Lecture Principle of inventory and material management - Lecture 29

Lecture 29 - Total Quality Management. The contents of this chapter include all of the following: Why quality is important, What is quality, dimensions of quality, why improve quality, statistical quality control, understanding variations, statistical process control, process capability, three sigma vs. six sigma, process control, data types.

Lecture 29 Total Quality Management Books • Introduction to Materials Management, Sixth Edition, J. R. Tony Arnold, P.E., CFPIM, CIRM, Fleming  College, Emeritus, Stephen N. Chapman, Ph.D., CFPIM, North Carolina State University, Lloyd M.  Clive, P.E., CFPIM, Fleming College • Operations Management for Competitive Advantage, 11th Edition, by Chase, Jacobs, and Aquilano, 2005,  N.Y.: McGraw­Hill/Irwin • Operations Management, 11/E, Jay Heizer, Texas Lutheran University, Barry Render, Graduate School of  Business, Rollins College, Prentice Hall Objectives • • • • • • • • • • • Why quality is important What is quality Dimensions of Quality Why improve quality Statistical quality control Understanding variations Statistical process control Process capability Three sigma vs. six sigma Process control Data types Orlando Utilities Commission Maintenance of power generating plants ỵ Every year each plant is taken off-line for 1-3 weeks maintenance ỵ Every three years each plant is taken off-line for 6-8 weeks for complete overhaul and turbine inspection ỵ Each overhaul has 1,800 tasks and requires 72,000 labor hours ỵ OUC performs over 12,000 maintenance tasks each year ỵ OrlandoUtilitiesCommission Every day a plant is down costs OUC $110,000 ỵ Unexpected outages cost between $350,000 and $600,000 per day ỵ Preventive maintenance discovered a cracked rotor blade which could have destroyed a $27 million piece of equipment ỵ WhyQualityisImportant Costsandmarketshare Companysreputation Productliability International implications What is Quality? • • • • • Conformance to requirements? Zero defects? Fitness for use? Consistency? “I can’t define it, but I know it when I  see it”? Garvin’s 8 Dimensions of Quality Dimension Meaning Performance Primary operating characteristics Features Secondary operating characteristics, added  touches Reliability Extent of failure free operation Durability Amount of use before replacement is  preferable to repair Consistency Uniformity around a target Serviceability Resolution of problems and complaints Aesthetics Subjective characteristics that relate to senses Perceived Quality  Indirect measures or inferences: reputation What is Quality? Quality means user satisfaction: that  goods and services satisfy the needs and  expectations of the user Arnold Why Improve Quality? Quality Chain Reaction Improve Quality Costs decrease because of less rework, fewer mistakes, fewer delays, snags; better use of machine-time and materials Productivity improves Capture market with better quality and lower price Stay in business Provide jobs and more jobs Process Control (3 of 6) • If the process mean shifts, more of  output falls outside the specifications  • If process variance increases,  more of the output falls  outside of the specifications Time lower design upper design specification specification Process Control (4 of 6) • • In either case, the process is considered  to be out of control It should be stopped, investigated (the  assignable cause found if present) and  corrected (the process brought back to  the status quo) Process Control (5 of 6) • Examples of assignable causes include – operator – raw material – equipment – environment Process Control (6 of 6) • • • How does management detect the presence of an  assignable cause? Process output is monitored to detect any changes by  inspecting the output of the process Inspection means assessing some characteristic of a  unit of output Central Limit Theorem Simulation The distribution of a  sample approaches normal  even when the parent  population is not normally  distributed Statistical Process Control • • Tolerance or specification limits – Defined by an engineer – Related to product design requirements Control limits – Defined by the process – Related to the variation in the process – Unrelated to product needs Lower Specification Upper Specification Much of the process output fits within specification width Lower Specification Process Capability Upper Specification Almost all of the process output fits within the specification width Lower Specification Upper Specification A significant portion of the process output In other words, is the process capable of falls outside of the specification width producing the item? Type I Error /2 /2 Mean Probability of Type I error LCL UCL Types of Sampling Errors A lot is accepted A lot is rejected based on sampling based on sampling information information Lot quality is actually good Decision is correct Type I error Lot quality is actually bad Type II error Decision is correct Control Chart Abnormal variation due to assignable sources Out of control UCL Mean Normal variation due to chance LCL Abnormal variation due to assignable sources Sample number 10 11 12 13 14 15 Observations from Sample Distribution UCL LCL Sample number Data Types • • Attribute ­ characteristic evaluated generates data that  are counted (good or bad, yes or no) Variable ­ characteristic evaluated can be measured  within a range of values Mean and Range Charts (process mean is shifting upward) Sampling Distribution UCL Detects shift x-Chart LCL UCL Does not detect shift R-chart LCL Mean and Range Charts Sampling Distribution (process variability is increasi UCL Does not reveal increase x-Chart LCL UCL R-chart Reveals increase LCL End of Lecture 29 ... Maintenance of power generating plants ỵ Every year each plant is taken off-line for 1-3 weeks maintenance ỵ Every three years each plant is taken off-line for 6-8 weeks for complete overhaul and turbine... fewer delays, snags; better use of machine-time and materials Productivity improves Capture market with better quality and lower price Stay in business Provide jobs and more jobs Two Ways to Improve Quality... The Process (2? ?of? ?2) • The distribution? ?of? ?a process’ output has a mean,  ,  and? ?a standard deviation,  ; it can have a wide variety  of? ?shapes Process distribution Mean Process Capability (1? ?of? ?3) •