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Ski Trip - Mount Stowe, VT
Sat., Mar. 18 from 5:30 AM - 4:30 PM
$65.00/person ($20.00/person ski rental)


Blue Man Group - Boston Playhouse
Fri., Mar. 24 at 7:00 PM and
Sat., Mar. 25 at 4:00 PM
Free

Guest Speaker Panel – SM 105
Mon., Mar. 20, 7:00 PM - 9:00 PM
Free
Quality Management
Boston University School of Management
Professor Peter Arnold
What is Quality?
The ability of a product or service to
consistently meet or exceed customer
expectations.
The Customer

Internal and External

Customer Requirements

Customer Satisfaction

Conflict between Heterogeneous
Customer Populations
The Customer
Who are the customers of the Boston
University School of Management?
The Customer
Customers of the School of Management

Alumni

Boston University

Employers
 Of Students
 Of Faculty (e.g. consultants)

Faculty

Governments

Potential Students (applicants)

Staff (including administration)

Students

Universities (other than BU)
The Customer

What are the requirements of the
student customers at BU SMG?
The Customer
Student Requirements
Reputation
Housing
Qualified Instructors
Feedback
Small Classes
Convenience
Strong, Relevant Curriculum
Fun
Case Studies
Varied Learning Experiences
Practical Skills
Career Services
Strong Peer Groups
Campus Life
Affordable Education
Dimensions of Quality
Performance:
Features:
Conformance:
Reliability:
Durability:
Perceived quality:
Serviceability:
Aesthetics:
Primary operating characteristics
Secondary characteristics
How well specifications are met
Consistency of performance
Product life
Brand image/reputation
Ease of service/friendliness of server
Effect on senses
Garvin
Managing Quality


