UNIT 11 VALUE ENGINEERING AND Value

Engineering
QUALITY ASSURANCE and Quality
Assurance

Objectives

Upon completion of this unit you should be able to:

• understand the concept of value engineering, differentiate between value

and cost, see value engineering in historical perspective and appreciate
the role of value engineering in cost reduction and performance
improvement
• identify poor value areas in products and systems, learn about the value
engineering job plan, appreciate the role of some of the techniques of
value engineering, study some cases to see the improvements in product
value through value engineering techniques and identify the behavioural
and organisational issues involved in value engineering.
• appreciate the role of quality control, quality assurance and quality
assessment, design a single sampling plan, draw an operating
characteristic curve for a given single sampling plan and compute the
AOQL

• assess process variability, draw up an and R Chart and decide whether

a process is in control or not.

Structure

11.1 Basic Concepts in Value Engineering

11.2 Historical Perspectives
11.3 Functions and Value
11.4 Value Engineering Job Plan
11.5 Fast Diagram as Value Engineering Tool
11.6 Some Case Studies in Value Engineering
11.7 Behavioural and Organisational aspects of Value Engineering
11.8 Benefits of Value Engineering and concluding Remarks
11.9 Introduction of Quality Assurance
11.10 Concept of Quality
11.11 Cost of Quality
11.12 Quality Management
11.13 Quality Organisation
11.14 Acceptance Sampling
11.15 Process Control
11.16 Use of Computers in Quality Control
11.17 Summary 305
Capacity Planning, 11.18 Key Words
Work and Job
Design & Value 11.19 Self-assessment Questions/Exercises
Engineering
11.20 Further Readings

11.1 BASIC CONCEPTS IN VALUE

ENGINEERING
Value Engineering and Value Analysis

Value Engineering (VE) or Value Analysis (VA) is an important and

powerful approach for improvement in the performance of the products,
systems or procedures and reduction in costs without jeopardising their
function. The terms VE and VA are used almost interchangeably. Other terms
used to convey the same concepts are Value Assurance and Value
Management (VM).

L.D. Miles defined Value Analysis in his book Techniques of Value Analysis
and Engineering (1961) as "an organised creative approach which has for its
purpose the efficient identification of unnecessary cost i.e., cost which
provides neither quality, nor use, nor life, nor appearance, nor customer
features”. Various other definitions are proposed such as “an organised
systematic study of the function of a material, component, product or service,
with the objective of yielding value improvement through the ability to
accomplish the desired function at the lowest cost without degradation in
quality". Thus the basic objective of VE/VA is to achieve equivalent or better
performance at a lower cost while maintaining all functional and quality
requirements. It does this largely by identifying and eliminating hidden, invisible
and unnecessary costs. We may simply perceive VE as the systematic
application of recognised techniques to identify the functions of a product or
service and provide those functions at the lowest total cost.

Value Engineering should not be treated as a mere cost reduction technique

or cheapening of the product. It is more comprehensive and the improvement in
value is attained without any sacrifice in quality, reliability, maintainability,
availability and aesthetics, etc. It was traditionally applied in the area of
hardware projects, such as product design, though these concepts are equally
applicable in software projects, in the systems and procedures. Recently these
concepts have been applied to non- traditional areas such as urban slum
development programmes, staff welfare motivation enhancement and courtesy
improvement plans.

Reasons for Poor Value

One of the important reasons behind poor value in products, systems and
procedures that we come across is the lack of organised effort in devising such
systems. Many times the designs are created under highly compressed time
frame and the designer may play safe by giving product designs with sole
306 emphasis on technical feasibility and may prescribe thicker, costlier materials
and other unnecessary features which are not needed by the customer. Value
Engineering
Sometimes, ad hoc decisions get permanency due to lack of review of product and Quality
designs. Often lack of consultation with others contributes to poor value. Lack of Assurance

information, wrong beliefs, habits and attitudes are some of the other reasons.

Distinction between VE and Cost Reduction

Value Engineering Conventional Cost Reduction

1. It is function oriented. 1. It is item oriented.
2. It applies innovative approach and 2. It follows past practices.
ideas.
3. It exercises maximum creativity. 3. It is analytical in approach.
4. There could be divergent- 4. There is only convergent ideas.
convergent ideas.
5. There is cost visibility on the 5. There is cost visibility on the
following functional basis : following parameters.
— Basic function. Part/component-wise.
— Secondary function. — Processwise.
— Unncessary function. — Materials.
— Essential function. — Labour.
— Overhead.
— Transport.
— Packaging.
— Maintenance.
— Replacement.
— Miscellaneous.
6. There is teamwork approach and 6. Usually there is individual
spirit among members. approach and no team spirit.
7. There is multi-disciplinary 7. There is generally no multi-
approach. disciplinary approach.
8. The V.E. approach does not 8. There is a tendency toward
compromise with performance, compromising quality and
quality and reliability. reliability.
9. It is a systematic and sequential 9. Its approach is arbitrary and
approach. adhoc.

11.2 HISTORICAL PERSPECTIVE

Value Engineering had its origin at the General Electric Company (GEC). As a
result of World War II, many materials were in short supply and L.D. Miles was
associated with a committee to identify substitute materials without sacrifice
in quality and performance. He organised a formal methodology in which a
team of people examined the functions of products manufactured by GEC.
Through team-oriented creative techniques they made changes in products to
lower their cost without affecting their utility and quality. This methodology
was given the name Value Analysis (VA). L.D. Miles who wrote his book in
1961 is generally recognised as the father of Value Engineering. Miles found 307
Capacity Planning, that many of the substitutes used were providing equal or better performance
Work and Job
Design & Value at lower costs.
Engineering
The first organisation to initiate a formal VE programme was Navy Bureau of
Ships in 1954. In 1959, Society of American Value Engineers (SAVE) was
set-up to propagate the philosophy of Value Engineering. Many companjes in
USA, UK, Japan, etc. subsequently set-up formal VE programmes. The
Department of Defence in US encouraged application of VE in defence
projects.. A number of success stories of VE/VA are reported.

