Quality Management and SPC

What is Quality?
Degree to which performance of a product or
service meets or exceeds customer
expectations
Performance - Expectations>0, performance has
exceeded customer expectations
Performance = Expectations, expectations have
been met
Performance Expectations <0, expectations have
not been met

Quality Management

Quality Management is a set of activities

an organization performs to maintain and
improve the quality of its products and
services

Quality Article

Competing on eight dimensions of quality

(HBR, Nov-Dec 1987)

Dimensions of Quality:
Manufactured Products
Performance primary product characteristics
Features secondary characteristics
Reliability probability that a product will operate within
an expected time frame; ex: TV for 7 years without
replacement. Consistency of performance
Conformance meeting design specifications
Durability How long the product lasts; its life span
before replacement
Serviceability ease of repair, speed of repair
Aesthetics sensory characteristics (sound, feel, look)
Perceived Quality past performance, reputation,
recognition

Key Points from the Article

Firms should not focus on all eight
dimensions of quality because it becomes
very costly
Focus on quality dimensions that are
important to customers
Change quality measure as the market
requirement changes

Key Contributors to Quality

Management
Shewart

Control Charts

Deming

14 points, special vs. common cause

variation

Juran

Quality is fitness-for-use

Feigenbaum

Customer defines quality

Crosby

Quality is free, zero defects

Ishikawa

Cause-and-effect diagrams

Taguchi

Taguchi loss function

Ohno and Shingo

Continuous improvement

Quality Defined

Traditional definition of quality

Quality means Fitness for use
Two aspects of fitness for use:
Quality of design (Consumers perspective)
Quality of conformance (Producers perspective)

Modern Definition of Quality

Quality is inversely proportional to variability

Reduction of variability is the fundamental idea in quality
control.

Describing Variability

Measures of variability (or spread out)

Range
Variance and the standard deviation
Stem-and-leaf plot
Histogram
Box Plot
Coefficient of variation

Quality Improvement

Quality improvement is the reduction of

variability in processes and products

Describing Variability

Stem-and-leaf display (Graphical display about a data

set)
Shape
Spread
Central tendency

Box Plot (Graphical Display)

Central tendency
Spread or variability
Departure from symmetry
Identification of outliers

Histogram
Same as above

Histogram

Coefficient of Variation

Coefficient of Variation, c = /
Where = standard deviation
= mean

If c<0.75 , low variability

If 0.75 <= c <=1.33, moderate variability
If c >= 1.33, High variability

Approaches to Quality
Assurance
Inspection before/
After production

Acceptance
Sampling

The least
progressive

Inspection and
corrective action
during production

Process Control

Quality built in
the process

Continuous
Improvement

The most
progressive

Quality Assurance is a process of determining whether a product or service meet or

exceed customer expectations

Acceptance Sampling and

Process Control
Inputs
Acceptance
Sampling

Transformation

Process control

Output
Acceptance
Sampling

Inspection before and after production often involves acceptance sampling

Procedures; monitoring during the production process is referred to as process
control

How Much to Inspect and How

Often

The amount of inspection can range from no inspection

whatsoever to inspection of each item.
Low cost, high volume items require less inspection
High-cost, low volume items require intensive inspection
Majority of the quality control applications lie somewhere
between the two

As a rule, operations with high proportion of human involvement necessitate

more inspection than mechanical operations

The amount of Inspection is Optimal When the

sum of the costs of inspection and passing
defectives is minimized

Where to Inspect in the Process?

