OPERATIONS MANAGEMENT
for MBAs Fourth Edition
Meredith and Shafer
Prepared by:
Al Ansari
Seattle University
John Wiley and Sons, Inc.
Chapter 3: Controlling Processes
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Chapter 3
Controlling Processes
Chapter 3: Controlling Processes
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Introduction
Chapter 3: Controlling Processes
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Texas Instruments
Wanted to design new Accounts Receivable
using new technologies
 To monitor and control their cost
 They identified variety of measures to track
including actual versus projected spending
 Problem – the planned budget exceeded the
contract funs available
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Automotive Systems Group
of Johnson Controls
Having trouble controlling their product
development process
 Each manager used a different process
 Workers did not know who was responsible
for the work
 Developments were failing because of rapid
company growth
 New employees were having trouble fitting
into the culture.
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Monitoring and Control

Monitor processes, output, and environment
to make sure that strategy is appropriate to
achieve goals.
◦ First, identify the key factors to be controlled.
◦ Second, identify the relevant information to be
collected.
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Stages of Operational Effectiveness

Internally Neutral Minimize manufacturing’s
negative potential

Externally Neutral Industry practice is
followed
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Internally Supportive Manufacturing
investment support the business strategy

Externally Supportive Manufacturing is
involved up front in strategic decision
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Benefits of Balanced Scorecard
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An effective way to clarify and gain consensus of the
strategy
A mechanism for communicating the strategy
throughout the entire organization
A mechanism for aligning departmental and personal
goals to the strategy
A way to ensure that strategic objectives are linked to
annual budgets
Timely feedback related to improving the strategy
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ISO 9000
ISO 9000 was developed by International
Organization for Standardization.
 ISO 9000 was developed as a guideline for
designing , manufacturing, selling, and servicing
products.
 It is a “checklist” of good business practices.
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ISO 9000
Guidelines for designing, manufacturing,
selling, and servicing products.
 Selecting an ISO 9000 certified supplier
provides some assurance that supplier
follows accepted business practices in
areas covered by the standard
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Elements of ISO 9000
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Management Responsibility
Quality System
Contract Review
Design Control
Document and Data Control
Purchasing
Control of Customer Supplied Product
Product Identification and Traceability
Process Control
Inspection and Testing
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Control of Inspection, Measuring,
and Test Equipment
Inspection and Test Status
Control of Nonconforming
Product
Corrective and Preventive
Action
Handling, Storage, Packaging,
Preservation, and Delivery
Internal Quality Audits
Training
Servicing
Statistical Techniques
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ISO 14000
Series of standards covering environmental
management systems, environmental auditing,
evaluation of environmental performance,
environmental labeling, and life-cycle assessment.
 Intent is to help organizations improve their
environmental performance through
documentation control, operational control,
control of records, training, statistical techniques,
and corrective and preventive actions.
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Process Control
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Process Control
Process control is the act of reducing
difference between plan and reality for each
process.
 Control is one of the manager’s most
difficult tasks involving mechanistic and
human elements.
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Process Control
Characteristic of a good control system:
 Should be flexible
 Should be cost effective
 Should be simple
 Must operate in a timely manner
 Should be precise
 Should be fully documented
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Control Based on Attributes and
Variables
Inspection for Variables: measuring a
variable that can be scaled such as weight,
length, temperature, and diameter.
 Inspection of Attributes: determining the
existence of a characteristic such as
acceptable-defective, timely-late, and rightwrong.
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Chance Versus Assignable Variation
Chance variation is variability built into
the system.
 Assignable variation occurs because some
element of the system or some operating
condition is out of control.
 Quality control seeks to identify when
assignable variation is present so that
corrective action can be taken.
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Control Charts
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Control Charts

Developed in 1920s to distinguish
between chance variation in a system and
variation caused by the system’s being out
of control - assignable variation.
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Control Charts continue
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Repetitive operation will not produce exactly
the same outputs.
Pattern of variability often described by
normal distribution.
Random samples that fully represent the
population being checked are taken.
Sample data plotted on control charts to
determine if the process is still under control.
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Control Chart with Limits Set at
Three Standard Deviations
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Control Charts for Variables
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Two Control Charts
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Sample Means Chart
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Range Chart
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Sample Data of Weights of Tacos
(Ounces)
Sample
Scenario 1
Scenario 2
1
4, 5, 6
4, 5, 6
2
6, 7, 8
3, 5, 7
3
7, 8, 9
2, 5, 8
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Analysis of Scenario 1
Sample
Mean
Range
1
5
2
2
7
2
3
8
2
Sample means show problem having increased from 5
ounces to 8 ounces. Sample ranges have not changed
from sample to sample.
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Analysis of Scenario 2
Sample
Mean
Range
1
5
2
2
5
4
3
5
6
Sample ranges show problem having increased from 2
ounces to 6 ounces. Sample means have not changed
from sample to sample.
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Patterns of Change in Process
Distributions
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Control Limits
Sample Means Chart:
UCL X  X  A 2 R
LCL X  X  A 2 R
Range Chart:
UCL R  D 4 R
LCL R  D 3 R
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Constructing Control Charts
X

X
N
R

R
N
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Mean Age of Ice Cream
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Range in Ice Cream Age
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Control Charts for Attributes
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Fraction-Defective (p) Charts
total number of defects
p
total number of units sampled
p 
p (1  p )
n
UCL p  p  z p
LCL p  p  z p
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Number-of-Defects (c) Charts
number of incidents observed
c
number of units sampled
c  c
UCL c  c  z c
LCL c  c  z c
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Service Defections

Organizations should monitor customer
defections
◦ feedback from defecting customers can be
used to identify problem areas
◦ can determine what is needed to win them
back
◦ changes in defection rate can be used as early
warning signal
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Chapter 3: Controlling Processes
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