In India, VE/VA is now a well recognised programme and many organisations in

military and navy as well as in other public and private sectors have set-up
directorates or cells of Value Engineering. A professional society Indian Value
Engineering Society (INVEST) came up to create awareness in VE/VA and they
publish a journal, organise conferences and provide other services. It is now
considered as an effective management tool.

11.3 FUNCTIONS AND VALUE

Types of Values

The term ’ Value' is used in many different ways and is frequently confused with
the monetary price or cost of an item. However value is not synonymous with
cost.

Value may be perceived as the ratio of the sum of positive and negative aspects
of an object. Thus value can be considered as a composite of quality and cost. It
is more in terms of worth or utility. Thus a ratio of quality to cost can be treated
as the value of a product. If its costs can be reduced for same quality or
quality can be improved with same cost, then the value improvement can be
said to occur. The term value can be divided into following types:

a) Use Value: The properties and qualities which accomplish a useful purpose
or service.
b) Esteem Value: The properties, features or attractiveness which cause us
to want or own it.
c) Cost Value: The sum of labour, material and various other costs required to
produce it.
d) Exchange Value: The properties or qualities which enable us to exchange it
for something else we want.

Function:

Function is the basic purpose of an item or an expenditure. It may also be a

characteristic that makes the item work or makes it sell. Miles defines
function as: “The basic purpose of each expenditure whether it be for
hardware, the work of a group of men, a procedure or whatever is to
accomplish a function”.
308
Types of Functions Value
Engineering
and Quality
VE discipline deals with the functions of items, products, systems and Assurance
procedures. It is a functional approach, a customer-oriented approach.
Identification of the functions, therefore, constitutes an important aspect of
VE. The term function' is used to mean the purpose or use of a product.

Functions can be of two types:

a) Basic functions-the primary purpose of a product.

b) Secondary functions-Other purposes not directly serving the primary
purpose but supporting it.Many a time poor value may result in, because
the functions have not been precisely understood and redundant or
unnecessary functions have been imposed(see example 11.2)

Value Tests

VE is essentially a questioning attitude looking at the function and costs. L.D.

Miles designed a set of value tests to ascertain whether there is a scope for
value improvement. If these value tests are honestly applied, there is bound to be
room for improvement in most of the products, systems and procedures that we
come across. Some of these questions which can work as thought-starters for
developing better value alternatives could be as follows:

1 Can the design be changed to eliminate the part?

2 Can you purchase it at lower cost?

3 Does it need all its features?

4 Is there anything better for the intended use?

5 Can a usable part be made by a lower-cost method?

6 Can a standard part be used?

7 Is it made on proper toolings considering the quantities involved?

8 Are there any newly developed materials that can be used?

9 Can two or more parts be combined into one?

10 Can any specifications be changed to effect cost reduction?

Identification of Poor Value Areas

By applying the value tests we may come across poor value areas which are
responsible for unnecessary costs. These could be in the design of the
product, , procurement, handling and storage of materials, production
processes, packaging and distribution of the final product. Once we are able to
identify poor value areas, we can focus our attention on these so this these
unnecessary features can be eliminated
309
Capacity Planning, Another way to identify the poor value areas is through function cost matrix
Work and Job
Design & Value approach. If a function is relatively less important but accounts for a larger
Engineering percentage of product cost then it is a potential area for value improvement.
By determining alternative cheaper ways to achieve that function we can reduce
the cost and improve value.

In simple terms a soundly conducted Value Analysis programme should

essentially provide answers to the following questions:

1) What is the item?

2) What does it do?

3) How much does it cost?

4) Can anything else do the same thing?

5) How much does that cost?

11.4 VALUE ENGINEERING JOB PLAN

Value Engineering Process

As mentioned earlier, the major advantage of the approach is that it is a

systematic and organised approach that examines all aspects of a problem
employing a questioning attitude. Thus a formal approach has to be adopted to
go through the VE programme. This formal procedural model of VE process is
called VE Job Plan. In the beginning, when Miles proposed VE Job Plan, it was
just a modified form of the steps involved in work study. Subsequently, it has
been modified and a number of approaches have emerged which are essentially
similar. These job plans have various steps and phases with their associated VE
techniques at each phase. In one of the job plans the seven steps involved are:
(1) preparation, (2) problem selection, (3) information, (4) evaluation, (5)
creation, (6) selection and presentation, and (7) implementation and follow
up.

In this unit we shall briefly outline the salient features of three different
approaches to conduct a VE programme. These are:

a) Job Plan due to Mudge

b) DARSIRI method
c) FAST (Function Analysis System Technique)

Since the Job Plan due to Mudge is a very well recognised approach, we will deal
with it in this section. The seven phases of Job Plan are:

(A) General phase

(B) Information phase
(C) Function phase
310
(D) Creation phase Value
Engineering
(E) Evaluation phase and Quality
Assurance
(F) Investigation phase
(G) Recommendation phase.

Each of these phases comprises or is supported by one or more techniques. There

are work-sheets for each phase. The practice of Job Plan and the application
of VE techniques should be made on properly selected project. Thus selection
of VE project is important. Those products should be chosen for the study
which are significant in terms of cost reduction potential. In step-by-step
application of the Job Plan the project unfolds from the information phase
right up to recommendation phase.

