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 What does the term quality mean?

Quality is the ability of a product or

service to consistently meet or exceed
customer expectations.
Customer define quality in various
ways
Quality has multiple dimensions in the
mind of customer

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 Conformance to Specifications
Value
Fitness for Use
Support
Psychological Impressions
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 Performance - main characteristics of the
product/service
Aesthetics - appearance, feel, smell, taste
Special features - extra characteristics
Conformance - how well product/service
conforms to customers expectations
Safety - Risk of injury
Reliability - consistency of performance

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 Durability - useful life of the
product/service
Perceived Quality - indirect evaluation of
quality (e.g. reputation)
Service after sale - handling of customer
complaints or checking on customer
satisfaction

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 Loss of Business/Reputation
Liability increased
Productivity decreased
Costs increased

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 An enhanced Reputation for quality
The ability to command premium prices
An increased market share
Greater customer loyalty
Less customer complaints
Higher productivity
Lower Costs and
Finally higher profits

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 Prevention Costs
Appraisal Costs
Internal Failure Costs
External Failure Costs
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 Prevention Costs are associated with preventing
defects before they happen. They include
Redesigning the process to remove the causes
of poor quality.
Redesigning the products to make it simple to
produce
Training employees for continuous
improvement
Working with suppliers to increase the quality of
purchased items
Quality data analysis

Source: Adapted form J. W. Gavett, Production

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& Ritzman Management
Operations (New and
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Analysis, Brace
Sixth Edition Jovanovich
2002 Prentice Hall, Inc. All rights reserved.
 Appraisal costs are associated with
assessing the level of quality attained by
the operating system. Examples are
Testing/Measuring/Inspection/Quality
audits of
materials/parts/products/services to
assess the conformance of quality
standards

Source: Adapted form J. W. Gavett, Production

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& Ritzman Management
Operations (New and
Management: Strategy York: Harcourt
Analysis, Brace
Sixth Edition Jovanovich
2002 Prentice Hall, Inc. All rights reserved.
 Internal failure costs result from defects
that are discovered during the
production process of product or service.
Examples are
Scrap, at full shop cost (yield losses)
Rework, at full shop cost
Scrap and rework , fault of vendor
QC investigations (of failures)
Repair and troubleshooting

Source: Adapted form J. W. Gavett, Production

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& Ritzman Management
Operations (New and
Management: Strategy York: Harcourt
Analysis, Brace
Sixth Edition Jovanovich
2002 Prentice Hall, Inc. All rights reserved.
 External failure costs arise when the defect is
discovered by the customer after receiving the
product or service.
Complaints and loss of customer goodwill
Warranty costs (a written guarantee of
replacement and repair)
Field maintenance and service cost
Returned material processing and repair cost
Replacement inventories
Strained distributor relations

Source: Adapted form J. W. Gavett, Production

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& Ritzman Management
Operations (New and
Management: Strategy York: Harcourt
Analysis, Brace
Sixth Edition Jovanovich
2002 Prentice Hall, Inc. All rights reserved.
 Costs of Detecting Defects
Cost of detection and correction

Process Final testing Customer

Where defect is detected
Figure 6.2
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 Total Quality Management

A philosophy that involves everyone

in an organization in a continual
effort to improve quality and achieve
customer satisfaction.

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 Find out what the customer wants
Design a product or service that meets or
exceeds customer wants
Design processes that facilitates doing the
job right the first time
Keep track of results
Extend these concepts to suppliers

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 Customer
satisfaction

Figure 6.1
 Continual improvement
Competitive benchmarking
Employee involvement
Knowledge of problem solving
tools
Supplier quality
Product design
Process design

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 Cultural Change
Team Approach
Individual
Development/Empowerment
Awards and Incentives

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 Continuous Improvement is the Philosophy
of continually seeking ways to improve
operations or production processes.
Kaizen: Japanese word for continuous
improvement. Example CI
Reducing the length of time to process
loans in a bank
Reduce the scrap generated in a milling
machine
Reduce the number of injuries in the factory

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 Train employees statistical process control
(SPC) and other tools for improving quality.
Make SPC a normal aspect of daily
operations
Build work team ands and employee
involvement.
Utilize problem solving techniques with the
work teams.
Develop a sense of operator ownership of
the process.

