0.0018
(0.5014 + 0.5022 +
0.5009 + 0.5027)/4 = 0.5018
Example 6.1

5 – 53
Sample Sample
Number 1 2 3 4 R x
1 0.5014 0.5022 0.5009 0.5027 0.0018 0.5018
2 0.5021 0.5041 0.5024 0.5020 0.0021 0.5027
3 0.5018 0.5026 0.5035 0.5023 0.0017 0.5026
4 0.5008 0.5034 0.5024 0.5015 0.0026 0.5020
5 0.5041 0.5056 0.5034 0.5047 0.0022 0.5045
R = 0.0021
x = 0.5027
Special Metal Screw
=
_
Example 6.1

5 – 54
Factor for UCL Factor for Factor
Size of and LCL for LCL for UCL for
Sample x-Charts R-Charts R- Charts
(n) (A2) (D3) (D4)
2 1.880 0 3.267
3 1.023 0 2.575
4 0.729 0 2.282
5 0.577 0 2.115
6 0.483 0 2.004
7 0.419 0.076 1.924
8 0.373 0.136 1.864
9 0.337 0.184 1.816
10 0.308 0.223 1.777
R = 0.0021
D4 = 2.282
D3 = 0 UCLR = D4R = 2.282 (0.0021) = 0.00479 in.
LCLR = D3R 0 (0.0021) = 0 in.
Example 6.1

5 – 55
Example 6.1

5 – 56
Factor for UCL Factor for Factor
Size of and LCL for LCL for UCL for
Sample x-Charts R-Charts R-Charts
(n) (A2) (D3) (D4)
2 1.880 0 3.267
3 1.023 0 2.575
4 0.729 0 2.282
5 0.577 0 2.115
6 0.483 0 2.00
R = 0.0021 A2 = 0.729 x = 0.5027=
UCLx = x + A2R = 0.5027 + 0.729 (0.0021) = 0.5042 in.
LCLx = x - A2R = 0.5027 – 0.729 (0.0021) = 0.5012 in.
=
=
Example 6.1

5 – 57
West Allis IndustriesWest Allis Industries
x-Chart
Sample the process Find the assignable cause
Eliminate the problem Repeat the cycle
Example 6.1

5 – 58
Application 6.1Application 6.1

5 – 59
708.0)38.0(864.14 === RDUCLR
052.0)38.0(136.03 === RDLCLR

5 – 60

5 – 61
Sunny Dale Bank
Example 6.2
==
UCLUCLxx = x + z= x + zσσxx
σσxx == σσ// nn
LCLLCLxx = x – z= x – zσσxx
==
Sunny Dale Bank
x = 5.0 minutes σ = 1.5 minutes n = 6 customers z = 1.96==
Sunny Dale Bank management determined the mean time to process a customer is 5
minutes, with a standard deviation of 1.5 minutes. Management wants to monitor mean
time to process a customer by periodically using a sample size of six customers.
Design an x-chart that has a type I error of 5 percent. That is, set the control
limits so that there is a 2.5 percent chance a sample result will fall below the
LCL and a 2.5 percent chance that a sample result will fall above the UCL.
After several weeks of sampling, two successive samples came in at
3.70 and 3.68 minutes, respectively. Is the customer service process in
statistical control?
UCLUCLxx = 5.0 + 1.96(1.5)/ 6 = 6.20 min= 5.0 + 1.96(1.5)/ 6 = 6.20 min
LCLLCLxx = 5.0 – 1.96(1.5)/ 6 = 3.80 min= 5.0 – 1.96(1.5)/ 6 = 3.80 min
Control Limits

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Control Charts for AttributesControl Charts for Attributes
p-chart: A chart used for controlling the proportion of
defective services or products generated by the process.
σσpp == pp(1 –(1 – pp)/)/nn
Where
n = sample size
p = central line on the chart, which can be either the historical
average population proportion defective or a target value.
z = normal deviate (number of standard deviations from the
average)
Control limits are: UCLp = p+zσσpp and LCLp = p−zσp
– –

5 – 63
Hometown BankHometown Bank
The operations manager of the booking services department of
Hometown Bank is concerned about the number of wrong customer
account numbers recorded by Hometown personnel.
Each week a random sample of 2,500 deposits is taken, and the number
of incorrect account numbers is recorded. The results for the past 12
weeks are shown in the following table.
Is the booking process out of statistical control? Use three-sigma
control limits.

