Managing Operations: A
Focus on Excellence
Transformation Process
Inputs
Throughput
Cox, Blackstone, and
Schleier, 2003
Chapter 14
The Tools of Quality:
Exceeding Customer’s Expectations
The Seven Tools of Quality
1.
2.
3.
4.
5.
6.
7.
Control chart
Run chart
Pareto chart
Flow chart
Cause and effect diagram
Histogram
Scatter diagram
CBS Chapter 14
14-2
Statistical Process Control
• A method of inspection by which it can
be determined whether a process is in
control
• Differs from Acceptance Sampling in
that SPC does not make judgements
about the quality of the item processed.
• Key tool is the Control Chart of which
several types exist.
CBS Chapter 14
14-3
1
SPC Defined
• All processes are affected by multiple factors
and, therefore, SPC can be applied to any
process.
• There is inherent variation in any process which
can be measured and “controlled.”
• SPC does not eliminate variation, but it does
allow the user to track special cause variation.
• “SPC is a statistical method of separating
variation resulting from special causes from
natural variation and to establish and maintain
consistency in the process, enabling process
improvement.” (Goetsch & Davis, 2003. p. 631)
CBS Chapter 14
14-4
Variation in Processes
• Common Cause variation - the variation
which in inherent in the process itself; when
sampled, a normal distribution is found; a
process is said to be in statistical control
when only common cause variation exists.
• Special (or Assignable) Cause variation - the
variation in process output that might be
traced to a specific cause; the process is said
to be out of control when a special cause
variation exists.
CBS Chapter 14
14-5
Rationale for SPC
Control of Variation
Continuous Improvement
Predictability of Processes
Elimination of Waste
Product Inspection
CBS Chapter 14
14-6
2
Creating Control Charts
• All control charts rely on the periodic
sampling and measurement of items.
• The data collected will allow the
calculation of a centerline, and upper
and lower control limits.
• The centerline is the mean of all
samples, whereas the control limits are,
conceptually, the mean +/- three
standard deviations.
CBS Chapter 14
14-7
Interpreting Control Charts
SPC is based upon the
Central Limit Theorem
which tells us, in effect,
that the samples will
follow a normal
distribution regardless
of the shape of the
parent distribution.
2σ
(68%)
µ
4 σ (95.5%)
6 σ (99.7%)
Interpreting control charts is, then, all about probabilities – if
the observations aren’t probable, then there must be a
special cause variation.
CBS Chapter 14
14-8
Interpreting Control Charts
Special Cause Variation is assumed
to exist if:
1. Any point falls outside the
control limits.
2. Nine consecutive observations
fall on one side of the mean.
3. Six consecutive observations
are increasing (or decreasing.)
4. 14 observations alternate
above and below the mean.
5. Two of three consecutive
points fall in zone C in one-half
of the chart.
6. Four of five consecutive points
fall in zone B in one-half of the
chart.
CBS Chapter 14
µ+3σx
µ+2σ
µ+1σ
UCL
C = 2.1%
B = 13.75%
A = 34%
µ
A = 34%
µ+1σ
B = 13.75%
µ+2σ C = 2.1%
µ-3σx
LCL
7. 15 consecutive observations
in the A zones.
8. Eight consecutive points
outside of the A zones.
14-9
3
Risks of SPC
• SPC has the same Type I and Type II
risks as acceptance sampling
• If the process if in fact in control but we
conclude that it is out of control, we
have committed a Type I error.
• If the process if in fact out of control but
we conclude that it is in control, we
have committed a Type II error.
CBS Chapter 14
14-10
Common control charts for
variables & attributes
Data Category
Chart Type
Statistical Qty
Variables data
X-bar & R
Mean & Range
X-tilde & R
Median & Range
X-Rs
Individual values
P-chart
Percent defective
Np-chart
Number of defectives
C-chart
Number of defects
U-chart
Number of defects per
unit (area, time, length,
etc.)
Attributes data
CBS Chapter 14
14-11
What SPC does not do
• SPC only determines whether a process is
in statistical control NOT whether the
process is producing within specifications
nor whether the process is even capable
of producing within specifications.
• We must rely on another measure AFTER
we have assured that the process is in
control using SPC.
CBS Chapter 14
14-12
4
Process Capability
• Process capability is the ability of the
process, as it currently exists, to
product within specifications.