The general phase plays vital role throughout and provides a good base for other
phases to succeed.

Brief description of each phase together with associated VE techniques are given
in the following sub-sections.

(A) General Phase

Throughout the application of the entire Job Plan the techniques of this phase
must be diligently applied to create the right environment for Value
Engineering job plan to be effective. There are five techniques associated with
this phase:

a) Use good human relations: It will be seen that considerable personal

contact is necessary throughout the Project. The use of good human
relations means assistance in place of resistance.
b) Inspire team work: This is one of the easiest to talk about, yet one of
the hardest to accomplish. It calls for subordinating personal prominence
or ego in the interest of the group as a whole.
c) Work on specifics: We should avoid generalities and work on specifics.
Concrete data and information on specific problems must be secured. Only
opinions and hearsay can be expected when talking in generalities.
d) Overcome roadblocks: In any organisation a group of dissenters can be
found. These individuals knowingly or unknowingly, will use every
means at their command to resist change. It is important to be able to
recognise roadblocks and then take steps to overcome them. Mudge has
in fact compiled an impressive list of ‘killer phrases’ which people use to
kill an idea. It is very crucial to avoid such mental roadblocks
e) Apply Good Business Judgment: Business decisions and judgments
must be based on facts. Poor business decisions and poor judgment
become prevalent when personal opinions and feelings take control. To
apply good business judgment one must be resourceful, able to think and
should be able to pursue new knowledge.
311
Capacity Planning, With the general phase as the base of foundation of the job plan, we can enter the
Work and Job
Design & Value second phase — information phase. The techniques included in the second
Engineering phase, though seemingly simple, incorporate some of the most difficult portions
of the approach.

(B) Information Phase

The objective of this phase is to gain an understanding of the project being

studied and to obtain all essential facts relating to the project as also to estimate
the potential value improvement. This phase comprises of three techniques:

a) Secure facts: Information gathered must be authentic; it is one of the most

arduous tasks. The type of information required will be:
i)Technical specifications-dimensions, grades, tolerances, quality,
appearance.
ii) Environmental specifications- test conditions.
iii) Engineering drawings.
iv) Production sample-actual or model of it.
v) Production data-operations, speeds, rates, output and stock levels.
vi) Cost data-material, labour, overhead-costs.
vii) Work specifications-work place layout, standard times.
viii) Features preferred by Customers.
ix) Development, testing and service records.
x) Quantities involved.
xi) Scrap rates.
b) Determine costs: In order to direct towards those areas promising the
greatest return on time and efforts in VE, the complete and accurate costs
must be secured.
c) Fix Costs on Specifications and Requirements: By establishing a
relationship between the costs and the specifications and requirements, a
means is presented by which the latter two can be quantitatively evaluated.
Extreme care should be taken during this phase to be sure that true facts are
gathered, accurate costs are secured, and these costs are truly related to
the specifications and requirements.

Once the techniques of the information phase have been used to secure pertinent
data, the function phase of the Job Plan can be used.

(C) Function Phase

The objectives of this phase are to define the functions that a product actually
performs and is required to perform as well as to relate these functions to the cost
and worth of providing them.

312
The two techniques of this phase are a major part of the functional approach. Value
Engineering
When combined with the other techniques of the Job Plan it produces a and Quality
systematic approach which is different and more productive than any other Assurance

product improvement or cost reduction approach.

The two techniques of this phase are:

a) Define function: This is one of the most crucial stages in Value

Engineering. The method of functional analysis requires functions to be
described with only two words, a verb and a noun. By so restricting the
functional specifications, clear descriptions of the functions are possible.
Concise function descriptions reduce the possibility of a detailed
semantic elaboration. They force a rational approach by eliminating
superfluous frills. The rules of function description are:
i)Determine user's need for a product or service.
ii) Use only one verb and one noun. The verb should answer the
question ”What does it do?" The noun should answer "What does
it do"? Where possible, noun should be measurable and verb
should he action oriented.
iii) Avoid passive or indirect verbs.
iv) Avoid goal-like words or phrases, such as improve, maximise,
minimise, optimise, etc.
v) List a large number of two-word pairs and then select the best
pair.

Example 11.1: Some functional definitions are:

Product Function
a) Mirror Reflect light
b) Brake Arrest motion
c) Clutch Transfer power
d) Erection tube cover Shield Tube
e) Cigarette lighter Provide ignition
f) Light bulb Emit light
g) Screwdriver Transfer torque
h) Coffee cup Hold Liquid.

b) Evaluate Function Relationship: This technique attempts to determine

relative importance of various functions. Through this technique a
descending order of importance of the functions is established alongwith
the relative value of their importance.

A paired comparison technique to determine the numerical value of various

functions is very simple and effective to use. In this, pairs of functions are
compared and it is sought to determine which is more important and whether
313
Capacity Planning, the degree of variation is major, medium or minor. Suppose we are comparing A
Work and Job
Design & Value with B. Then A-3 will mean that A is more important than B and there is a major
Engineering difference in their importance. B-1 would have meant that B is more
important than A but there is a minor difference only. This way a total number
of n (n-1)/2 pairs are compared and values entered in a cell if n-functions are to
be compared. Then the score is obtained by adding all the numerals following a
particular function. The function score divided by the total score gives relative
importance of that function.

Function description should be derived for the product and all its components.
The evaluation process also helps to find out whether it is a primary (basic)
function or a secondary function. The basic function will have the highest
score in the above- mentioned process of evaluation. The technique not only
establishes the basic and secondary functions but also identifies those functions
which are present because of specifications and requirements or present design
approach. Generally, a product or component will have only one basic function
and a number of secondary functions. If you have more than one basic function,
it must be a mere restatement of the other.