5 – 64
Sample Wrong Proportion
Number Account # Defective
1 15 0.006
2 12 0.0048
3 19 0.0076
4 2 0.0008
5 19 0.0076
6 4 0.0016
7 24 0.0096
8 7 0.0028
9 10 0.004
10 17 0.0068
11 15 0.006
12 3 0.0012
Total 147
Using a p-Chart to monitor a processUsing a p-Chart to monitor a process
n = 2500
p =
147
12(2500)
= 0.0049
σσpp == pp(1 –(1 – pp)/)/nn
σσpp == 0.0049(1 – 0.00490.0049(1 – 0.0049)/)/25002500
σσpp ==
0.00140.0014
UCLp = 0.0049 + 3(0.0014)
= 0.0091LCLp = 0.0049 – 3(0.0014)
= 0.0007

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Using a p-Chart to monitor a processUsing a p-Chart to monitor a process
Example 6.3

5 – 66

5 – 67
( )
025.0
14420
72
===
tubesofnumberTotal
tubesleakyofnumberTotal
p
( ) ( ) 01301.0
144
025.01025.01
=
−
=
−
=
n
pp
pσ
( ) 06403.001301.03025.0 =+=+= pp zpUCL σ
( ) 01403.001301.03025.0 −=−=−= pp zpLCL σ
0=pLCL

5 – 68
 c-chart: A chart used for controlling the number of defects when
more than one defect can be present in a service or product.
 The underlying sampling distribution for a c-chart is the Poisson
distribution.
 The mean of the distribution is cc
 The standard deviation is cc
 A useful tactic is to use the normal approximation to the Poisson
so that the central line of the chart is cc and the control limits are
UCLc = c+z c and LCLc = c−z c
c-Chartsc-Charts

5 – 69
Woodland Paper CompanyWoodland Paper Company
In the Woodland Paper Company’s final step in their paper
production process, the paper passes through a machine
that measures various product quality characteristics. When
the paper production process is in control, it averages 20
defects per roll.
a) Set up a control chart for the number of defects per roll. Use
two-sigma control limits.
c =c = 20
z = 2
UCLc = c+z c = 20 + 2 20 = 28.94
LCLc = c−z c = 20 - 2 20 = 11.06
b) Five rolls had the following number of defects: 16, 21, 17, 22, and 24,
respectively. The sixth roll, using pulp from a different supplier, had 5
defects. Is the paper production process in control?

5 – 70
Solver - c-Charts
Sample Number
NumberofDefects Woodland Paper CompanyWoodland Paper Company
Using a c-Chart to monitor a processUsing a c-Chart to monitor a process
Example 6.4

5 – 71
4
12
290561464056
=
+++++++++++
=c 24 ==cσ
( ) 8224 =+=+= cc zcUCL σ ( ) 0224 =−=−= cc zcLCL σ

5 – 72
Process CapabilityProcess Capability
 Process capability is the ability of the process to meet
the design specifications for a service or product.
 Nominal value is a target for design specifications.
 Tolerance is an allowance above or below the nominal
value.

5 – 73
2020 2525 3030 MinutesMinutes
UpperUpper
specificationspecification
LowerLower
NominalNominal
valuevalue
Process is capable
Process distributionProcess distribution

5 – 74
Process is not capableProcess is not capable
2020 2525 3030 MinutesMinutes
UpperUpper
LowerLower
NominalNominal
valuevalue
Process distributionProcess distribution

5 – 75
LowerLower
MeanMean
UpperUpper
Nominal valueNominal value
Six sigmaSix sigma
Four sigmaFour sigma
Two sigmaTwo sigma
Effects of ReducingEffects of Reducing
Variability on Process CapabilityVariability on Process Capability

5 – 76
Cpk = Minimum of Upper specification – x
3σ
x – Lower specification
3σ
,
= =
Process Capability Index, Cpk, is an index that measures the
potential for a process to generate defective outputs relative to
either upper or lower specifications.
Process Capability Index, CProcess Capability Index, Cpkpk
We take the minimum of the two ratios because it gives the
worst-case situation.

