Today’s Agenda

• Quiz 2
• Quality and Statistic Process Control
– History Background
– TQM
– Process Capability and Control

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 Chapter 9
Quality and
Statistical Process
Control

9-1
 Why Quality
• Samsung's Galaxy Note 7 disaster
– CNN
• How should we manage quality?

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Why Quality

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 Turning point in the West

• Deming was featured in an NBC Program in

1980 “If Japan can why Can’t we?”
– In the program Edwards Deming drove the point
home that it is Management’s attitude towards quality
that is the major cause for US loss of competitiveness
to the Japanese

• Consequent to the above congress enacted the

Malcolm Baldrige National Quality Award
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 TQM and Quality Standard
• TQM: A core definition of total quality
management (TQM) describes a management approach
to long–term success through customer satisfaction. In a
TQM effort, all members of an organization participate in
improving processes, products, services, and the culture
in which they work.
• Quality Standards:
– IS9000
– College of Business Administration
• http://www.allbusinessschools.com/business-administration/common-
questions/business-school-accreditation/

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 The Statistical Process
Control Framework
Variation exists everywhere. Defects are
driven by variability.
–Natural (or common cause) variation – Occurs in
a process as result of pure randomness (common
cause variation)
–Assignable cause variation – Occurs because of
a specific change in input or in environmental
variables.

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 The Statistical Process
Control Framework
• Environmental variables – Variables in a process
that are not under the control of management but
might impact the outcome of a process.
• Outcome variables – Measures describing the
quality of the output of the process.
• Defective – Not corresponding to the specifications
of the process
• Set of specifications – A set of rules that determine
if the outcome variable of a unit is defective or not
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 The Statistical Process
Control Framework
• Root cause – A root cause for a defect is a
change in an input or an environmental variable
that initiated a defect

• Robust – The ability of a process to tolerate

changes in input and environmental variables
without causing the outcomes to be defective.

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 The Statistical Process
Control Framework
• Statistical process control (SPC) – A framework in
operations management built around empirical
measurement, statistical analysis of output, and outcome
variables.

• Abnormal – A variation is abnormal if is not behaving in

line with past data; this allows us to conclude that we are
dealing with an assignable cause variation and are not
just facing randomness in the form of common cause
variation.
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 Basic Statistics
• What is random variable?
• What is the probability distribution of
random variable?
• What is Normal distribution?
• How to characterize a normal distribution?

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 Capability Analysis

• Lower specification limit (LSL) The smallest

outcome value that does not trigger a defective
unit
• Process capability index – The ratio between the
width of the specification interval of the outcome
variable and the variation in the variable
(measured by six-times its estimated standard
deviation). It tells us how many standard
deviations we can move away from the statistical
mean before causing a defect. 9-8

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 Computing the Process
Capability Index the Defect
Probability

This index tells us how many standard

deviations we can move away from the
statistical mean before causing a defect. It thus
can be translated to a defect probability 9-9

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 Example
• A bottle-filling process has a lower and
upper spec limit of 0.99 liter and 1.01 liter.
The standard deviation is 0.005 liter and
the mean is 1 liter. Find out the process
capability index.

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 Predicting the Probability of a
defect
• Continue with the previous problem, what
is the probability that a bottle will either
have too much or too little fluid in it?

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 Capability Analysis
• Six-Sigma program – Initiatives within the
framework of statistical process control trying to
increase the process capability index.
• Defect Probability – The statistical probability with
which a randomly chosen flow unit does not meet
specifications.
• Parts per Million – The expected number of
defective parts in a random sample of one million.
• Target Variation – The largest amount of variation in
a process that does not exceed a given defect
probability. 9-10

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 Control Chart
Control Chart formula to determine if an
abnormal variation exists in a process

Provides a visual representation of variation in

the process. Shows upper and lower control
limits. If a sample is outside the control limits
one can infer an assignable cause variation has 9-11

impacted the process. © Wenge Zhu

 Conformance Analysis

Control Charts – Provide a visual representation

of variance in the process. It has time on its x-
axis and an outcome variable on the y-axis. In
each time period, we collect a sample outcomes
which is plotted in the control chart.
X-bar-bar – long-run center line which is the
average across all points. Will also show an upper
and lower control limit which are computed on
past data.
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 Conformance Analysis
• X-bar Chart – A special control chart in which we
track the mean of a sample (also known as X-
bar).
• X-bar – The average of a sample
• Lower Control Limit (LCL) – A line in a control
chart that provides the smallest value that is
still acceptable without being labeled an
abnormal variation.
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 Conformance Analysis
• Upper Control Limit (UCL) – A line in a control chart
that provides the largest value that is still
acceptable without being labeled an abnormal
variation.
• X-double bar – The average of a set of sample
averages
• Estimated Standard Deviation of all Parts – The
standard deviation computed across all parts.
• Estimated Standard Deviation for X-Bar – The
standard deviation of a particular sample mean, x-
bar 9-14