Example 11.2: Here we illustrate the application of function phase on the item.
‘Door Assembly' of a refrigerator. The two-word definition of each part or
component of the door assembly is shown in Table 1 in the form of Functional
Analysis Worksheet. The paired comparison of various functions is shown in
Table 2. Figure I shows the graphical display of the relative importance of
various functions which identify them as basic and secondary. You can also
distinguish functions which are there due to present design approach as well as
due to specifications and requirements. The basic function of the door assembly
emerges as ‘Provide Security’ with the highest score.

Having defined the functions, the next step is to establish the worth of each
function. The objective is to determine the poor value functions and to obtain a
reference point from which the cost of alternatives can be compared.

Function cost matrix is an effective technique of finding out the relative

importance of a function and the percentage cost incurred in attaining that
function. If the importance is low and cost is high then it reflects a poor value
area.

314
 Value
Engineering
and Quality
Assurance

From the adjusted weight

of various parts from the
Table 2, this graph has
been plotted.

Fig. 1: Weight factor vs. function

Table 1: Functional Analysis Work Sheet (for Example 11.2)
Qty Description Function Part Assembly
Verb Noun Basic Sec Basic Sec
1(A) Outer Pan Provide Support X
Provide Security X X
Permit Rotation X
Provide Appearance X
4(B) Gusset Plates Provide Strength X
1(C) Handle Provide Location X
Reinforcement Provide Stiffness X
1(D) Centre Provide Stiffness X
Stiffner
1(E) Lock Provide Fastening X
Assembly
2(F) Sleeve door Provide Location X
Hinge
Provide Rotation X
Support Weight X
1(G) Handle Facilitate Grip X
Facilitate Opening X
1(H) Liner Accommodate Articles X
Prevent Leak X
Provide Insulation X
Support Insulation X
4(I) Retainer Apply Force X
Strip (Gasket) Provide Location X
1(J) Gasket Provide Seal X
4(K) Magnetic Provide Force X
Strip
1(L) Decorative Provide Aesthetics X
Strip
–M Insulating Prevent Conduction X
Glass
Wool Provide Insulation X 315
Capacity Planning, Table 2 Numerical Evaluation Chart for Function (Exp 11.2)
Work and Job
Design & Value
Engineering

33
(1) % weight (A) 100 1.85
178
12
% weight (B) 100 6.7 ..etc
178
(2) Cost to be calculated from the available price break-
up of the component part of the Door-Assembly of
the refrigerator.
We conclude from Table 2
Worth 18.5
(3) Value Index for A 0.83 that while item A has poor
Cos t 22.3 value and high cost items C,
6.7 1 and K all have poor
Value Index for B 1.72.....and so on.
3.9 values.
(The greater, the better).

Example 11.3: Table 3 shows a Function Cost matrix for a typical product
(compass). It describes in two-words the function of a component. Its
percentage importance (I) as obtained by paired comparison and percentage cost
(C) obtained by allocating cost to attaining that function by that component.
The Value index is given by I/C. A low value of I/C ratio shows a poor value
area.

Table 3 (for example 11.3) Function-cost matrix for a compass

Sl. Component Function % Importance I % Cost C Value
No. (%) (%) Index I/C
1. Pencil leg Contain marker 16 25 0.6
2. Pencil lock Apply leverage 5 4 1.3
3. Lock rivet Create fulcrum 1 1 1.0
4. Handle Access Assembly 0 9 0.0
5. Screw Connect 12 7 1.7
Components
6. Nut Induce Torque 7 3 2.3
7. Washer Maintain Friction 1 4 0.3
8. Pinleg Hold Pin 12 20 0.6
9. Pin Anchor Axis 21 4 5.3
10. Pencil Deposit Graphite 25 23 1.1
316
D) Creation Phase Value
Engineering
and Quality
The objective of this phase is to create ideas for value alternatives to accomplish Assurance
the functions defined in the previous phase. The first step is to try answering the
question What else will do'? This phase requires creativity to be the focal
point.

Brainstorming is a very effective way of promoting creativity. In brainstorming

‘free wheeling’ is permitted. Two powerful techniques to promote creativity
are:

a) Establish positive thinking: Here we divorce the judicial part of the mind
from the creative part by insisting that we do not attempt to judge an idea
simultaneously when it is being created.
b) Develop creative ideas: This is done by cultivating uninhibited thinking
and developing a multitude of ideas and approaches for accomplishing the
defined functions. The desired thing at this point is a large number of
ideas, no matter whether they look ridiculous. A number of check-lists and
idea-stimulators could be used for the purpose.

E) Evaluation Phase

The objective of this phase is to select for further analysis the most promising of
the ideas generated during the creative phase and to subject the ideas to a
preliminary screening to identify those which satisfy the following criteria:

• Will it work?
• Is it less costly than the present design?
• Is it feasible to implement?

This phase of the Job Plan together with its supporting techniques must be
undertaken with both care and diligence, for it is here that the judicial part of
the mind is brought into active use. There are four techniques associated with
this phase:

a) Refine and combine ideas: The ideas must be practicable and to make
them so we may have to refine an idea or combine two or more than two
ideas.
b) Establish cost on all ideas: As an idea or combination of ideas is being
refined, an estimated cost should be calculated. What are the potential
costs of implementing the idea and what are the resultant savings
implied?
c) Develop function alternatives: This makes further use of the
information developed in the evaluation of functional relationships to
mould the individual functional solutions into total solutions.
d) Evaluate by comparison: When these rough total solutions and their
related estimates of costs have been established they are compared to
determine which one will provide the greatest value advantage. 317
Capacity Planning, The evaluation of value alternatives may have to be done on multiplicity of
Work and Job
Design & Value attributes-both tangible and intangible. The decision matrix approach can be a
Engineering very effective way of multi-criteria evaluation. Here each criterion is assigned a
relative importance and a normalised value score is allocated to each alternative
on each attribute. The total weighted score is obtained for each alternative and
the greatest score determines the preferred alternative.