• One measure known as Cp compares
the natural variation of the process to
the specification width.
• Another, more precise, measure known
as Cpk compares the natural variation of
the process to the specification width
and target.
CBS Chapter 14
14-13
Process Capability
Process Capability (PC) is the range in which "all" output
can be produced – the inherent capability of the process.
Definition:
PC = 6 σ
µ
6 σ (99.7%)
CBS Chapter 14
14-14
Process Capability
and Process Specifications
Process output
distribution
Output
out of spec
Output
out of spec
5.010
4.90
4.95
5.00
5.05
X
5.10
5.15
cm
Tolerance band
LSL
USL
CBS Chapter 14
Inherent capability (6σ )
14-15
5
Process Capability
and Process Specifications
This process is
CAPABLE of
producing all good
output.
Ê Control the process.
Lower
Spec
Limit
Upper
Spec
Limit
×
This process is
NOT CAPABLE.
Ê INSPECT - Sort out
the defectives
CBS Chapter 14
14-16
Process Capability Index
Index Cpk compares the spread and location
of the process, relative to the specifications.
Cpk =
{
the smaller of:
–
OR
Upper Spec Limit - X
3σ
–
X - Lower Spec Limit
3σ
CBS Chapter 14
14-17
Cpk Values
Cpk = 1.0
LSL
Cpk = 1.33
USL
Cpk = 1.0
LSL
CBS Chapter 14
LSL
Cpk = 3.0
USL
Cpk = 0.60
USL
LSL
LSL
USL
Cpk = 0.80
USL LSL
USL
14-18
6
Run Charts
Number of
defectives
x
x
x
x
x
x
x
x
Time
Figure 14.13. Run chart
CBS Chapter 14
14-19
Pareto Chart
Comments
200
180
160
140
120
100
80
60
40
20
x
x
x
x
x
Crust
too
hard
Few
toppings
Need
more
cheese
Too
much
sauce
Service
too
slow
Figure 14.14. Pareto Analysis of problems at a pizza parlor
CBS Chapter 14
Element
14-20
Flow Chart
Time (distance)
Brief Description
5 min.
Sale is made. Items sold are entered into POS terminal.
D
4 hours
Average delay until the end of the day.
1 min.
Inventory records are updated for sales and receipts by computer.
D
14 hours
Delay until order review.
20 min.
Manager builds an order to maximize discount/minimize freight costs by ordering reorder
items and other items required to reach discount.
→
3 days
Mail order to vendor.
3 days
Vendor processes order.
→
3 days
Vendor ships order.
5 min.
Inspect shipment for damage.
→
5 min.
Move shipment to stock room.
D
2 days
Temporarily placed in stock room until time is available to stock shelf.
→
2 min.
Move coffees to proper shelves.
30 minutes Coffees/teas placed in correct display containers.
∆
15 days
Wait until time to pay invoice.
5 min.
Pay invoice.
Summary of Work Elements
Element
Number
Time/distance
Percentage
6
3 days
61 min.
11
D
3
2 days
18 hrs.
11
→
4
6 days
7 min.
22
∆
1
15 days
56
1
5 min.
0
Figure 11.7. Process flow chart—current method of inventory replenishment
CBS Chapter 14
14-21
7
Cause and Effect Diagram
Out of Gas
BATTERY
FUEL
Old
Cable Corroded
Dead
Fuel Line Closed
Lights Left On
CAR WON’T
START
Loose Wire
STARTER
SOLENOID
Wires Corroded
WIRES
Figure 14.15. Ishikawa (cause and effect) diagram for “car won’t start”
CBS Chapter 14
14-22
Histogram
18
16
14
14
25
23
14
20
10
8
11
8
6
3
4
2
15
15
8
6
6
Frequency
11
12
14
11
11
10
10
9
3
5
4
4
2
1
0
0
2 3 4 5 6 7 8 9 10 11 12
Result
Figure 14.16a. Histogram of expected results
2
3
4
5
6
7
8
9
10
Result
Figure 14.16b. Histogram of actual
results
11
CBS Chapter 14
12
14-23
Possible Histogram Shapes
14
14
12
Frequency
12
12
10
9
9
Frequency
9
8
6
6
6
8
6
6
4
4
3
4
3
3
2
0
12
12
10
2
2
1
2
3
4
5
6
7
8
Figure 14.18. Bimodal histogram
0
9
Category
1
2
3
4
5
C a te g o r y
F ig u r e 1 4 .1 9 . C liff-lik e h isto g r a m
10
14
9
12
8
Frequency
7
Frequency
Frequency
17
6
5
4
3
10
8
6
4
2
2
1
0
1
2
3
4
5
6
7
8
Figure 14.20. Saw-toothed histogram
CBS Chapter 14
9
10
11
Category
12
0
1
2
3
4
5
6
7
Figure 14.21. Skewed histogram
8
9
10
Category
14-24
8
Points Scored
Scatter Diagram
40
35
30
25
20
15
10
5
0
0
50
100
150
200
250
300
Figure 14.22. Scatter diagram
350
400
450
Yards Gained Rushing
CBS Chapter 14
14-25
The Seven “New” Tools
1.