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Estimated Standard Deviation of Means (x-bar) vs
Estimated Standard Deviation of All Parts

𝐸𝑆𝐷(𝑎𝑙𝑙 𝑝𝑎𝑟𝑡𝑠)
• 𝐸𝑆𝐷 𝑋 − 𝑏𝑎𝑟 =
𝑛
– 𝑛 𝑖𝑠 𝑡ℎ𝑒 𝑠𝑎𝑚𝑝𝑙𝑒 𝑠𝑖𝑧𝑒

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 Page 267
• Example

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 Investigating Assignable
Causes
• Defect occurrence reflects some abnormal
variation in the outcome variable.
– Result of abnormal variation in input or environmental
variable
• Control Chart will alert an assignable cause
variation has occurred
– Our job to look for what input or environmental
variables led to this result – to investigate the root
cause for the abnormal variation
• First step- to create a more careful diagram
illustrating the relationship between the outcome
variable and the various input and
environmental variables. 9-15

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 Investigating Assignable
Causes
Fishbone diagram – A structured way to brainstorm
about the potential root causes that have led to a change
in an outcome variable. This is done by mapping out all
input and environmental variables. Also know as a cause-
effect diagram or Ishikawa diagram.

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 Investigating Assignable
Causes
Cause-effect Diagram – A structured way to
brainstorm about the potential root causes that have
led to a change in an outcome variable. This is done
by mapping out all input and environmental variables.
Also know as a fishbone diagram or Ishikawa
diagram. (in honor of Kaoru Ishikawa a Japanese
quality scholar)
Cause-effect diagrams are also called fishbone
diagrams because when laid out they resemble the
skeletal structure of a fish.
9-17

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 Investigating Assignable
Causes
Five Whys – A brainstorming technique that
helps employees to find the root cause of a
problem, in order to avoid stopping too early
and not having found the real root cause.
Why did this happen?
Was a potential cause the true root cause? Was it a
symptom?
1.By asking “Why” five times, we can get to the
underlying root cause as opposed to just dealing with
the symptoms of the problems
2.We can observe the responsible or root cause of the 9-18
problem
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 Investigating Assignable
Causes
Given the multiple potential root causes of a defect it is
desirable to find the root cause for most of the problems.

The Pareto Diagram is a graphical way to identify the

most important causes of process defects. Creating a
Pareto Diagram, requires collecting the data on the
number of defect occurrences as well as the associated
defect types. We can then plot simple bars with heights
indicating the relative occurrences of the defect types. It is
common to plot the cumulative contribution of the defect
types. 9-19

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Investigating Assignable
Causes

9-20

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How to Eliminate Assignable Causes
and Make the Process More Robust

Robust process – A process that is robust, can

tolerate variation in input variables and
environmental variables without leading to a
defect. A robust process is resistant against
variation in input and environmental strategies.

How can we make a process

robust? 9-21

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How to Eliminate Assignable Causes and Make
the Process More Robust
• Over engineering – make the process so that can do well, even
under exceptional conditions
• Fool-proofing – Change the work in such a way that the operator
cannot complete the task if s mistake has been made. The side
benefit provides the operator feedback thus reducing the likelihood
of future reoccurrence of defective outputs.
• Early warning signs on input and environmental variables There
typically exists some lag time between the occurrence of a variation
at this point an alert would be placed providing for earlier
intervention to the root cause of the variation

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 Defects with Binary
Outcomes: Event Trees
Event Tree – A visual representation of binary
outcome variables. It supports the defect probability
calculations by connecting the defects in the process
to an overall outcome measure.
•The event tree helps us compute the defect
probability for a process with binary values for the
input, environmental, and outcome variables.
•The previously introduced concept of robustness
applies also to binary outcomes
•Looks for variation in the process for analysis
9-23
•More opportunity to robustly test variables
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 Defects with Binary
Outcomes: p-Charts
P-chart – A special control chart used for
dealing with binary outcomes. It all the
features of the X-bar chart, yet does not
require a continuous outcome variable.
However, p-charts require larger sample
sizes, especially if defects occur rarely. Also
known as attribute-based control charts.

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Defects with Binary
Outcomes: p-Charts
P-chart formula

9-25

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Check Your Understanding

9-26

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 More Example
• Page 288 Solved Problem LO 9-7

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