Example 11.4: For the compass of Example 11.3 suppose the criteria for
evaluation are: Ease of use, Ease of manufacturing, Safety, Quality and
Attractiveness with the relative percentage weightage of 15, 30, 20, 25 and 10,
respectively. Then the four value alternatives can be compared by using
decision-matrix approach as shown in Table 4. As can be seen value alternative
A2 is the best as it gives the greatest total weighted score.

Table 4
Decision-Matrix to evaluate value alternatives for a compass
ATTRIBUTES
Sr. Value Ease Ease of Safety Quality Attract- Total
N Alternat of use Manufat- (20) (25) iveness Score
o. ive (15) curing (10)
(30)
1 A1 100 30 50 70 100 61.50*
2 A2 80 100 100 50 50 79.50**
3 A3 30 50 70 100 70 61.50
4 A4 50 60 80 50 60 57.00

*(15×100+30×30+20×50+25×70+10×100) / (15+30+30+25+10)=61.50
** A2 is the best alternative, being the maximum scorer.

F) Investigation Phase

The three techniques of this phase further refine the selected ideas into workable
and acceptable solutions providing lower cost methods for performing the
desired function. The three techniques are:

a) Use Company and Industrial Standards: Within a standard lies tried

and proven solution to a problem. We should try to use standards to the
extent possible.

b) Consult Vendors and Specialists: The vendor may prove to be

invaluable source of help in VE programme because he knows more about
his product and its potential capabilities than most of his customers. We
may decide to buy an item from the vendor instead of making it within
if it is a cheaper and better proposal. Suppliers should be asked for cost-
reducing and quality improving ideas. The degree of VE assistance by
vendors also varies directly with the types of rewards, such as giving more
business to cooperating vendors. Specialists can also contribute by
suggesting a better material substitute, for example, by virtue of vast and
318
 up-to-date knowledge they may have in their chosen area of Value
Engineering
specialisation. In VE philosophy the consultation with others is a and Quality
strength rather than a sign of weakness. Assurance

c) Use Specialty Products, Processes and Procedures: These in many

cases provide lower-cost way of accomplishing the function; but before
being adopted these should be evaluated to ensure lower costs in relation
to standard products, processes and procedures

G) Recommendation Phase

This is the final phase of the Job Plan in which the finally selected value
alternative is recommended for acceptance and implementation. It is vital in
the sense that the entire project of conducting VE would succeed only if the
recommendation is accepted. Many a time the acceptance of the suggested
alternative depends upon the way it is presented to the management. The two
techniques associated with this phase are:

a) Present Facts: Facts usually speak for themselves.

b) Motivate Positive Action: The presentation of accurate, specific and
detailed facts and costs will motivate positive action. This technique
requires the follow-up to make sure that the action is taken for idea
implementation.

The presentation of facts can be either verbal or written in standard format or in

combined form. The combined strategy is the best. The final recommendation
need not contain all the data but should contain sufficient information to enable
decision makers to find the course of action to be taken.

Example 11. 5: We take the same phase. After successfully carrying out VE
Job Plan, the improved example as ’Door Assembly' of a refrigerator which
was given for functional analysis design of the ‘Door Assembly’ was
suggested. Figure II shows the existing design and the proposed design. By
the porposed improved design of the door assembly of refrigerator by VE
there would be a saving of considerable amount to the company
manufacturing the unit in its factory per year. The new design will perform
its role well without jeopardizing the functions to be accomplished by such as
assembly.

319
Capacity Planning,
Work and Job
Design & Value
Engineering

Figure II: Existing and Proposed Door Assembly.

Example 11.6: The fig III shows a typical part redesigned with
manufacturing considerations. The revised design has much less number of
parts and hence much reduced cost compared to the original design.

Original Design
Revised Design

Figure III: Existing and Proposed Design of Portable Rack.

320
Other Variants of Job Plan Value
Engineering
and Quality
Some other variants of the Job Plan described above have also been reported. Assurance
These are: DARSIRI method and FAST. The FAST is the most powerful of
these and will be discussed in detail in the next section. DARSIRI is essentially
similar to the Job Plan of Mudge described above. The seven steps involved are-
D (Data Collection), A (Analysis), R (Record of Ideas), S (Speculation), I
(Investigation), R (Recommendation) and I (Implementation).

These are self-explanatory steps and hence need not be elaborated.

11.5 FAST DIAGRAM AS VALUE

ENGINEERING TOOL
This technique is developed by Charles. Bythaway and it is used to establish
the relationship between functions in the analysis of an entire system, process
or complicated assembly and gives a better understanding of interrelationships of
function and their cost. FAST diagram is shown in fig IV.

Fig IV- Function Analysis System Technique (FAST)

CONSTRUCTION OF A FAST DIAGRAM OF A BALL POINT PEN

The FAST diagram is represented in Fig. IV(a)

The first step is to identify all the functions of the parts.

The parts of the ball pen and functions of parts are shown in Table 5

Table 5

Part Function Remarks

Tip Improves look, locate Chromium plating
part
Plastic neck Hold part, provide grip, Step in tip
facilitate maintenance
Spring Provide tension —
Refill Contain ink. control —
flow, restrict movement
321
Capacity Planning, Ink in refill Make marks —
Work and Job
Design & Value Plastic barrel Enclose part, identify Hole in barrel, name on
Engineering company, air flow. barrel.