If Quality improvement is about any
one thing it is about variance
reduction.
Variation is a term used to describe
deviation from the expected.
 High variation or variability creates
great uncertainty in outcome.
Variation
How much variation in outcome is there?
Variation
Which has more variation in outcome?
Variation
Source of Variation?
Source of Variation?
Six Sigma
“The statistical representation of Six Sigma describes quantitatively
how a process is performing. To achieve Six Sigma, a process must
not produce more than 3.4 defects per million opportunities. A Six
Sigma defect is defined as anything outside of customer
specifications.”
http://www.isixsigma.com/sixsigma/six_sigma.asp
Six Sigma focuses on process capability – Develop and operate
processes that are capable of producing only “good” units of output.
Why would that be an appealing?
Savings – less waste, lower capacity utilization, lower fixed costs,
increased premium….
Basketball and Six Sigma
Suppose there was an outcry by fans of college basketball over the
dearth of scoring in the game. Suppose further that the czar of
basketball asked us to increase the scoring in college basketball
games. The focus of the effort might be the process of shooting
hoops. The best field goal percentage in Men’s NCAA Division I
basketball is about 65%. How could the average be improved?
1.
2.
3.
4.
5.
Study the data
Identify patterns in the data
Develop countermeasures
Implementation
Review
Fundamental
approach to
quality improvement
F
G
C
G
F
Division 1 NCAA Men’s Basketball Statistics 2002-3
ncaa.org
Rank
Name
School
1
Adam Mark
Belmont
2
Rickey White
3
Field
Goals
Tried
Field
Goal %
Field
Goals
per
Game
Height
Position
Jr.
6-8
F
28
199
297
67
7.1
Maine
Sr.
6-4
F
24
131
198
66.2
5.5
Matt Nelson
Colorado State
So.
7-0
C
31
205
319
64.3
6.6
4
Armond
Williams
Ill.-Chicago
Jr.
6-5
F
30
168
263
63.9
5.6
5
Michael
Harris
Rice
So.
6-6
F
28
172
276
62.3
6.1
6
Chris Kaman
Central Michigan
Jr.
7-0
C
31
244
392
62.2
7.9
7
David Gruber
Northern Iowa
Jr.
6-6
F
28
141
231
61
5.0
8
Ike Diogu
Arizona State
Fr.
6-8
F
32
209
344
60.8
6.5
9
Omar Barlett
Jacksonville State
Sr.
6-8
G
30
178
293
60.8
5.9
Jason Keep
San Diego
Sr.
6-10
C
30
195
323
60.4
6.5
10
Class
Field
Goals
Made
Games
Division 1 NCAA Men’s Basketball Statistics 2002-3
ncaa.org
Free
Throws
Tried
Free
Throw %
Free
Throws
per
Game
Class
Height
Position
Games
Free
Throws
Made
Belmont
Jr.
6-0
G
29
78
82
95.1
2.7
Matt Logie
Lehigh
Sr.
6-5
G
28
91
96
94.8
3.3
3
Hollis Price
Oklahoma
Sr.
6-1
G
34
130
140
92.9
3.8
4
Brian Dux
Canisius
Sr.
6-4
G
28
115
125
92
4.1
5
J.J. Redick
Duke
Fr.
6-4
G
33
102
111
91.9
3.1
6
Tim Parker
Chattanooga
Sr.
6-5
G
30
78
85
91.8
2.6
7
Dwayne
Byfield
Monmouth
So.
6-2
G
28
72
79
91.1
2.6
8
Gerry
McNamara
Syracuse
Fr.
6-2
G
35
90
99
90.9
2.6
9
Kyle Korver
Creighton
Sr.
6-7
F
34
109
120
90.8
3.2
Jeb Ivey
Portland
State
Sr.
6-2
G
27
69
76
90.8
2.6
Rank
Name
School
1
Steve Drabyn
2
10
Improving Field Goal
Percentage
Outlaw defense
Do not take very many shots
Practice, Practice, Practice
Only shoot from short distances
Permit only very tall players to shoot
Decrease the height of the basket
Increase the diameter of the basket
Make the rim out of thick fluffy cotton material
Make the backboard convex
Decrease the size of the ball
Make the ball out of sponge materials
Poor Quality
What happens when quality is poor?
• Costs increase
• Customers complain  more costs
• Customers don’t come back  highest costs
• And along with increasing costs, you have
fewer goods or services to sell.
Cost of Quality
•
•
•
•
•
Conceptual Framework
Not Always Totally Quantifiable
Useful for Attention Getting
Useful as a Mechanism for Keeping Score
Consistency of Measurement
Four Categories of Cost
• Cost of Prevention
• Cost of Appraisal
Increasing overall
quality results from
investment in these
• Cost of Internal Failure
• Cost of External
Failure
Increasing overall
quality results in lower
experience with these
Total Cost
Cost
Internal and
External Failures
Prevention
and Appraisal
Poor
Superior
Level of Quality
Cost of Prevention
•
•
•
•
•
•
Quality Planning
Design (Prototyping, Field Testing)
Education and Training
Process Control
Information reporting
Quality Improvement Programs, Quality
Improvement Teams (QIPs and QITs)
• Supplier Involvement
Cost of Appraisal
•
•
•
•
•
•
Incoming Inspection
In-Process Inspection
Final Inspection
Testing Devices
Destructive Testing
Inventory Safeguarding
Cost of Internal
Failures
•
•
•
•
•
•
Scrap – wasted materials and labor
Rework – doing the job twice
Retesting – checking the second time
Downtime - Capacity
Yield Losses – goods unavailable for sale
Managing Defective Materials – making sure the
bad ones do not get out.
Calculating the Cost of Scrap: Yield Loss
DataStor – Perfect Quality – Disk Fabrication
Pre-Stage
Material
Labor
Stage
Stage-End
Cost
Cost
Cost
Yield
Cost
Coat & Polish
$0.000
$0.050
$0.010
100.0%
$0.060
Assemble
$0.060
$0.080
$0.040
100.0%
$0.180
Package
$0.180
$0.010
$0.030
100.0%
$0.220
$0.140
$0.080
100.0%
Stage
Overall
Calculating the Cost of Scrap: Yield Loss (cont.)
DataStor – Yield Loss – Disk Fabrication
Pre-Stage
Material
Labor
Stage
Stage-End
Cost
Cost
Cost
Yield
Cost
Coat & Polish
$0.000
$0.050
$0.010
92.0%
$0.065
Assemble
$0.065
$0.080
$0.040
71.0%
$0.010
$0.030
99.0%
$0.140
$0.080
64.7%
Pre-Stage
Material
Labor
Stage
Stage-End
Cost
Cost
Cost
Yield
Cost
Coat & Polish
$0.000
$0.050
$0.010
92.0%
$0.065
Assemble
$0.065
$0.080
$0.040
71.0%
$0.261
Package
$0.261
$0.010
$0.030
99.0%
$0.304
$0.140
$0.080
64.7%
Stage
Package
Overall
Stage
Overall
Cost of External Failures
•
•
•
•
•
Customer Complaint Adjustment
Returned Materials - Restocking and Reshipping
Warranty Charges
Allowances for Defective Materials
Lost Business
Trade-offs
• Appraisal and Prevention (Investment)
• Internal and External Failures (Expense)
• As the level of Quality Improves
– Appraisal and Prevention Increase
– Internal and External Decrease
Cost of Prevention
•
•
•
•
•
•
•
•
Quality Planning
Design (Prototyping, Field Testing)
Education and Training
Process Control
Quality Information Systems
Quality Reporting
Quality Improvement Programs, Quality Improvement Teams
Supplier Involvement
What are the long-run consequences of
investment in these items?
Total Cost
Cost
Internal and
External Failures
Prevention
and Appraisal
Poor
Superior
Level of Quality