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 Problem Solving Process
Plan

Deming Act
Wheel Do

Check

Figure 6.3
 A P
(Act) (Plan)

(Check) (Do)
C D

Quality

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 Deming cycle is a tool for continuous
improvement and it is a tool for an ongoing
effort to improve products, services or
processes.
Plan:
Define the problem and establish an
improvement goal
Collect data
Analyze the problem
Generate potential solutions after assessing
benefits and costs
Choose a solution
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 Do:
Implement the change on a small scale.
Monitor the solution
Check:
Use data and facts to analyze the results of
the change and determine whether it made
a difference.
Act:
If the change was successful, implement it
on a wider scale and continuously assess
your results.
If the change did not work, begin the cycle
again.
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 Sometimes, firms need to change design to
remain competitive.
New design and redesign of the product or
service or process should be tested
carefully.
Design or redesign should focus on
performance and simplicity.
Change in design often require changes in
methods, materials and specification which
increase the risk of making mistakes.
Stable product and service design can help
to reduce internal quality problems,

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Product reliability
rs = (r1)(r2) . . . (rn)
where
rs = reliability of the complete
product
n= number of subsystems
rn = reliability of the subsystem or
component n

rs = (0.99)(0.95)(0.90) = 0.85
 Benchmarking is the process of measuring
an organizations performance against that
best in the same or another industry.

Types of benchmarking
Internal: Involves an organizational unit with
superior performance as the benchmark for other
units
Competitive: Based on comparisons with a
direct industry competitors
Functional: Compares areas such as
administration, customer service, sales and
marketing with those of outstanding firms in any
industry

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 Flowcharts
Check sheets
Histograms
Pareto Charts
Scatter diagrams
Control charts
Cause-and-effect diagrams
Run charts

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition 2002 Prentice Hall, Inc. All rights reserved.
 When manager discover several quality problems,
which should be addressed first?
Vilfredo Pareto, a nineteenth century Italian scientist
proposed that most of the activity is caused by
relatively few of the factors.
In a restaurant quality problem, the activity could be
customer complaints and factor could be
discourteous waiter.
For a manufacturing, the activity could be product
defects and factor could be missing parts.
Pareto concept called the 80-20 rule. That is 80% of
the activity is caused by 20% of the factors.
By concentrating on the 20% of the factors (the vital
few), manager can attack 80% of the quality
problems.
The few vital factors can be identified with a Pareto
Chart.

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Figure 6.5
Figure 6.4
Machines Personnel

Effect

Materials Process
 Equipment Personnel

Aircraft late to gate Passenger processing at gate

Other Mechanical failures Late cabin cleaners

Weather Unavailable cockpit crew

Air traffic delays Late cabin crew

Delayed
flight
Late baggage to aircraft departures
Poor announcement of departures
Late fuel
Weight/balance sheet late
Late food service
Delayed check-in procedure
Contractor not provided
updated schedule Waiting for late passengers

Materials Procedures

Source: Adapted from D. Daryl Wyckoff, New Tools for Achieving Service Quality. The Cornell Hotel and Restaurant
Figure 6.6
Administration Quarterly, November 1984, pg. 89. 1984 Cornell H.R.A. Quarterly. Used by permission. All rights reserved.

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Tools for Improving Quality
Step 1Checklist
Step 2Pareto chart
Step 3Cause-and-effect diagram
Step 4Bar chart
 Checklists
Headliner Defects
Defect type Tally Total
A. Tears in fabric //// 4
B. Discolored fabric /// 3
C. Broken fiber board //// //// //// ////
//// //// //// / 36
D. Ragged edges //// // 7
Total 50
Figure 6.7
 Pareto Chart 50 100

Cumulative percentage
40 C 80

Number of defects
30 60

20 40

10 D 20
A B
0 0
Defect type

Figure 6.7
 Cause-and-Effect Diagram
People
Materials
Training
Out of specification Absenteeism
Not available Communication
Broken
fiber
Humidity Machine maintenance board
Schedule changes Machine speed
Wrong setup
Other
Process

Figure 6.7
 Bar Chart

Number of broken fiber boards

20

15

10

0 First Second Third

Shift
Figure 6.7
 Solved Problem 2
40 100
90%

Cumulative percentage of defects

36 100% 90
78%
32 80
Frequency of defects

28 70
24 60
48%
20 50
16 40
12 30
8 20
4 10
0 0
Label Fill Mix Seal
Figure 6.8