Recap of Previous Session

Understand Quality
Costs of Quality
Impact of Quality on Operations
Impact of Quality on Supply Chain

Operations Management-104

*Images available in the public domain

Quality Control

Operations Management-104

Debabrata Ghosh

The ANZ Door Manufacturing Case

The COO of ANZ Door Manufacturing Company has
recently received complaints from the sales head
that several of his team members (Salespersons) have
received customer complaints over the past few months.
The complaints vary from higher costs, the door not meeting the customers required specifications or
door not having the required quality standards in terms of safety, durability and ease of operation.
The COO decided to form an internal Quality Assurance Team (QAT) to study the concerns and suggest
any improvement changes, if required.

Approach:
To begin with, the QAT team ran a survey of 1000 past and present customers, asking them to rate their
experiences with each of the following aspects of ANZ Door's products and services:
Cost of purchasing and maintaining a door
Response time from ordering a door until its delivery
Degree of door customization permitted in accommodating individual preferences
After sales service quality
Door quality in terms of its fit and finish; ease of operation and durability

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The ANZ Door Manufacturing Case

Step 1: Based on the survey feedback, the QAT team lists the number of complaints received :
Type of Quality

Number of Complaints

Cost

10

Response Time

Customization

Service Quality

15

Door Quality

25

Step 2: Based on the above table, QAT team applies the Pareto Chart to prioritize customer complaints
Number of Complaints
Customization
Response Time
Cost
Service Quality
Door Quality

Number of Complaints
0

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10

20

30

The ANZ Door Manufacturing Case

Day
Time/
Day

10

9 a.m.

81

82

80

74

75

81

83

86

88

82

11 a.m.

73

87

83

81

86

86

82

83

79

84

1 p.m.

85

88

76

91

82

83

76

82

86

89

3 p.m.

90

78

84

75

84

88

77

79

84

84

5 p.m.

80

84

82

83

75

81

78

85

85

80

Day
Time/
Day

11

12

13

14

15

16

17

18

19

20

9 a.m.

86

86

88

72

84

76

74

85

82

89

11 a.m.

84

83

79

86

85

82

86

85

84

80

1 p.m.

81

78

83

80

81

83

83

82

83

90

3 p.m.

81

80

83

79

88

84

89

77

92

83

5 p.m.

87

83

82

87

81

79

83

77

84

77

Operations Management-104

Refer to Tab: Histogram in Histogram of Door Weights.xls

Basic forms of Variation

Assignable variation is caused

by factors that can be clearly
identified and possibly
managed

Common variation is inherent

in the production process

Operations Management-104

Example: A poorly trained employee that

creates variation in finished product output.

Example: The door manufacturing process

is inherently variable

An Understanding of standard deviation

(2) 0.9772, or Pr(x + 2) 0.9772.

In the ANZ Door Manufacturing Case, the QAT team would expect 99.73% of the door weights would be
within +- 3 standard deviations from the mean (between 69.9 and 95.1 kg).

95%
99.74%

-3
Operations Management-104

-2

-1

=0

The ANZ Door Manufacturing Case

Step 6: Control Charts
A generic control chart :
LCL = - z
UCL = + z

Average (or X-bar) and Range (or R) Control Charts:

X-bar - Process central tendency based on estimated process mean
x Chart Control Li mi ts
UCL = x + A 2 R
LCL = x - A 2 R

x = The average of the means of the samples =

j
m

i
n

= Sample Number
= Total number of samples

=
=

ith observation
Number of observations in each sub-group

Operations Management-104

Refer to Tab: X-bar and R in Histogram of Door Weights.xls

Average (or X-bar) and Range (or R) Control Charts:

R chart - Process variability based on estimated process range
R Chart Control Limits
UCL = D 4 R
LCL = D 3 R

R= Average of the measurement differences R for all samples =

Rj = Difference between the highest and lowest measurement in the sample
n = Number of observations in each sub-group

