Quality Management

Guanyi Lu April 20, 2014

Learning Objectives
Understand total quality management. Understand the cost of quality. Understand how processes are monitored with control charts. Calculate the capability of a process. Understand six sigma philosophy. Understand the lean manufacturing philosophy.

All Rights Reserved, G. Lu, 2014

Total Quality Management

Total quality management (TQM): managing the entire organization so that it excels on all dimensions of products and services that are important to the customer Two fundamental operational goals:
Careful design of the product or service Ensuring that the organizations systems can consistently produce the design

All Rights Reserved, G. Lu, 2014

Quality Specifications
Design quality: inherent value of the product in the marketplace Conformance quality: degree to which the product or service design specifications are met
Quality at the source: the person who does the work takes responsibility for making sure it meets specifications
The later a defect is detected, the more costly the defect is

All Rights Reserved, G. Lu, 2014

Defects and Profit Losses

Defects found at: Own Process Next Process End of Line Final Inspection End Users Hand

Impact to Very the company minor

Minor delay

Rework Delay

Significant Warranty rework cost Delay in Administrative delivery cost Additional Reputation inspection Loss of market share
5

All Rights Reserved, G. Lu, 2014

Cost of Quality
Basic cost assumptions
Failures are caused Prevention is cheaper Performance can be measured

Cost of quality
Appraisal cost Prevention cost Internal failure cost External failure cost

All Rights Reserved, G. Lu, 2014

Statistical Process Control

Statistical Process Control (SPC) is a set of techniques designed to evaluate quality from a conformance view. Can be applied to both manufacturing and service processes Statistics on variations
Process capability determines how good a process is at making parts when it is running properly
Measure the overall variations

Control charts are used to check continuously whether the process is running properly
Differentiate two types of variations
All Rights Reserved, G. Lu, 2014 7

Two Types of Variations

Assignable variation
Variation that is caused by factors that can be clearly identified and possibly even managed

Common variation
Variation that is inherent in the process

The distinction between common variation and assignable variation is NOT a universal truth

All Rights Reserved, G. Lu, 2014

General Form of Control Charts

80
Value

60

40
20 0

Sample Value UCL Average LCL

13

17

21

Sample No.
All Rights Reserved, G. Lu, 2014 9

The Basics of Control Charts

Control charts are graphical tools to statistically distinguish between assignable and common variations Attribute charts versus variable charts
Attributes are quality characteristics that are classified as either conforming or not conforming to specification
p charts

Variables refer to measurable quality characteristics

X-bar charts and R charts

Based on samples taken from the process

All Rights Reserved, G. Lu, 2014 10

Sample Size
Control charts are plotted based on samples taken from the process Sample size: the number of units (data points) included in a sample
Make the sample size large enough to expect to count the attribute twice in each sample
If the defect rate were about 1%, an appropriate sample size would be 200 units

Sample sizes for variable control charts are much smaller, typically from 2 to 10. Larger sample sizes may be necessary for detecting finer variations of a process

All Rights Reserved, G. Lu, 2014

11

Attribute Control Chart: p Chart

When it is difficult to comp up with a single variable that captures the degree of specification, it is desirable to track the percentage of defective items in a given sample Denote by p this percentage and by p the average percentages of defects over all samples

All Rights Reserved, G. Lu, 2014

12

Control Limits For p Chart

sp p(1 p) sample size

UCLp p zs p
LCLp p zs p , or 0, whichever is larger
z=3 (for 99.7% confidence) z=2.58 (for 99% confidence)

All Rights Reserved, G. Lu, 2014

13

Example: p Chart
Facing intense competitions, the manager of Cheesy Pizza is thinking of implementing a 30-minute delivery policy which promises a customer a free pizza if the delivery time exceeds 30 minutes. Before publicizing the policy, the manager sets up a pchart based on 6 samples of 50 deliveries. (z=3) Is the delivery process in control or out of control? SAMPLE #1 #2 #3 #4 #5 #6 Number of belated deliveries 4 9 4 5 2 6 Fraction of belated deliveries

All Rights Reserved, G. Lu, 2014

14

Example: p Chart
0.25 0.2 0.15 0.1 0.05 0 1 2 3 4 5 6 p-bar UCL LCL p value

All Rights Reserved, G. Lu, 2014

15

Variable Control Charts: X-bar Chart and R chart

X-bar chart The x-axis corresponds to sample numbers The y-axis corresponds to the mean of each sample

R chart The x-axis corresponds to sample numbers The y-axis corresponds to the range of each sample

All Rights Reserved, G. Lu, 2014

16

Construct X-bar Chart and R Chart

The mean of each sample x1 x2 ... xn X n The range of each sample
R = max{x1, x2, , xn} - min{x1, x2, ,xn}

X : the average of

R : the average range

All Rights Reserved, G. Lu, 2014 17

X-bar Chart and R Chart Control Limits

UCLX X A R 2 LCLX X A R 2
UCL R D 4 R LCL R D 3 R
All Rights Reserved, G. Lu, 2014 18