2.
3.
4.
5.
6.
7.
Affinity diagram
Relational diagram
Tree diagram
Matrix diagram
Program decision process chart
Arrow diagram
Matrix data analysis
CBS Chapter 14
14-26
Affinity Diagram
A method to “get your arms around” a complex problem.
Similar to a brainstorming session wherein each
participant writes his/her idea for a cause on an index
card.
2
7
1
8
6
5
13
11
3
10
CBS Chapter 14
4
9
12
14
16
15
14-27
9
Affinity Diagram
A method to “get your arms around” a complex problem.
Similar to a brainstorming session wherein each
participant writes his/her idea for a cause on an index
card.
The possible causes are then arranged into groups of
similar causes. The groups might be functional areas.
Group 1
Group 2
4
8
Group 3
2
13
1
12
6
10
3
15
5
14
9
16
11
Group 4
7
CBS Chapter 14
14-28
Relational Diagram
Used to logically examine the interrelationships among the
causes within a particular grouping.
The problem is written to the left and the causes are placed
according to their relationship to the problem -- the further away
the weaker the relationship.
5
1
12
Statement of
problem
16
9
14
CBS Chapter 14
14-29
Relationship Diagram Example
Losses not
defined
Planning work
Accepting current
reality
Status quo is
rewarded
Busy
maximizing
department
profit
Short-term
profit goals
Schedule is
overloaded
Too many
projects
Employees lack
understanding
Lack incentive
for
improvement
Lack time to
develop
employees
Improvement
work competes
with day-to-day
work
Management is
not setting a
good example
CBS Chapter 14
Figure 14.23. Relational diagram
14-30
10
Tree Diagram
Used to identify and sequence the tasks necessary to accomplish
an objective (the opposite of the problem) using the affinity
diagram and the relationship diagram as a reference.
1
4
6
2
8
5
3
13
12
10
7
15
14
11
9
16
Objective
CBS Chapter 14
14-31
Tree
Diagram
Example
Interaction must
occur with
frequency
Make group
meetings
more
Effective
Publish and
adhere to agenda,
with team input
Develop
procedures
to assure
team
effectiveness
Require each
function to
periodically
report status
Provide
system to
communicate
progress
Improve interaction
among functional
areas represented
in the group, in the
creation and
implementation of
an effective business
plan
Distribute
tracking charts
of team
performance
Each function
shows its plan
to fulfill
overall plan
Show
functional
interdependencies
in plan
development
Identify
relationships in
dependencies in
project plan
Interaction
techniques
Participate in
joint training
of planning
methods
Use consensus
building
techniques in plan
development and
implementation
Use facilitator
approach at
meetings
Figure 14.24. Example tree diagram
CBS Chapter 14
14-32
Matrix Diagram
A\B
B1
B2
B3
B4
B5
A1
A2
A3
A4
A5
L-shaped
C5
C5
C4
C4
C3
C3
C2
C2
C1
C1
B1
B2
B3
B4
B5
D5
D4
D3
D2
B1
D1
A1
A1
A2
A2
A3
A3
A4
A4
B2
B3
B4
B5
A5
A5
T-shaped
CBS Chapter 14
X-shaped
14-33
11
Dept 1 Dept 2 Dept 3
1
1
2
5
1
3
1
2
T 10
2
3
1
A 3
4
1
S
K 6
1
2
13
1
3
2
2
2
1
8
2
1
12
1
2
14
1
7
3
2
1
11
3
1
2
9
2
1
16
1
2
15
1
2
CBS Chapter 14
Matrix Diagram
Example
The matrix L-diagram is
often used to identify and
assign responsibility for
tasks identified in the tree
diagram.