A2

D3

D4

1.88

3.27

1.02

2.57

0.73

2.28

0.58

2.11

0.48

2.00

0.42

0.08

1.92

0.37

0.14

1.86

0.34

0.18

1.82

10

0.31

0.22

1.78

11

0.29

0.26

1.74

Source: Exhibit 9A.6, Operations and Supply Management, Chase, Shankar, Jacobs and Aquilano, McGraw Hill 12 th Ed., 2010

Operations Management-104

Average (or X-bar) and Range (or R) Control Charts:

x Chart Control Limits

UCL = x + A 2 R
LCL = x - A 2 R
UCL = 82.5 + 0.58* 10.05 = 82.5 + 5.829 = 88.33
LCL = 82.5 0.58*10.05 = 76.67

R Chart Control Limits

UCL = D 4 R
LCL = D 3 R
UCL = 2.11* 10.05 = 21.21
LCL = 0

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Control Chart Patterns

UCL

Normal Behavior

LCL
1

Samples
over time

Samples
over time

UCL

Possible problem, investigate

LCL

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Constructing p-charts
p is the proportion of non-conforming items found in a sample. p-chart is often called fraction nonconforming chart.
Assume, that k samples each of size n are collected.
Let y, represent the number non-conforming in a particular sample, then proportion nonconforming is y/n.
Let, pi be the fraction non-conforming in the i th sample, the average fraction non-conforming for
group of k samples is

An estimate of the s.d. Is given by:

Thus, UCL =
LCL = - z

+z

Q: The operators of automated sorting machines in a post office must read the ZIP code on letters
and divert the letters to the proper carrier routes. Over a months study, 25 samples each of 100
letters were chosen and the number of errors were recorded. The data presented is the following:
Operations Management-104

Refer to Tab: p-chart in Histogram of Door Weights.xls

12

Constructing c-charts
A non-conforming item may have more than one non-conformance factor.
For e.g. A customers order may have several errors such as wrong item, wrong quantity, wrong
price etc.
To monitor the number of non-conformances per unit, a c-chart is used.

For a c-chart,
UCL =
z
LCL =

where, sc =

Operations Management-104

Refer to Tab: c-chart in Histogram of Door Weights.xls

13

Summary of Control Charts

Type of Measurement

Discrete

Continuous

Type of Attribute

X-bar and R chart

Proportion Nonconforming
Nonconformances
per unit
p-chart

Operations Management-104

c-chart

14

Process Capability
Process capability is the ability of the process to meet customer specifications
The ANZ Door Manufacturing Case :
If the design specifications given by the design team for customer use varies between 75-85
Kg, process capability studies the variability of the process with respect to these design/customer
specifications.

Process Control

Process Capability

Looks at internal stability

Customer centric focus

Analysis based on samples

Each individual unit matters

Pertains to production process

Pertains to Design specifications

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Process Capability
Design
Specifications
(a) Process variation
exceeds design
specifications; process is
not capable of meeting
specifications all the time.
Process

Design
Specifications
(b) Design specifications and
process variation the same;
process is capable of meeting
specifications most of the
time.
Process

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Process Capability

Design
Specifications
(c) Design specifications
greater than process
variation; process is capable
of always conforming to
specifications.
Process

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Fraction of Output within specifications

Q: The ANZ Door Manufacturing Case :
Given, design specifications of the doors as 75-85 kg with 75 being the lower specification limit (LSL)
and 85 being the upper specification limit (USL), what is the fraction of door output that meets the door
specifications (given, production process is normal with mean = 82.5 kg and s.d. = 4.2 kg)

Ans:
Prob(75<=X<=85) = Prob( X<=85) Prob(X<=75)
In excel,
= NORMDIST(85,82.5,4.2,TRUE) NORMDIST(75,82.5,4.2,TRUE)
= 0.724158 0.037073 = 0.687085

Thus, the door making process is capable of producing 68.7% of doors within specifications.

