Business Statistics, 5

th
ed.
by Ken Black




Chapter 18

Statistical
Quality Control
Discrete Distributions
PowerPoint presentations prepared by Lloyd Jaisingh,
Morehead State University
Understand the concepts of quality, quality
control, and total quality management.
Understand the importance of statistical
quality control in total quality management.
Learn about process analysis and some
process analysis tools.
Learn how to construct x-bar charts,
R charts, p charts, and c charts.
Understand the theory and application of
acceptance sampling.
Learning Objectives
Quality

Quality is when a product delivers what is
stipulated for in its specifications

Crosby: quality is conformance to
requirements

Feigenbaum: quality is a customer
determination

Garvins Five Dimensions of Quality

Transcendent quality: innate excellence
Product quality: quality is measurable
User quality: quality is determined by the
consumer
Manufacturing quality: quality is measured
by the manufacturer's ability to target the
product specifications with little variability
Value Quality: did the consumer get his or
her moneys worth?

Quality Control
Quality control is the collection of strategies,
techniques, and actions taken by an organization to
assure themselves that they are producing a quality
product.

After-process quality control involves inspecting the
attributes of a finished product to determine whether the
product is acceptable, is in need of rework, or is to be
rejected and scrapped.
reporting of the number of defects per time period
screening defective products from consumers

In-process quality control techniques measure product
attributes at various intervals throughout the
manufacturing process in an effort to pinpoint problem
areas.
Demings Fourteen Points (Total Quality
Management, TQM)
1. Create constancy of purpose for improvement of product
and service.
2. Adopt a new philosophy.
3. Cease dependence on mass inspection.
4. End the practice of awarding business on price tag alone.
5. Improve constantly and forever the system of production
and service.
6. Institute training.
7. Institute leadership.
8 Drive out fear.
9. Break down barriers between staff areas.
10. Eliminate slogans.
11. Eliminate numerical quotas.
12. Remove barriers to pride of workmanship.
13. Institute a vigorous program of education and retraining.
14. Take action to accomplish the transformation.
Important Quality Concepts
Benchmarking
examine and emulate the best practices and techniques used in
the industry
a positive, proactive process to make changes that will effect
superior performance
Just-In-Time Inventory Systems
necessary parts for production arrive just in time
reduced holding costs, personnel, and space needed for inventory
no extra raw materials or inventory of parts for production are
stored
Reengineering
complete redesign of the core business process in a company
Six sigma
Total quality approach that measures the capacity of a process to
perform defect -free work
Team Building:
employee groups take on managerial responsibilities
quality circle


Process Analysis
A process is a series of actions, changes or functions
that bring about a result.
Flowcharts - schematic representation of all the
activities and interactions that occur in a process
Pareto Analysis -quantitative tallying of the number and
types of defects that occur with a product
Pareto Chart - ranked vertical bar chart with most
frequently occurring on the left
Fishbone Diagram - display of potential cause-and-
effect relationships
Control Charts - graphical method for evaluating
whether a process is or is not in a state of statistical
control
Flowchart Symbols
Input/Output Symbol
Processing Symbol
Decision Symbol
Start/Stop Symbol
Flow line Symbol
0
10
20
30
40
50
60
70
80
90
100
Poor
Wiring
Short in
Coil
Defective
Plug
Other
F
r
e
q
u
e
n
c
y

0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pareto Charts
Cause-and-Effect Diagram
Raw Materials Equipment
Workers Methodology
Poor
Wiring
Wiring Scheme
Pland Layout
Maintenance
Tools
Out-of-Adjustment
Out-of-Date
Vendor
Transportation
Inventory
Training
Attitude
Absenteeism
MINITAB Pareto Chart
C
o
u
n
t
P
e
r
c
e
n
t
Defects
Count
15.4 7.7 3.8
Cum % 42.3 73.1 88.5 96.2 100.0
22 16 8 4 2
Percent 42.3 30.8
O
t
h
e
r
W
r
o
n
g

P
r
e
s
c
r
i
p
t
io
n

W
r
it
t
e
n
M
is
r
e
a
d

H
a
n
d
w
r
it
i
n
g
I
m
p
r
o
p
e
r
l
y

S
t
o
r
e
d
W
r
o
n
g

M
e
d
i
c
in
e

A
d
m
i
n
is
t
e
r
e
d
50
40
30
20
10
0
100
80
60
40
20
0
Pareto Chart of Medication Errors in a Hospital
Types of Control Charts
Control charts for measurements
charts
R charts
Control charts for compliance items
P charts
c charts
X
Control Chart
Monitor process location (center)
1. Decide on the quality to be measured.
2. Determine a sample size.
3. Gather 20 to 30 samples.
4. Compute the sample average for each sample.
5. Compute the sample range for each sample.
6. Determine the average sample mean for all samples.
7. Determine the average sample range (or sample
standard deviation) for all samples.
8 Using the size of the samples, determine the value of A
2

or A
3
.
9. Compute the UCL and the LCL

X
Control Chart: Formulas
X and Charts
X
X
k
UCL X R
LCL X R
R
R
k
LCL R
UCL R
A
A
D
D
R
=
= +
=
=
=
=