Basic function—Provide impression or MAKE MARK

Secondary functions— Improve look

Provide grip

Control flow

To start with, MAKE MARK (basic function).

The question “why do we need this function is asked ?”

The answer is “to communicate ideas”. This function is shown on the left of
the FAST diagram.

How do you make marks?

The answer is by performing the functions “contain ink and control flow”
which represented right side of basic function.

Figure IV (a) Function Analysis System Diagram for pen.

Next question is how do we control flow and contain Ink? Then the answer is
to position refill, i.e., by making use of spring whose function is to provide

tension, which is represented in the Fig. . Then the other functions are
to be considered. The question ‘when do we improve look? All the time
(ans). The all time functions are placed on the right hand top corner of the
diagram. The other functions are represented as shown in order to determine
the scope of the problem, the FAST diagram includes scope rules (Vertical
broken lines). The left scope line is placed between the basic function under
consideration (make marks) and highest order basic function (Communicate
Ideas). The scope line on the right hand is determined by drawing a vertical
broken line to the left of the function that is suitable input to the system "In
this case, provide part is the suitable input." Design parameters, are placed
322
inside the scope lines. In the next phase, the generation of alternative ways of Value
Engineering
performing desired function is taken up. By observation of adjacent functions and Quality
on the FAST diagram many new ideas may be found to combine. This leads Assurance

to better performance of function.

11.6 SOME CASE STUDIES IN VALUE

ENGINEERING
Value engineering has been very extensively applied in product design, systems
and procedures and a very large number of case studies have been reported in
books and journais on Value Engineering. In many of these case studies large
amounts of savings have been reported. In Indian industries value engineering
applications have been reported from TISCO,TELCO, Escorts, Hindustan
Lever, Kelvinator, Railways, Godraj, BHEL, NTPC, L&T, Reymond, and
a host of other public and private organizations. It is also known to have been
applied in Indian Army ,Navy and Air Force.

Some very simple case illustrations are as follows:

i) Problem: Make design changes to reduce the construction cost in a large

garage for a trucking firm.

Function: Protect Trucks

General Explanations and Solutions: Company management had

drawn plans to construct a large garage complex for its fleet of trucks. The
value Analysis pointed out that trucks were on road on an average of 20
out of 24 hours. What was really needed was a large parking area and a
small maintenance building.

ii) Problem: Reduce the number of guards by combining entrances to

classified areas.

Function: Monitor doors

General Explanations and Solutions: It was difficult to reduce the

number of doors to the classified areas. However, it was found that each
guard could monitor and control two entrance doors by using CCTV
and electric door locks.

iii) Problem: Reduce the manufacturing cost of gasoline tanks for the landing
aircrafls.

Function: Hold gasoline

General Explanations and Solutions: Initial design was inherently very

costly. It was discovered that standard 55 gallon steel drums could be
easily modified, coated and used.

iv) Problems: Reduce the manufacturing cost of oil dipstick

323
Capacity Planning, Function: Measure Oil
Work and Job
Design & Value
Engineering
General Explanations and Solutions: It was discovered that the
standard dipstick used in large numbers could be more economically
purchased from outside vendors instead of making.

11.7 BEHAVIOURAL AND ORGANISATIONAL

ASPECTS OF VALUE ENGINEERING
Basic foundation of VE is structured around the effective use of people in teams.
If team work is not properly harnessed it may not achieve major cost reductions.
Some problems and roadblocks that are commonly encountered in the VE
process are:

i) lndividuals involved in VE usually have other jobs and are already busy.
ii) Teams may be inherently conservative, non-coherent and may avoid
decisions and waste time.
iii) Individual members of the team may have vested interests in resisting
changes.

The success of VE study is enhanced if organisational and behavioural aspects

are considered early in VE process. Hence the importance of the general phase
of the VE Job Plan. Some important factors are;

a) Organising for VE: Organising of VE function itself is very important.

There are many alternative ways of doing it and there are many question
to be answered. Size, composition, level of participation and leadership are
some of the relevant issues. VE may be organised as a team of
multidisciplinary areas coordinated by a value engineer/industrial
engineer. It may be an independent cell in staff level or it may be visualised
as a philosophy-conditioning of mind so that every individual be trained to
be value conscious. As a result it gets reflected in his decisions and
attitudes towards problem solving. The right choice is contingent upon
various situational parameters
b) Decision Making: How are decisions to be made in a team? What are
the external influences? What are the processes of approval? Are there some
relevant issues that must be debated in the early stage of VE process?

11.8 BENEFITS OF VALUE ENGINEERING AND

CONCLUDING REMARKS
Value Engineering helps in improving efficiency as well as effectiveness of
products, systems and procedures. In general, VE,

i) enables people to pinpoint areas that need attention and improvement.

ii) provides a method of generating ideas and alternatives for possible solution
324 to a problem.
iii) provides a means of evaluating alternatives including intangible factors. Value
Engineering
iv) provides a vehicle for dialogue. and Quality
Assurance
v) documents the rationale behind decisions.
vi) materially improves the value of goods and services.

In conclusion it must be re-emphasised that VE/VA is an extremely powerful

methodology for cost reduction and value improvement and is becoming more
and more popular. It is applicable to all areas: hardware, products, services,
systems or procedures, and in all functional processes: purchasing, designing,
producing, packaging, physical handling and distribution.

