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1OSCM356 Operations ManagementSession 3 Process Performance and Quality IFuqiang ZhangOlin Business SchoolWashington University in St. LouisSpring 2008Session OutlineProcess performance and qualityDefinition of qualityCosts of qualityTotal Quality Management (TQM)Statistical Process Control (SPC)R chartx-chart OSCM356, Spring 08, Prof. ZhangSession 3Slide 2–
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2What Does Quality Mean?Conformance to specificationsHow a service or product conforms to performance specifications.ValueHow well the service or product serves its intended purpose at a price customers are willing to pay. Includes considerations such as: responsiveness, cost, features, timeliness, durability, and credibility.Fitness for useHow well a service or product performs its intended purpose. Includes considerations such as reliability and serviceability.Psychological impressionsAesthetics, comfort, and image.Service/SupportResponsiveness, courtesy, availability, competence, communication (pre, during, and after sales).OSCM356, Spring 08, Prof. ZhangSession 3Slide 3Importance of QualityQuality of AutomobilesChrysler285GM256Ford214Japanese (avg.)132Toyota55Quality of SemiconductorsU .S. CompaniesJapanese CompaniesDefective on Delivery16%0%Failure after 1,000 hours14%1%Quality of Room Air ConditionersU .S. CompaniesJapanese CompaniesFabrication defects4.40%<0.1%Assembly line defects63.50%0.90%Warrenty Cost (as % of sales)2.20%0.60%Quality of Color TVsU .S. CompaniesJapanese CompaniesAssembly line defects per set1.40.01Things gone w rong inFirst Eight Months per 100 carsA Comparison of American and Japanese Products in the 1970s and 1980sAdapted from Russel & Taylor, Operations Management, Prentice Hall, 1999.OSCM356, Spring 08, Prof. ZhangSession 3Slide 4
3Costs of Failure (Non-Conformance)Internal failure costs (prior to transfer of ownership to customers)scrap, rework, retestdowntimepurchasing errorsexcessive overtimeExternal failure costs (after transfer of ownership to customers)customer complaintswarrantiesproduct recallreturned materialpotential loss of market shareOSCM356, Spring 08, Prof. ZhangSession 3Slide 5Costs of Control (Conformance)Appraisal costsreceiving inspectionquality auditsfield performance testinginspection and testing of intermediate and final productsPrevention costsquality planningprocess controlquality trainingquality improvement process implementationOSCM356, Spring 08, Prof. ZhangSession 3Slide 6