2
2
3
4
X and S Charts
X
X
k
UCL X R
LCL X R
S
S
k
UCL R
LCL R
A
A
B
B

=
= +
=
=
=
=

3
3
4
3
X
Data for Demonstration Problem
18.1: Samples 1 - 10
1 2 3 4 5 6 7 8 9 10
5.13 4.96 5.21 5.02 5.12 4.98 4.99 4.96 4.96 5.03
4.92 4.98 4.87 5.09 5.08 5.02 5.00 5.01 5.00 4.99
5.01 4.95 5.02 4.99 5.09 4.97 5.00 5.02 4.91 4.96
4.88 4.96 5.08 5.02 5.13 4.99 5.02 5.05 4.87 5.14
5.05 5.01 5.12 5.03 5.06 4.98 5.01 5.04 4.96 5.11
4.97 4.89 5.04 5.01 5.13 4.99 5.01 5.02 5.01 5.04
4.9933 4.9583 5.0567 5.0267 5.1017 4.9883 5.0050 5.0167 4.9517 5.0450
0.25 0.12 0.34 0.10 0.07 0.05 0.03 0.09 0.14 0.18
X
R
Data for Demonstration Problem
18.1: Samples 11 - 20
11 12 13 14 15 16 17 18 19 20
4.91 4.97 5.09 4.96 4.99 5.01 5.05 4.96 4.90 5.04
4.93 4.91 4.96 4.99 4.97 5.04 4.97 4.93 4.85 5.03
5.04 5.02 5.05 4.82 5.01 5.09 5.04 4.97 5.02 4.97
5.00 4.93 5.12 5.03 4.98 5.07 5.03 5.01 5.01 4.99
4.90 4.95 5.06 5.00 4.96 5.12 5.09 4.98 4.88 5.05
4.82 4.96 5.01 4.96 5.02 5.13 5.01 4.92 4.86 5.06
4.9333 4.9567 5.0483 4.9600 4.9883 5.0767 5.0317 4.9617 4.9200 5.0233
0.22 0.11 0.16 0.21 0.06 0.12 0.12 0.09 0.17 0.09
X
R
Demonstration Problem 18.1:
Control Chart Computations
( )( )
( )( )
( )( )
( )( )
X and Charts
X
X
k
UCL X R
LCL X R
R
R
k
LCL R
UCL R
A
A
D
D
R
= =
+ + + +
=
= + = + =
= = =
= =
+ + + +
=
= = =
= = =

4 9933 4 9583 50566 50233

20
500215
500215 0 483 0136 506784
500215 0 483 0136 4 93646
0 25 012 0 34 0 09
20
0136
0 0136 0
2 004 0136 0 2725
2
2
3
4
. . . .
.
. . . .
. . . .
. . . .
.
.
. . .

Sigma level: 3
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
Bearing Diameter
UCL = 5.0679
Average = 5.0022
LCL = 4.9364
Control Chart: Bearing Diameter
Mean
5.10963
5.05590
5.00217
4.94844
4.89471
Demonstration Problem 18.1:
Control Chart
X
R Chart
Monitor process variation
1. Decide on the quality to be measured.
2. Determine a sample size.
3. Gather 20 to 30 samples.
4. Compute the sample range for each sample.
5. Determine the average sample mean for all
samples.
6. Using the size of the samples, determine the
values of D
3
and D
4
.
7. Compute the UCL and the LCL

R Chart Formulas
R Charts
R
R
k
LCL R
UCL R
D
D
=
=
=

3
4
Demonstration Problem 18.2:
R Control Chart
Control Chart: Bearing Diameter
Sigma level: 3
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
Range
.4
.3
.2
.1
0.0
Bearing Diameter
UCL = .2725
Average = .1360
LCL = .0000
P Charts
Monitor proportion in noncompliance

1. Decide on the quality to be measured.
2. Determine a sample size.
3. Gather 20 to 30 samples.
4. Compute the sample proportion for each
sample.
5. Determine the average sample proportion for
all samples.
6. Compute the UCL and the LCL