Control Chart Parameters (99.7% confidence)

Sample Size (n) 2 3 4 5 6 7 8 9 10 Factor for X-bar chart (A2) 1.88 1.02 0.73 0.58 0.48 0.42 0.37 0.34 0.31 Factor for LCL in R chart (D3) 0 0 0 0 0 0.08 0.14 0.18 0.22 Factor for UCL in R chart (D4) 3.27 2.57 2.28 2.11 2.00 1.92 1.86 1.82 1.78
19

All Rights Reserved, G. Lu, 2014

Example: X-bar Chart and R Chart

Sample Number #1 #2 1 6.2 5.8 Item Number 2 6.1 6.0 3 5.9 6.1 4 6.0 6.0

#3 #4 #5
#6

6.0 5.2 5.9

6.3

6.0 5.8 5.9

6.1

6.0 6.1 6.0

5.9

6.0 6.0 6.1

5.7

All Rights Reserved, G. Lu, 2014

20

Example: X-bar Chart and R Chart

6.3 6.2 6.1 6.0 5.9 5.8 5.7 5.6 5.5 5.4 1 2 3 4 5 6 average UCL LCL X-bar

1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 1 2 3 4 5 6 average UCL LCL Range

All Rights Reserved, G. Lu, 2014

21

Process Capability
In control vs. meet quality requirement Running properly vs. making good products A design specification includes
An upper tolerance level (UTL) A lower tolerance level (LTL)

A process is capable if it can produce output according to the design specifications Measure: Process Capability Index Cpk
All Rights Reserved, G. Lu, 2014 22

Process Capability Index

Cpk = min [(X-LTL)/3s, (UTL X) /3]

where X = Estimated process average
= Estimated Process Standard Deviation

All Rights Reserved, G. Lu, 2014

23

Example
We are the maker of this cereal. Consumer reports has just published an article that shows that we frequently have less than 16 ounces of cereal in a box. Lets assume that the government says that we must be within 5 percent of the weight advertised on the box.

Upper Tolerance Limit = _____

Lower Tolerance Limit = _____

We examine 1,000 boxes of cereal and find that they weight an average of 15.875 ounces with a standard deviation of 0.529 ounces. Cpk = _____
All Rights Reserved, G. Lu, 2014 24

Interpretations
An index that shows how well the units being produced fit within the specification limits The greater the Cpk is, the more capable the process is in terms of producing quality products Threshold Cpk = 1.3 Six-sigma companies want 2.0!
All Rights Reserved, G. Lu, 2014 25

Six Sigma

Six Sigma quality 3.4 defects per million opportunities (DPMO)

All Rights Reserved, G. Lu, 2014

26

Six Sigma
Six Sigma is a business management strategy, initially implemented by Motorola, that today enjoys widespread application in many sectors of industry (Source:Wikipedia.org) Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and variability in manufacturing and business processes

All Rights Reserved, G. Lu, 2014

27

Six Sigma Standard

Metric: defects per million opportunities (DPMO) When the process mean is centered there are only 2 defects per billion

If, for some reason, the process mean is shifted off the center by 1.5 sigma, there are 3.4 defects per million If the process goes out of control (adjustment) it might be identified before bad units are produced
All Rights Reserved, G. Lu, 2014 28

GE's Six-Sigma Program

Employing statistical tools in a systematic projectoriented fashion through the define, measure, analyze, improve and control (DMAIC) cycle. Six Sigma at GE
In 1995, percentage of quality products was about 97% (3-4 sigma). Started the Six Sigma program in Jan. 1996 Achieved $320 million in productivity gains and profits in 1997 Generated $750 million in Six Sigma savings over and above the investment by 1998 Earned $1.5 billion in savings in 1999
All Rights Reserved, G. Lu, 2014 29

DMAIC Methodology
Define -- Identify customers and their priorities; Identify a project; Identify critical-to-quality characteristics Measure -- Determine how to measure the process; Identify key internal processes Analyze -- Determine most likely causes of defects; Understand why key defects are generated Improve -- Identify means to remove causes of defects; Confirm the key variables; Identify the maximum acceptance ranges; Modify process to stay within acceptable range Control -- Determine how to maintain improvements; Put tools in place to track key variables

All Rights Reserved, G. Lu, 2014

30

The Fundamental Element of Lean Manufacturing

Eliminating waste through continuous improvement

All Rights Reserved, G. Lu, 2014

31

High Inventory Level

32

All Rights Reserved, G. Lu, 2014

32

Low Inventory Level

33

All Rights Reserved, G. Lu, 2014

33

The Kanban System

Kanban system refers to a production and inventory control system, in which production instructions and parts delivery instructions are triggered by the consumption of parts at the downstream step

All Rights Reserved, G. Lu, 2014

34

Push vs. Pull System

Raw Material Supplier
PUSH

Final Assembly

Finished Goods Customer Demand

Raw Material Supplier

PULL

Final Assembly

Finished Goods Customer Demand

Material Flow Information Flow

All Rights Reserved, G. Lu, 2014 35