Raw materials and purchased parts
Finished products
Before a costly operation or where
significant value is added to the product
Before an irreversible process
Before a covering process

Costs of Quality

Appraisal Costs
Inspection and testing of incoming materials
Product inspection and test at various stages
Maintaining accuracy of test equipment (calibration)
Laboratory testing

Prevention Costs
Quality Planning (developing & implementing quality
management program)
Process monitoring
Training
Working with vendors
Quality data acquisition and analysis
Quality improvement projects

Cost of Quality

Internal failure costs

Scrap
Rework
Process downtime
Retest
Failure analysis
Disposition

Customer complaint
Warranty charges
Liability costs
Returned product/material

External failure costs

Cost of Quality

Quality Cost Trend Prediction as

a Function of Time

Cost of Quality
Ce + Ci + Ca + Cp

Cost of Quality= -------------------------------------Cb + Ce + Ci + Ca + Cp

Ce = External failure cost
Ci = Internal failure cost
Ca = appraisal cost
Cp = prevention cost
Cb = measured base production cost ( no costs for quality)

Reporting Quality Costs

A motor company produces small motors

for use in lawn mowers and garden
equipment. The company instituted a
quality management program in 2006 and
has recorded the cost data and accounting
measures for four years

An Evaluation of Quality Costs

2006

2007

2008

2009

--Prevention

$27,000

41,500

74,600

112,300

--Appraisal

155,000

122,500

113,400

107,000

--Internal
Failure costs

386,400

469,200

347,800

219,100

--External
Failure Costs

242,000

196,000

103,500

106,000

TOTAL

$810,400

$829,200

$639,300

$544,400

--Sales

$4,360,000

4,450,000

5,050,000

5,190,000

--Mfg. costs

$1,760,000

1,810,000

1,880,000

1,890,000

QUALITY
COSTS

ACCOUNTING
MEASURES

Quality Index Number

Year

Quality Sales Index

Quality Mfg. Cost

Index

2006

18.58

(810400/4360000)*100

46.04
(810400/1760000)*100

2007

18.63

45.18

2008

12.66

34.00

2009

10.49

28.80

Quality Index = (Total quality costs / Base)100

Cost of Quality

It is estimated that the cost to fix a problem at the customer end is about 5 times the
cost to fix a problem at the design stage

Consequences of Poor Quality

Loss of business
Liability
Productivity
Costs

7 Basic SPC Tools Used in Process

Improvement
Check Sheet
Scatter diagram
Histogram
Pareto Chart
Flow Chart
Run chart
Fish-bone diagram or Cause-and Effect
diagram

Example Summarized Data

(Airlines Performance)

Check Sheet
Causes

January

February

March

April

Lost Luggage

///

//

////

Departure
Delay

//

///

////

////

Mechanical

///

///

////

Overbooked

///

//

Pareto Chart

Pareto (Continued)

Histogram

Run Chart

Scatter Diagram

Fishbone Diagram

Flow Chart

Statistical Process Control (SPC)

A statistical process control involves testing a

random sample of output from a process to
determine whether the process is producing
items within a pre-selected range

It is used to prevent poor quality before it

occurs

SPC is about monitoring consistency and

repeatability of a process

Why Quality Problems?

Variation due to two reasons

Common Cause or random variation
Assignable or Special cause or controllable
variation

Statistical Process Control Tools

(SPC)

Variation in output is due to:

Common causes
Inherent variation present in every process,
unidentifiable sources of variation

Assignable causes
Variations due to specific causes

A process subject to assignable variation is

out of control

Control Charts

A control chart is a time ordered plot of sample statistics

Graphical display of a quality characteristics
Distinguish between random and non-random variability
Chart contains a center line and two limits
Upper control limit
Lower control limit
If the process is in control, all sample points will fall between them
As long as points fall within control limits the process is in
statistical control
However, any point outside limits investigate the assignable
causes

Control Charts

If all the points plot inside the limits, but

behave in a nonrandom manner
indication that process is out of control
and needs investigation

A Control Chart

In Statistical Control
A process that is operating with only
chance cause of variation present is said
to be in statistical control
If the process is in control, all the plotted
points should have an essentially random
pattern

Statistical Process Control Tools

(SPC)

Control (or in control or stable)

A process that exhibits only common cause
variation is said to be in control or stable

A process is said to be out of control when

it exhibits assignable variation
Examples: less experienced worker has
replaced an experienced worker, machine
malfunctioning, change of machine settings

