Session 3 Process and Quality I - OSCM356 Operations Management Session 3 Process Performance and Quality I Fuqiang Zhang Olin Business School

Session 3 Process and Quality I - OSCM356 Operations...

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1 OSCM356 Operations Management Session 3 Process Performance and Quality I Fuqiang Zhang Olin Business School Washington University in St. Louis Spring 2008 Session Outline Process performance and quality Definition of quality Costs of quality Total Quality Management (TQM) Statistical Process Control (SPC) R chart x-chart OSCM356, Spring 08, Prof. Zhang Session 3 Slide 2
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2 What Does Quality Mean? Conformance to specifications How a service or product conforms to performance specifications. Value How 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 use How well a service or product performs its intended purpose. Includes considerations such as reliability and serviceability. Psychological impressions Aesthetics, comfort, and image. Service/Support Responsiveness, courtesy, availability, competence, communication (pre, during, and after sales). OSCM356, Spring 08, Prof. Zhang Session 3 Slide 3 Importance of Quality Quality of Automobiles Chrysler 285 GM 256 Ford 214 Japanese (avg.) 132 Toyota 55 Quality of Semiconductors U .S. Companies Japanese Companies Defective on Delivery 16% 0% Failure after 1,000 hours 14% 1% Quality of Room Air Conditioners U .S. Companies Japanese Companies Fabrication defects 4.40% <0.1% Assembly line defects 63.50% 0.90% Warrenty Cost (as % of sales) 2.20% 0.60% Quality of Color TVs U .S. Companies Japanese Companies Assembly line defects per set 1.4 0.01 Things gone w rong in First Eight Months per 100 cars A Comparison of American and Japanese Products in the 1970s and 1980s Adapted from Russel & Taylor, Operations Management, Prentice Hall, 1999. OSCM356, Spring 08, Prof. Zhang Session 3 Slide 4
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3 Costs of Failure (Non-Conformance) Internal failure costs (prior to transfer of ownership to customers) scrap, rework, retest downtime purchasing errors excessive overtime External failure costs (after transfer of ownership to customers) customer complaints warranties product recall returned material potential loss of market share OSCM356, Spring 08, Prof. Zhang Session 3 Slide 5 Costs of Control (Conformance) Appraisal costs receiving inspection quality audits field performance testing inspection and testing of intermediate and final products Prevention costs quality planning process control quality training quality improvement process implementation OSCM356, Spring 08, Prof. Zhang Session 3 Slide 6
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