P Chart Formulas

:
p
n
the number of noncomplying items in the sample
the number of items in the sample
=
the sample proportion
the number of samples
UCL = P +3
P Q
n
LCL P 3
P Q
n

non
non
n
n
=
=
=
=
=

where
n
P
p
k
where p
k
where Q P 1
Demonstration Problem 18.3:
Twenty Samples of Bond Paper
Sample n
Number Out
of
Compliance Sample n
Number Out
of
Compliance
1 50 4 11 50 2
2 50 3 12 50 6
3 50 1 13 50 0
4 50 0 14 50 2
5 50 5 15 50 1
6 50 2 16 50 6
7 50 3 17 50 2
8 50 1 18 50 3
9 50 4 19 50 1
10 50 2 20 50 5
Demonstration Problem 18.3:
Preliminary Calculations
Sample n n
non
Sample n n
non
1 50 4 0.08 11 50 2 0.04
2 50 3 0.06 12 50 6 0.12
3 50 1 0.02 13 50 0 0.00
4 50 0 0.00 14 50 2 0.04
5 50 5 0.10 15 50 1 0.02
6 50 2 0.04 16 50 6 0.12
7 50 3 0.06 17 50 2 0.04
8 50 1 0.02 18 50 3 0.06
9 50 4 0.08 19 50 1 0.02
10 50 2 0.04 20 50 5 0.10
p p
Demonstration Problem 18.3:
Centerline, UCL, and LCL Computations
( )( )
( )( )
P
p
k
UCL P
P Q
n
LCL P
P Q
n
LCL
= =
+ + + +
=
= +

= + =
=

= =
=

. . . .
.
.
. .
.
.
. .
.
08 06 02 10
20
053
3 053 3
053 947
50
148
3 053 3
053 947
50
042
0

Demonstration Problem 18.3:

P Control Chart
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
0 5 10 15 20
Sample Number
P = .053
UCL = .148
LCL = 0
p
Demonstration Problem 18.3:
MINITAB P Control Chart
Sample
P
r
o
p
o
r
t
i
o
n
20 18 16 14 12 10 8 6 4 2
0.16
0.14
0.12
0.10
0.08
0.06
0.04
0.02
0.00
_
P=0.053
UCL=0.1480
LCL=0
P Chart of Out of Compliance
c Charts
Monitor number of nonconformances per item
1. Decide on nonconformances to be evaluated.
2. Determine the number of items to be studied (at
least 25).
3. Gather items.
4. Determine the value of c for each item by
summing the number of nonconformances in the
item.
5. Determine the average number of
nonconformances per item.
6. Determine the UCL and the LCL

c Chart Formulas
c c LCL
c c UCL
where
i
c
c c c c
i
3 -
3 + =
item per ities nonconform of number
items of number = i :
c
i
3 2 1
=
=
+ + + +
=

Demonstration Problem 18.4:

Number of Nonconformities in Oil Gauges
Item
Number
Number of
Nonconformities
Item
Number
Number of
Nonconformities
1 2 14 2
2 0 15 1
3 3 16 4
4 1 17 0
5 2 18 2
6 5 19 3
7 3 20 2
8 2 21 1
9 0 22 3
10 0 23 2
11 4 24 0
12 3 25 3
13 2
Demonstration Problem 18.4:
c Chart Calculations
c
i
UCL c c
LCL c c
LCL
c c c c
i
=
+ + + +
=
+ + + +
=
= + =
= = =
=
1 2 3
2 0 3 3
25
2 0
3 2 0 3 2 0 62
3 2 0 3 2 0 2 2
0

.
. . .
. . .
= +
-
Demonstration Problem 18.4: c Chart
0
1
2
3
4
5
6
7
0 5 10 15 20 25
Item Number
c
UCL = 6.2
LCL = 0
c = 2.0
Demonstration Problem 18.4:
MINITAB c Chart
Sample
S
a
m
p
l
e