11.9 INTRODUCTION TO QUALITY

ASSURANCE
You all must have come across the word quality in different contexts. All of
us look for good quality in goods and services. We all realise the fact that the
major achievement of industrial revolution has been the ability to mass
produce a variety of goods of uniform quality, the classic example being the
automobile. You will agree that the characteristic which sets apart Japanese
goods as a superior or class, is precisely their quality.

In this unit we will describe the assessment, control and management of the
quality function in an industrial organisation. We will develop a simple
working definition of quality and then outline the assurance aspects of quality
management.

Statistical techniques have contributed substantially to the success of modern

quality control. Two of the important statistical techniques, viz., Acceptance
Sampling and Control Charts will be developed in detail. Finally we will
outline the role of computers in the area of quality control.

While this unit will outline methods and techniques which are useful in
quality control and quality management, a successful quality improvement
will depend on the skill and efficiency of the manager in using these
techniques.

11.10 CONCEPT OF QUALITY

Even though we all talk of quality, it is not easily defined. Before we give a
definition, it will be a good idea to give your own definition.

One of the accepted definitions of quality is fitness for use. An equally good
definition is conformance to requirements. Note that in both the definitions
quality is defined relative to use, rather than as a general characteristic that
may be intangible. By this simple, yet practical definition, if a product or
service lives up to expectations, it is of high quality. On the other hand, extra
fine finish or using materials that are far stronger than required does NOT
325
Capacity Planning, add quality to an item unless it somehow causes the item to conform to its
Work and Job
Design & Value requirements better.
Engineering

11.11 COST OF QUALITY

The term cost of quality is often a misnomer. Cost of quality is a measure of
the cost to the firm for a lack of quality. It is very difficult to measure and
often cannot be found in account books. One has to carefully back calculate,
as most of the cost elements are hidden.

Quality costs are distributed throughout the organisation. Most organisations

include only the cost of quality control departments whereas the cost of
inspection, and measurement carried out in production departments are often
ignored. More importantly the cost of bad workmanship, wastages and
rework, etc. are often not included in quality costs. Careful examination of
quality costs should account for Prevention, Assessment, Control Costs and
costs due to lack of control.

"Quality is free, but it is not a gift". This statement sums up the opinion that
effective, permanent quality improvement is difficult to achieve, but more
than pays for itself in increased productivity.

11.12 QUALITY MANAGEMENT

Quality assessment is an investigation of the level of quality being achieved.

Quality control on the other hand, begins with assessment, and includes
action taken to eliminate unacceptable quality. The typical quality control
programme is based on periodic inspection, followed by feedback of the
results and changes or adjustments whenever necessary. Quality assurance
includes quality control, but it also refers to emphasis on quality in the design
of products, processes and jobs and in personnel selection and training. Total
quality control refers to the managerial commitment to quality so as to
include the quality aspect in every functional area of work, production,
marketing, finance and personnel. It also includes behavioural science based
techniques like Quality Circles and Zero Defect Programmes. Naturally, the
management of quality is an extensive area of study.

Quality assurance as an idea is quite old, but a systematic inclusion of quality

assurance in organisations is a twentieth century phenomenon. Statistical
methods of quality control were first proposed by Shewart in 1924, in the
United States.

Intensive training courses in statistical control popularised by the American

and Japanese industries contributed to much of the success of quality control
programme. Recently the concept of Quality Circles has been a runaway
success in Japanese industries. A quality circle is a group of employees
whose assignment is to identify problems, formulate solutions, and
326
present their results to management with Suggestions for Value
Engineering
implementation. It is getting increasingly popular with employees and and Quality
management in India also. Assurance

11.13 QUALITY ORGANISATION

A common mistake is to view quality as the responsibility of the department
that produces the goods or services. Lack of conformance, however, can be a
problem of design or even advertising. Consider the manufacture of
automobile transmissions. If the gears are improperly designed, the
transmission will fail despite the best quality of the manufactured gears. That
Quality is Everyone's Business must be understood by everyone in the
organisation.

Also, quality begins at the product concept stage and extends throughout the
development, production, delivery and use of an item. Causes of poor quality
can occur anywhere in the organisation, from top management to the shop
floor worker, in accounting, production, sales, service or any other functional
area of management (including the quality control function itself!). Some
quality problems have roots outside the organisation, such as defective
supplies from a vendor or incorrect specifications from a customer.

To achieve success, a major commitment to quality must be made by top

management, and it must be visible to all the employees. Major quality
problems often cross departmental lines, so barriers to system-wise actions
must be removed. Quality improvement must be established as a positive
effort rather than blaming the assignment. In general, training is the key to
the success of quality control. Keeping these principles in mind, several
alternatives exist for organising the quality control function.

11.14 ACCEPTANCE SAMPLING

One of the powerful statistical techniques of quality control is Acceptance
Sampling. This technique is generally used in those situations where items
are inspected in batches, generally known as lots. For example, you may
receive a shipment of 10,000 electric bulbs and you may have to decide
whether to accept the shipment or return it back to the supplier. The
acceptability will depend on the acceptable quality of the lot, which in turn
depends on the use and the price you are willing to pay for this quality.
Suppose you decide to accept if the average fraction defective is less than 5
per cent. Then to ascertain the actual quality you may decide to inspect each
and every bulb. Such a strategy of.100 per cent inspection, however, may
often be expensive and impractical. In such cases a more intelligent way is to
use the concept of Sampling Inspection.

The idea of sampling inspection is to inspect only a small portion of the lot
and infer the quality of the lot, based on the quality of the sample.
Acceptance is based on the inference made from the sample and hence the 327
Capacity Planning, technique is known as Acceptance Sampling. Typically a lot is specified by
Work and Job
Design & Value its size (N) and the fraction (f) of defectives that are expected to be present
Engineering (at the most) in the lot. The principles of statistics are used in the inference
process.