Reasons for Popularity of Control

Charts
Proven technique for improving
productivity
Effective in defect prevention
Prevents unnecessary process adjustment
Provides diagnostic information
Provides information about process
capability

Statistical Process Control Tools

Control Charts for variables

X-bar Chart and R-Chart
X-bar chart for process average
R-chart for process variability

Control Charts for attributes

p-chart and c-chart
p-charts for percent defective in a sample
c-charts for counts (e.g. # of defects)

SPC Tools

Control Charts for variables

(X-chart, R-

Chart)

Variables data are measured on continuous

scale
Length
Width
Voltage
Viscosity
Time needed to complete a task

R-Chart Control Limits

D3, D4 = constants that provide 3 standard deviations (3) limits

for a given sample size

Mean Control Chart (x-bar

chart)

If the process standard deviation is not known, a

second approach is to use the sample range as a
measure of process variability. The appropriate
formulas for control limits are

VARIABLE CONTROL CHART CONSTANTS

Sample Size

X-bar chart

R-chart

R-chart

n
2
3
4
5
6
7
8
9
10

A2
1.880
1.023
0.729
0.577
0.483
0.419
0.373
0.337
0.308

D3
0
0
0
0
0
0.076
0.136
0.184
0.223

D4
3.267
2.574
2.282
2.114
2.004
1.924
1.864
1.816
1.777

Steps in developing X-bar and Rchart

Collect data on the variable measured (time,

weight, diameter). Collect at least 20-25 samples
randomly.
Compute range for each sample, and average Rbar
Calculate the UCL and LCL
Plot the sample ranges. If all are in control
process is in statistical control
Calculate UCL and LCL for x-bar chart
Plot the sample means. If all are in control,
process is in statistical control.

Control Chart Patterns

Control Chart Patterns

p-chart

Control charts for attributes

p-chart measures % defective items or proportion defective
items in a sample
Total # defects from all samples
p-bar = ---------------------------------------# samples Sample size
Appropriate when data consists of two categories of items
Good or bad, pass or fail
Examples: # bad light bulbs and good light bulbs in a given
lot
# of bad glass bottles and good glass bottles
Satisfied and dissatisfied customers

P-chart Limits

c-chart
Appropriate when number of defects are
counted because not possible to compute
proportion defective
Examples

Number of accidents per day

Number of crimes committed in a month
Blemishes on a desk
Complaints in a day
Typo errors in a chapter of the text book
# customer invoice errors

C-chart Limits

Process Capability

Specifications: A range of acceptable values established

by engineering design or customer requirements

Process variability: Natural or inherent variability in a

process due to randomness

Process capability: The inherent variability of process

output relative to the variation allowed by the design
specifications

Measures of Process Capability

Measures of Process Capability

Process Capability Ratio (Cp)
Process Capability Index (Cpk)

Process Capability Ratio

Cp = (Upper Spec Lower Spec) / 6

If Cp < 1, process range > tolerance range

Process not capable of producing within design
specifications
If Cp = 1, Tolerance range and process range are same
If Cp > 1, Tolerance range > process range
A desirable situation
Ideally, Cp > 1.33

Process Capability
Specifications: A range of values imposed by designers
of the product or service based on customer
requirements
Control limits and based on production process, and they
reflect process variability
Process variability: Natural or inherent variability in a
process due to randomness
Process capability: The inherent variability of process
output relative to the variation allowed by the design
specifications

Process Capability

Process Capability

Cp does not take into account where the

process mean is located relative to the
specifications

Cp simply measures the spread of the

specifications relative to the six sigma
spread in the process

Process Capability Index

Generally, if Cp = Cpk, the process is centered at the midpoint of the specifications

When Cpk < Cp, the process is off center

Process Capability
(Sequential Steps)
1.

2.

Calculate Cpk to check centrality

Calculate Cp to check whether the
process variation are within design
specifications

THANK YOU!