C
o
u
n
t
24 22 20 18 16 14 12 10 8 6 4 2
7
6
5
4
3
2
1
0
_
C=2
UCL=6.243
LCL=0
C Chart of Number of Nonconformances
Interpreting Control Charts
Points are above UCL and/or below LCL
Eight or more consecutive points fall above or
below the centerline. Ten out of 11 points fall
above or below the centerline. Twelve out of 14
points fall above or below the centerline.
A trend of 6 or more consecutive points
(increasing or decreasing) is present
Two out of 3 consecutive values are in the outer
one-third.
Four out 5 consecutive values are in the outer
two-thirds.
The centerline shifts from chart to chart.
Interpreting Control Charts:
Points above UCL and/or below LCL
UCL
LCL
Centerline
Interpreting Control Charts: 8 Consecutive
Points on One Side of the Centerline
UCL
LCL
Centerline
Interpreting Control Charts:
7 Consecutive Increasing Points
UCL
LCL
Centerline
Interpreting Control Charts:
2 out of 3 Consecutive Points in Outer 1/3
UCL
LCL
Centerline
Interpreting Control Charts:
4 out of 5 Consecutive Points in Outer 2/3
UCL
LCL
Centerline
Acceptance Sampling
Acceptance sampling is the inspection of a
sample from a lot of goods to determine if
the lot will be accepted or rejected.
N = the lot size
n = the sample size
Single Sample Plan
Double-Sample Plan
Multiple-Sample Plan
Rules for Sampling Plans
Accept lot if
Reject lot if
x c
x c
s
>
First sample:
Accept if
Reject if
Take second sample if
Second sample:
Accept if
Reject if
1
1
1
1
1
x
x
c
x
x
s
>
< <
+ s
+ >
1
1
1 1
2 2
2 2
c
r
x r
x c
x c
Single Sample
Plan
Double Sample
Plan
Producers and Consumers Risk
State of Nature
Null True Null False
Actions
Fail to
Reject Null
Type II error Correct
Decision --
Consumers
Risk
Reject Null Type I
error --
Producers
Risk
Correct
Decision
H
0
: the lot is of acceptable quality
Bicycle Manufacturer Example
N = 3,000 (Braces arrive at the manufacturers plant in lots of 3,000.)
n = 15 (The bicycle manufacturer randomly selects a sample of 15 braces
to inspect.)
X is the number of nonconforming braces in the
sample of 15.
A 2% nonconformance rate is acceptable to the
consumer (the bicycle manufacturer).
If the lot contains 60 nonconforming braces, what is
the probability that the consumer will reject the lot
(producers risk)?
If the lot contains 360 nonconforming braces, what is
the probability that the consumer will not reject the
lot (consumers risk)?
Bicycle Manufacturer Example:
Sampling Plan
n
c
x
x
=
s
>
15
1
1
1
=
Accept lot if
Reject lot if
Bicycle Manufacturer Example:
Analysis for 2% Nonconforming Braces
( ) ( )
( ) ( ) ( ) ( )
0
0 15 1 14
02
0 1
15
0
15
1
1 9647 0353
02 98 02 98
p
P x P x
=
= + = =
|
\

|
.
|
+
|
\

|
.
|
=
=
.
.
. .
. . . .
Probability of accepting
Probability of rejecting
9647
Producers Risk
Bicycle Manufacturer Example:
Analysis for 12% Nonconforming
Braces
( ) ( )
( ) ( ) ( ) ( )
1
0 15 1 14
12
0 1
15
0
15
1
4476
1 4476 5524
12 88 12 88
p
P x P x
=
= + = =
|
\

|
.
|
+
|
\

|
.
|
=
=
.
.
. .
. . . .
Probability of accepting
Probability of rejecting
Consumers
Risk
Bicycle Manufacturer Example:
OC Curve for n = 15 and c = 1
0.00
0.20
0.40
0.60
0.80
1.00
0% 10% 20% 30% 40%
Percent nonconforming
Probability
of
acceptance
2%
.9647
} .0353 Producers Risk
.4476 Consumers Risk
12%
.4476
Bicycle Manufacturer Example:
OC Curve for n = 15 and c = 0
0.00
0.20
0.40
0.60
0.80
1.00
0% 10% 20% 30% 40%
Percent nonconforming
Probability
of
acceptance
2%
.74
12%
.21
Demonstration Problem 18.5
Demonstration Problem 18.5
Demonstration
Problem 18.5
n = 20
c = 2
p P(Accept)
0.00001 =BINOMDIST(B$2,B$1,A5,TRUE)
0.01 =BINOMDIST(B$2,B$1,A6,TRUE)
0.02 =BINOMDIST(B$2,B$1,A7,TRUE)
0.03 =BINOMDIST(B$2,B$1,A8,TRUE)
0.04 =BINOMDIST(B$2,B$1,A9,TRUE)
0.05 =BINOMDIST(B$2,B$1,A10,TRUE)
0.06 =BINOMDIST(B$2,B$1,A11,TRUE)
0.07 =BINOMDIST(B$2,B$1,A12,TRUE)
0.08 =BINOMDIST(B$2,B$1,A13,TRUE)
0.09 =BINOMDIST(B$2,B$1,A14,TRUE)
0.1 =BINOMDIST(B$2,B$1,A15,TRUE)
0.11 =BINOMDIST(B$2,B$1,A16,TRUE)
0.12 =BINOMDIST(B$2,B$1,A17,TRUE)
0.13 =BINOMDIST(B$2,B$1,A18,TRUE)
0.14 =BINOMDIST(B$2,B$1,A19,TRUE)
0.15 =BINOMDIST(B$2,B$1,A20,TRUE)
0.16 =BINOMDIST(B$2,B$1,A21,TRUE)
0.17 =BINOMDIST(B$2,B$1,A22,TRUE)
0.18 =BINOMDIST(B$2,B$1,A23,TRUE)
0.19 =BINOMDIST(B$2,B$1,A24,TRUE)
0.2 =BINOMDIST(B$2,B$1,A25,TRUE)
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