Operations Management-104

Refer to Tab: ANZ Process Plot in ProcessCapability of ANZ

Door Manf Company.xls

18

Process Capability Measures

Cp

=
=

tolerance range
process range
upper spec limit - lower spec limit
6
Process Capability Ratio

x= - lower specification limit

3

Cpk = minimum
upper specification limit - =
x
3

Process Capability Index

Q: The ANZ Door Manufacturing Case : Whats the process capability?

Operations Management-104

Refer to Tab: ProcessCapability in ProcessCapability of

ANZ Door Manf Company.xls

19

Understanding Process capability ratio, Defects (ppm) and sigma measure

A 3-sigma process: Cp = 6 = 1
6
A 6-sigma process: Cp = 12 = 2
6
A 3-sigma process: 0.9973 of the output falls within specifications, which means 0.0027 defects =>
2700 defects in parts per million (ppm).
A 6-sigma process: 0.999999998 of the output falls within specifications, which means 1.97318 *10^-9
defects => 0.002 defects in parts per million (ppm)

Cp

Sigma level ()

Area under
the probability
density function

0.33

0.6826894921

68.27%

317311

0.67

0.9544997361

95.45%

45500

1.00

0.9973002039

99.73%

2700

1.33

0.9999366575

99.99%

63

1.67

0.9999994267

99.9999%

2.00

0.9999999980

99.9999998%

0.002

Operations Management-104

Process yield

Process fallout (in

terms of PPM)

16
42
60
500

20

Mean shift under a Six-sigma process

Motorola allows for a 1.5 sigma shift in mean which results in a process producing on an average 3.4
defective units per million.

4.5 sigma process. Percentage yield is 99.99966%. Therefore, percent defective is 0.00034%.
Thus, Defects in Parts per million = 3.4

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Process Capability Improvement

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Six-sigma Examples
Mumbai Dabbawalas pick up, deliver and return tiffin lunch boxes from 200,000 homes and apartments
to 80,000 office locations that are situated over 40 miles away, hardly using any fuel or modern
technology. The distribution process is an ingenious combination of coding, aggregating and sorting
boxes and moving them in crates through public trains, push carts and bicycles from each household to
a correct office destination and back to home. The error rate in delivery is 1 in more than million trips
with a cost of about $10 a month.

Harley-Davidson, Bank of America, HSBC, Hospital Chains

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Process Capability Improvement

The ANZ Door Manufacturing Case :
1) Mean Shift: If the average door weight could be brought down to 80 kg thus shifting the entire
distribution.
Ans:
Prob(75<=X<=85) = Prob( X<=85) Prob(X<=75)
In excel,
= NORMDIST(85,80,4.2,TRUE) NORMDIST(75,80,4.2,TRUE)
= 0.88307 0.11693= 0.766141
Refer to Tab: NewMean in ProcessCapability of ANZ Door Manf
Company.xls

2) Variability Reduction: Reduction of variability through investments in better equipment, worker

training or supplier selection.

Ans:
Assume, s.d. of door weights is reduced from 4.2 kg to 2.5 kg
Prob(75<=X<=85) = Prob( X<=85) Prob(X<=75)
In excel,
= NORMDIST(85,80,2.5,TRUE) NORMDIST(75,80,2.5,TRUE)
= 0.9544
What about process control limits?
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Question:
Munchies snack food company packages potato chips in a process with a process mean of 8.8 oz and a
s.d. of 0.12 oz. The packages are designed for 9 oz of chips with a tolerance of 0.5 oz. The company
wants to determine the capability of the current process.
The process mean is off the center.
And the capability of the process is
Cpk = Min[ (8.8-8.5)/(3*0.12); (9.5-8.8)/(3*0.12)]
= Min[0.83,1.94]
= 0.83
Cp = (9.5-8.5)/(6*0.12) = 1.389

What percentage of packages produced are defective?

1- Prob(8.5<=X<=9.5)

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