Business statistics a decision making approach 6th edition ch17ppln

Business Statistics:
A Decision-Making Approach
6th Edition

Chapter 17
Introduction to Quality and
Statistical Process Control

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Chap 17-1


Chapter Goals
After completing this chapter, you should be
able to:

 Use the seven basic tools of quality
 Construct and interpret x-bar and R-charts
 Construct and interpret p-charts
 Construct and interpret c-charts

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Chap 17-2


Chapter Overview
Quality Management and
Tools for Improvement
Philosophy of

Quality
Deming’s 14
Points
Juran’s 10
Steps to
Quality
Improvement

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Tools for Quality
Improvement
The Basic
7 Tools

Control
Charts
X-bar/R-charts
p-charts
c-charts
Chap 17-3


Themes of Quality
Management









Primary focus is on process improvement
Most variations in process are due to systems
Teamwork is integral to quality management
Customer satisfaction is a primary goal
Organization transformation is necessary
It is important to remove fear
Higher quality costs less

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Chap 17-4


Deming’s 14 Points


1. Create a constancy of purpose toward
improvement




2. Adopt the new philosophy




Better to improve now than to react to problems later

3. Stop depending on inspection to achieve
quality -- build in quality from the start




become more competitive, stay in business, and provide jobs

Inspection to find defects at the end of production is too late

4. Stop awarding contracts on the basis of
low bids


Better to build long-run purchaser/supplier relationships

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Chap 17-5


Deming’s 14 Points
(continued)




5. Improve the system continuously to improve

quality and thus constantly reduce costs
6. Institute training on the job




7. Institute leadership






Workers and managers must know the difference between common
cause and special cause variation
Know the difference between leadership and supervision

8. Drive out fear so that everyone may work
effectively.
9. Break down barriers between departments so
that people can work as a team.

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Chap 17-6


Deming’s 14 Points
(continued)


10. Eliminate slogans and targets for the
workforce









They can create adversarial relationships

11. Eliminate quotas and management by
objectives
12. Remove barriers to pride of workmanship
13. Institute a vigorous program of education
and self-improvement
14. Make the transformation everyone’s job

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Chap 17-7


Juran’s 10 Steps to Quality
Improvement








1. Build awareness of both the need for
improvement and the opportunity for
improvement
2. Set goals for improvement
3. Organize to meet the goals that have been
set
4. Provide training
5. Implement projects aimed at solving
problems

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Chap 17-8


Juran’s 10 Steps to Quality
Improvement

(continued)








6. Report progress
7. Give recognition
8. Communicate the results
9. Keep score
10. Maintain momentum by building
improvement into the company’s regular
systems

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Chap 17-9


The Deming Cycle
Plan

Act

The
Deming
Cycle
Study

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Do
The key is a
continuous

cycle of
improvement
Chap 17-10


The Basic 7 Tools
1.

Process Flowcharts

2.

Brainstorming

3.

Fishbone Diagram

4.

Histogram

5.

Trend Charts

6.

Scatter Plots

7.

Statistical Process
Control Charts

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Chap 17-11


The Basic 7 Tools
(continued)
1.
2.
3.
4.
5.
6.
7.

Process Flowcharts
Brainstorming
Fishbone Diagram
Histogram
Trend Charts
Scatter Plots
Statistical Process
Control Charts

Map out the process to better

visualize and understand
opportunities for improvement

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Chap 17-12


The Basic 7 Tools
(continued)
1.
2.
3.
4.
5.
6.
7.

Process Flowcharts
Brainstorming
Fishbone Diagram
Histogram
Trend Charts
Scatter Plots
Statistical Process
Control Charts

Show patterns of variation

Fishbone (cause-and-effect) diagram:

Cause 1

Cause 2
Sub-causes

Problem
Sub-causes

Cause 3

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Cause 4

Chap 17-13


The Basic 7 Tools
(continued)
1.
2.
3.
4.
5.
6.
7.

Identify trend

Process Flowcharts

Brainstorming
Fishbone Diagram
Histogram
Trend Charts
Scatter Plots
Statistical Process
Control Charts

y

y

time

Examine relationships

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

x
Chap 17-14


The Basic 7 Tools
(continued)
1.
2.
3.
4.
5.
6.

7.

Process Flowcharts
Brainstorming
Fishbone Diagram
Histogram
Trend Charts
Scatter Plots
Statistical Process
Control Charts

Examine the performance
of a process over time
X

time

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Chap 17-15


Introduction to Control
Charts


Control Charts are used to monitor variation in
a measured value from a process


Exhibits trend



Can make correction before process is out of control



A process is a repeatable series of steps
leading to a specific goal



Inherent variation refers to process variation
that exists naturally. This variation can be
reduced but not eliminated

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Chap 17-16


Process Variation
Total Process
Common Cause
Special Cause
=
+
Variation
Variation

Variation






Variation is natural; inherent in the world
around us
No two products or service experiences
are exactly the same
With a fine enough gauge, all things can
be seen to differ

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Chap 17-17


Sources of Variation
Total Process
Common Cause
Special Cause
=
+
Variation
Variation
Variation
Variation is often due to differences in:
 People

 Machines
 Materials
 Methods
 Measurement
 Environment
Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Chap 17-18


Common Cause Variation
Total Process
Common Cause
Special Cause
=
+
Variation
Variation
Variation
Common cause variation


naturally occurring and expected



the result of normal variation in
materials, tools, machines, operators,
and the environment

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Chap 17-19


Special Cause Variation
Total Process
Common Cause
Special Cause
=
+
Variation
Variation
Variation
Special cause variation


abnormal or unexpected variation



has an assignable cause



variation beyond what is considered
inherent to the process

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Chap 17-20


Statistical Process Control
Charts


Show when changes in data are due to:




Special or assignable causes
 Fluctuations not inherent to a process
 Represents problems to be corrected
 Data outside control limits or trend
Common causes or chance

Inherent random variations
 Consist of numerous small causes of random
variability

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Chap 17-21


Control Chart Basics
Special Cause Variation:
Range of unexpected variability

UCL
Common Cause
Variation: range of
expected variability

+3σ

Process Average

- 3σ
LCL
time

UCL = Process Average + 3 Standard Deviations
LCL = Process Average – 3 Standard Deviations
Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Chap 17-22


Process Variability
Special Cause of Variation:
A measurement this far from the process average
is very unlikely if only expected variation is present

UCL
±3σ → 99.7% of
process values
should be in this

range

Process Average
LCL
time

UCL = Process Average + 3 Standard Deviations
LCL = Process Average – 3 Standard Deviations
Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Chap 17-23


Statistical Process Control
Charts
Statistical Process
Control Charts

X-bar charts
and R-charts
Used for
measured
numeric data

p-charts
Used for
proportions
(attribute data)

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

c-charts
Used for
number of
attributes per
sampling unit
Chap 17-24


x-bar chart and R-chart






Used for measured numeric data from a
process
Start with at least 20 subgroups of observed
values
Subgroups usually contain 3 to 6 observations
each

Business Statistics: A Decision-Making Approach, 6e © 2010 PrenticeHall, Inc.

Chap 17-25