5 – 77
Process capability ratio, Cp, is the tolerance width divided by 6
standard deviations (process variability).
Process Capability Ratio, CProcess Capability Ratio, Cpp
CCpp ==
Upper specification - Lower specificationUpper specification - Lower specification
66σσ

5 – 78
Using Continuous Improvement to Determine ProcessUsing Continuous Improvement to Determine Process
CapabilityCapability
 Step 1: Collect data on the process output; calculate mean and
standard deviation of the distribution.
 Step 2: Use data from the process distribution to compute
process control charts.
 Step 3: Take a series of random samples from the process and
plot results on the control charts.
 Step 4: Calculate the process capability index, Cpk, and the
process capability ratio, Cp, if necessary. If results are
acceptable, document any changes made to the process and
continue to monitor output. If the results are unacceptable,
further explore assignable causes.

5 – 79
Intensive Care LabIntensive Care Lab
Upper specification = 30 minutesUpper specification = 30 minutes
Lower specification = 20 minutesLower specification = 20 minutes
Average service = 26.2 minutesAverage service = 26.2 minutes
σσ = 1.35 minutes= 1.35 minutes
The intensive care unit lab process has an average turnaround
time of 26.2 minutes and a standard deviation of 1.35 minutes.
The nominal value for this service is 25 minutes with an upper
specification limit of 30 minutes and a lower specification limit of
20 minutes.
The administrator of the lab wants to have four-sigma
performance for her lab. Is the lab process capable of this level of
performance?

5 – 80
Cpk = Minimum of Upper specification – x
3σ
3σ
,
= =
Upper specification = 30 minutes
Lower specification = 20
minutes
Average service = 26.2 minutes
σ = 1.35 minutes
Assessing Process CapabilityAssessing Process Capability
CCpkpk == Minimum ofMinimum of 26.226.2 – 20.0– 20.0
3(3(1.351.35)) ,,
30.0 –30.0 – 26.226.2
3(3(1.351.35))
CCpkpk == Minimum of 1.53, 0.94Minimum of 1.53, 0.94 = 0.94= 0.94
Process
Capability
Index
Example 6.5

5 – 81
Cpk ==
Upper specification - Lower specification
6σ
Cpp ==
30 - 20
6(1.35)
= 1.23 Process Capability Ratio
Before Process Modification
Upper specification = 30.0 minutes Lower specification = 20.0 minutes
 = 1.35 minutes Cpk = 0.94 CCpp = 1.23
After Process Modification
Upper specification = 30.0 minutes Lower specification = 20.0 minutes
 = 1.2 minutes Cpk = 1.08 CCpp = 1.39
Assessing Process CapabilityAssessing Process Capability
Does not meet 4σ (1.33 Cpp) target
Example 6.5

5 – 82

5 – 83

5 – 84
Solved Problem 1Solved Problem 1
The Watson Electric Company produces incandescent lightbulbs.
The following data on the number of lumens for 40-watt lightbulbs
were collected when the process was in control.
Observation
Sample 1 2 3 4
1 604 612 588 600
2 597 601 607 603
3 581 570 585 592
4 620 605 595 588
5 590 614 608 604
a. Calculate control limits for an R-chart and an x-chart.
b. Since these data were collected, some new employees were
hired. A new sample obtained the following readings: 570, 603,
623, and 583. Is the process still in control?

5 – 85
Sample R
1 601 24
2 602 10
3 582 22
4 602 32
5 604 24
Total 2,991 112
Average
x = 598.2 R = 22.4
x
604 + 612 + 588 + 600
4
= 601x =
R = 612 – 588 = 24
SOLUTION
a. To calculate x, compute the mean for each sample. To calculate
R, subtract the lowest value in the sample from the highest value
in the sample. For example, for sample 1,

5 – 86
The R-chart control limits are
b. First check to see whether the variability is still in control based
on the new data. The range is 53 (or 623 – 570), which is outside
the UCL for the R-chart. Since the process variability is out of
control, it is meaningless to test for the process average using
the current estimate for R. A search for assignable causes
inducing excessive variability must be conducted.
2.282(22.4) = 51.12
0(22.4) = 0
UCLR = D4R =
LCLR = D3R =
The x-chart control limits are
UCLx = x + A2R =
LCLx = x – A2R =
598.2 + 0.729(22.4) = 614.53
598.2 – 0.729(22.4) = 581.87

5 – 87
The data processing department of the Arizona Bank has five
data entry clerks. Each working day their supervisor verifies
the accuracy of a random sample of 250 records. A record
containing one or more errors is considered defective and
must be redone. The results of the last 30 samples are shown
in the table. All were checked to make sure that none was out
of control.

