Introduction to operations and supply chain management 3e bozarth chapter 05

Managing Quality
Chapter 5


Chapter Objectives
Be able to:

 Discuss the various definitions and dimensions of quality and
why quality is important to operations and supply chains.
 Describe the different costs of quality, including internal and
external failure, appraisal, and prevention costs.
 Describe what TQM is, along with its seven core principles.
 Calculate process capability ratios and indices and set up
control charts for monitoring continuous variables and
attributes.
 Describe the key issues associated with acceptance sampling, as
well as the use of OC curves.
 Distinguish between Taguchi’s quality loss function and the
traditional view of quality.
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Quality Defined
 Quality – The characteristics of a product or service
that bear on its ability to satisfy stated or implied
needs; a product or service that is free of
deficiencies.
 Value perspective – A quality perspective that holds that
quality must be judged, in part, by how well the

characteristics of a particular product or service align with
the needs of a specific user.
 Conformance perspective – A quality perspective focused
on whether or not a product was made or a service was
performed as intended.
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Eight Dimensions of Quality
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Performance
Features
Reliability
Durability
Conformance
Aesthetics
Serviceability
Perceived Quality
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Quality Dimension Examples

Table 5.1
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Total Cost of Quality
 Prevention costs – Costs an organization incurs to
actually prevent defects from occurring to begin
with.
 Appraisal costs – Costs a company incurs for
assessing its quality levels.
 Internal failure costs – Costs caused by defects that
occur prior to delivery to the customer.
 External failure costs – Costs incurred by defects that
are not detected until a product or service reaches
the customer.
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Total Cost of Quality
Traditional View

Figure 5.2
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Total Cost of Quality
Zero Defects View

Figure 5.3
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Total Quality Management
Total Quality Management A managerial approach in which an
organization is managed so that it excels in all
quality dimensions that are important to
customers.

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Total Quality Management
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Customer focus
Leadership involvement
Continuous improvement
Employee empowerment
Quality assurance
Strategic partnerships
Strategic quality plan
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Total Quality Management
 Customer focus
 Each employee has a customer whether internal
or external to the company.

 Leadership involvement
 Must be ‘top’ down, throughout the company.
 If not, major cause of TQM failures.

 Continuous improvement
 There is always room for improvement.
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Total Quality Management
 Employee empowerment
 Giving employees the responsibility for managing quality.

 Quality assurance
 Quality Function Deployment (QFD) discussed in Chapter
15
 Statistical quality control (SQC), also called statistical
process control (SPC)

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Total Quality Management
 Supplier Partnerships
 The commitment between firms and supply chain
partners must be the same.

 Strategic Quality Plan
 Sets a broad set of objectives.
 Should establish measurable goals for the shortterm.
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Process Capability
Answers the Question:

Can the process provide
acceptable quality consistently?

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Process Capability Ratio (Cp)
Process Capability Ratio (Cp) – Measures whether or not a process is potentially capable of
meeting certain quality standards

Cp =

Upper Tolerance Limit – Lower Tolerance Limit
6σ
Where σ is the estimated
standard deviation
for the individual observations

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Normal Distribution

Figure 5.4
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Process Capability Values

Figure 5.5
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Process Capability Index
Process Capability Index (Cpk) – Measures whether or not a process is capable of
meeting certain quality standards and is centered between the specification limits.

   LTL UTL   
Cpk min 
,
3 
 3

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Six Sigma Quality
To achieve Six Sigma quality, the variability
of a process must be reduced to the point
that the process capability ratio is greater
than or equal to 2.

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Six Sigma Quality

Figure 5.6
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Control Charts
 Control Chart – A specialized run chart that
helps an organization track changes in key
measures over time.
 Continuous variable – A variable that can be
measured along a continuous scale.
 Attribute – The presence or absence of a
particular characteristic.

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Sampling
 Sampling – Using carefully selected samples
to get a fairly good idea of how well a process
is working.
 Good sample:
 Every outcome has an equal chance of being
selected into the sample.
 The sample size is large enough to not be swayed
by any single observation.
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Continuous Variable
Measurements

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Control Charts
 X chart - A specific type of control chart for a
continuous variable that is used to track the average
value for future samples.
 R chart – A specific type of control chart for a

continuous variable that is used to track how much
the individual observations within each sample
vary.
 p chart – A specific type of control chart for
attributes that is used to track sample proportions.
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Step 1 – Sampling the Process
Observation
Sample

1

2

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5

1

136

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144

141

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2

143

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140

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3

140

141

144

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4

139

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141

5

137

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6

142

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7

143

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140

8

139

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136

9

140

138

143

141

139

10

139

141

142

140

136

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