1 = primary
2 = secondary
3 = tertiary
14-34
Case received via mail.
Program
Decision
Process
Chart
Case scanned by paralegal
No conflict of interest
Conflict of interest
Attorney and paralegal
meet with client
Sent to another attorney
Attorney and paralegal
"discover” evidence
A settlement offer is made
Plaintiff settles
Plaintiff doesn't settle
File motion to
dismiss case
File trial motions
Hold hearing on motions
Judge orders mediation
Judge doesn't order mediation
No settlement
Mediate settlement
Set trial date
Depose witnesses
Go to trial
Figure 14.27. Sample program decision process chart
CBS Chapter 14
14-35
Arrow Diagram
Operations
1
2
3
4
5
6
7
8
9
10
11 12
Foundation
Framework
Scaffolding
Exterior
Interior walls
Plumbing and
electrical work
Doors and
windows
Interior painting
Interior finished
Final inspection
and delivery
CBS Chapter 14
Figure 14.28a. Gantt chart to plan the construction of a house
14-36
12
Arrow Diagram
4
1
2
5
3
6
7
8
10
9
Figure 14.28b. Arrow diagram for construction of a house
CBS Chapter 14
14-37
What is QFD?
A specialized method for making customers part of
the product development cycle.
It translates customer wants into what the
organization produces enabling the organization
to:
• Prioritize customer needs;
• Find innovative responses to those needs; and,
• Improve processes to maximize effectiveness.
CBS Chapter 14
14-38
Structure of QFD
6
2
1 Customer Input
2 Manufacturer’s Current
Requirements/Specifications
to Suppliers
3 Planning Matrix
importance rating
competition rating
target values
scale-up needed
sales points
4 Relationships
1
4
5
CBS Chapter 14
3
5 Prioritized list of
manufacturer’s critical
process requirements
6 Process requirement
trade-offs
14-39
13
QFD Example
X = conflicting requirement
+ = supporting requirement
Tapes from CD
4
Large speakers
5
Light weight
6
Good balance
4
Good sound
1
Inexpensive
2
Attractive
4
CBS Chapter 14
3 Color choices
6” Speakers
Plastic handle
Plastic case
PRIORITY
Tape recorder
Product
characteristics
X
A = Competitor 1
B = Competitor 2
C = Our Boom Box
WORST
BEST
A B
+
C
B C
+
C
A
C
B
B
AC
C
X
X
+
B
A
C
+
BC
AB
A
Figure 14.29. House of quality for a boom box
Technical features
Customer
Requirements
Matrix 1
14-40
QFD Process
Applied technologies
Technical
features
Matrix 2
Applied
technologies
Matrix 3
Manufacturing
processes
Matrix 4
Quality control
processes
Matrix 5
Statistical process
control
Matrix 6
Manufacturing processes
Quality control processes
Statistical process control
Specifications for the finished product
CBS Chapter 14
14-41
Taguchi Loss Function
COSTS
$
L = k(T-x)2 where:
L = loss
k = a constant (typically a
measure of intolerance of
deviation)
T = target
x = observed value
0
12 OUNCE
AMOUNT
Figure 14.30. The Taguchi loss function
CBS Chapter 14
14-42
14
Business System Model
L IC
Y
Y
PH
CT
JE
OB
EM
EN
T
&
GY
TE
ES
IV
INFORMATION
SYSTEMS
SO
ILO
PO
RA
ST
S
AL
GO
ORGANIZATION
GE
PH
MA
NA
G
NA
MA
NT
ME
NT O L
ME TR
GE ON
CE
NA & C
AN TS
MA ING
RM EN
N
FO REM
AN
N
PL
ER
U
IO
P
T
AS
TA
ME
EN
EM
PL
N
IM
SIG
DE
THE ENVIRONMENT: GLOBAL COMPETITORS AND
SUPPLIERS, GOVERNMENTS, ECONOMIES,
CONSUMER TASTES, UNIONS, ETC.
CUSTOMERS
SUPPLIERS
PHYSICAL
RESOURCES
PEOPLE
BUSINESS PROCESSES
INPUT
TRANSFORMATION
THROUGHPUT
FIGURE 1.6g. BUSINESS SYSTEM MODEL
CBS Chapter 14
14-43
15