5 – 88
Sample
Number of Defective
Records
Sample
Number of Defective
Records
1 7 16 8
2 5 17 12
3 19 18 4
4 10 19 6
5 11 20 11
6 8 21 17
7 12 22 12
8 9 23 6
9 6 24 7
10 13 25 13
11 18 26 10
12 5 27 14
13 16 28 6
14 4 29 11
15 11 30 9
Total 300

5 – 89
a. Based on these historical data, set up a p-chart using z = 3.
b. Samples for the next four days showed the following:
Sample Number of Defective Records
Tues 17
Wed 15
Thurs 22
Fri 21
What is the supervisor’s assessment of the data-entry process
likely to be?

5 – 90
SOLUTION
a. From the table, the supervisor knows that the total
number of defective records is 300 out of a total sample of
7,500 [or 30(250)]. Therefore, the central line of the chart is
= 0.04
300
7,500
p =
The control limits are
( )
n
pp
zpp
−
+=
1
UCL
( )
n
pp
zpp
−
−=
1
LCL
0.077
250
0.04(0.96)
30.04 =+=
0.003
250
0.04(0.96)
30.04 =−=

5 – 91
Sample Number of Defective Records Proportion
Tues 17 0.068
Wed 15 0.060
Thurs 22 0.088
Fri 21 0.084
b. Samples for the next four days showed the following:
Samples for Thursday and Friday are out of control. The
supervisor should look for the problem and, upon identifying
it, take corrective action.

5 – 92
a. Which type of control chart should be used? Construct a control
chart with three sigma control limits.
b. Last month, seven accidents occurred at the intersection. Is this
sufficient evidence to justify a claim that something has changed
at the intersection?
a. The Minnow country highway safety department monitors
accidents at the intersection of route 123 and 14. Accidents at
the intersection have average three per month.

5 – 93
SOLUTION
a. The safety department cannot determine the number of accidents
that did not occur, so it has no way to compute a proportion
defective at the intersection. Therefore, the administrators must
use a c-chart for which
There cannot be a negative number of accidents, so the LCL in
this case is adjusted to zero.
b. The number of accidents last month falls within the UCL and
LCL of the chart. We conclude that no assignable causes are
present and that the increase in accidents was due to chance.
UCLc = c + z c
LCLc = c – z c
= 3 + 3 3 = 8.20
= 3 – 3 3 = –2.196

5 – 94
Pioneer Chicken advertises “lite” chicken with 30 percent fewer
calories. (The pieces are 33 percent smaller.) The process average
distribution for “lite” chicken breasts is 420 calories, with a standard
deviation of the population of 25 calories. Pioneer randomly takes
samples of six chicken breasts to measure calorie content.
a. Design an x-chart using the process standard deviation.
b. The product design calls for the average chicken breast to
contain 400 ± 100 calories. Calculate the process capability
index (target = 1.33) and the process capability ratio. Interpret
the results.

5 – 95
SOLUTION
a. For the process standard deviation of 25 calories, the standard
deviation of the sample mean is
=
σ
=σ
n
x calories10.2
6
25
=
UCLx = x + zσx =
LCLx = x – zσx =
420 + 3(10.2) = 450.6 calories
420 – 3(10.2) = 389.4 calories

5 – 96
Because the process capability ratio is 1.33, the process should be
able to produce the product reliably within specifications. However,
the process capability index is 1.07, so the current process is not
centered properly for four-sigma performance. The mean of the
process distribution is too close to the upper specification.
The process capability ratio is
b. The process capability index is
Cpk = Minimum of ,
3σ
Upper specification – x
3σ
= Minimum of = 1.60, = 1.07
420 – 300
3(25)
500 – 420
3(25)
Cp =
Upper specification – Lower specification
6σ
= = 1.33
500 – 300
6(25)

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