Interestingly the concept of acceptance sampling is no different from the

strategy adopted by a typical housewife who decides whether or not a pot-ful
of rice is cooked by inspecting just a spoonful of grains.

Two things must be kept in mind. In order that sampling inspection might
work, the sample must be representative of the lot. Typically this is ensured
by choosing the sample at random so that every portion of the lot has equal
representation in the sample. Such a sampling is known as Random
Sampling. Second, a sample is only representative and not identical (in
characteristic) with the lot. In the inference process, therefore, a few good
lots may be rejected and a few bad lots may be accepted. We can control such
sampling errors, but they cannot be eliminated. In fact in the design of
sampling plans we will ensure that the errors are kept below certain
acceptable levels.

Sampling Plans

We will first consider a single sampling plan in which accept/reject

decisions are based on the results of a single sample of n items from the lot of
N items. Each of the n sample items is inspected and categorised as either
acceptable or defective. Such a plan is known as Sampling by Attributes
(we will not discuss Sampling by Variables in this unit. The interested
reader may refer to the references cited at the end). If the number of defective
items in the sample exceeds a pre-specified cut off level, c, acceptance
number is c the entire batch is rejected. (Depending on costs, a rejected lot
may be scrapped or 100 per cent inspected or returned back to the
manufacturer). Since a finding of c or fewer defective items in the sample
implies accepting the batch, c is often referred to as the acceptance level. A
Sampling Plan is specified by the values of n and c.(c=acceptance number)

The sampling plan is supposed to separate good lots from bad ones. As
mentioned earlier there are bound to be sampling errors. We will now study
the probabilities of such error graphically, using an Operating
Characteristic Curve.

The Operating Characteristic Curve

It is useful to have a simple picture that allows us to compare sampling plans

as to how they will react to different lots with unknown, varying fraction
defective. Such a comparison is provided by the, operating characteristic
curve (OCC) which displays the probability of accepting a lot with any
fraction defective.

328
 Value
Engineering
and Quality
Assurance

Fig v. operating characteristic curve.

Figure V shows OCC for two single sampling plans A and B with n = 35,
c = 1 and n = 150, c = 6, respectively. For example, suppose that a lot with
f = 10 per cent defectives is considered to be a bad lot and a lot with f = 2 per
cent defectives is considered to be a good lot. From Figure V, it is clear that
sampling plan A would stand a 14 per cent chance of accepting a bad lot. The
same unfortunate error can occur with the sampling plan B, with larger
sample size also, but the probability of error is much smaller. In fact it is only
1 per cent. The sampling plan B is also better at not rejecting good lots (f = 2
per cent). Sampling plan A has 16 per cent chance of rejecting a good lot
whereas sampling plan B has only 3 per cent chance of rejecting a good lot.

It is not surprising that a larger sample does a better job of discriminating

between good and bad lots. It has more information. However, the price for
increased accuracy is higher inspection costs. The design of a sampling plan
has to optimally trade-off cost with discrimination.

The values of the ordinates of the Operating Characteristic Curve are

determined from the Poisson Distribution. The actual details can be found in
the advanced texts listed in the reference.

Design of Single Sampling Plan

You have to design a sampling plan (n, c) that has an OCC that meets certain
pre- specified requirements. Generally the design is based on the following
criteria that are related to the probability of making either of the following
errors: accepting a bad lot and rejecting a good lot . The criteria are
established subjectively and ultimately should reflect the cost of accepting a
bad lot or rejecting a good lot.

329
Capacity Planning,
Work and Job Needless to say before and values can be specified, one has to decide
Design & Value
Engineering what is a good lot and what is a bad lot. Invariably this is done by specifying
the lower/upper limits of fraction defective (f), as illustrated below:

AQL (Acceptable Quality Level) the fraction defective (f) that the user
considers acceptable. Thus if a batch were known to have a fraction defective
equal to AQL, it should not be rejected.

LTPD (Lot Tolerance Per cent Defective) the fraction defective that defines a
bad lot or one that should be rejected. Of course AQL must be less than
LTPD.

Producers Risk ( ) the largest allowable probability of rejecting a good lot

(due to statistical error). Note that a good lot has fraction defective less than
or equal to AQL (generally 5 per cent).

Consumers Risk ( ) the largest allowable probability of accepting a bad lot

(due to statistical error). Note that a bad lot has fraction defective greater than
or equal to LTPD (generally 10 per cent).

Example 11.7

Consider a manufacturing situation with the following values:

AQL = 0.02, α= 0.05

LTPD = 0.10, β= 0.01

Design a suitable sampling plan.

Solution. To design the sampling plan, follow the instruction at the bottom of
the chart Table 6 (Here the notation µ is the same as our notation m = mean
value). Note that we have to read off  = 0.01 and (1–) = 0.095 rows only.
First find a c value for which µβ/µα< 0.10/0.02 = 5 (= LTPD/AQL) Starting
With c = 0 we read off µβ = 4.6052 and µα = 0.0513

But does not satisfy .

Continuing with etc. we find that for

(satisfied).

Hence we choose To get the value of , the limits are

14.5706 3.2853
and n , n 146 and n 165
AQL 0.10 0.02

330
Hence sampling plans with size in the range of 146 to 165 will satisfy the Value
Engineering
and Quality
requirement. The exact value of and for any sampling plan can be Assurance
determined using Thorndike chart again.

1) To plot an OC curve for a given sample plan (n, c): (a) Find the column
for your c value. (b) Divide each number in that column by n. The
results are the f values for the horizontal axis. (c) The Pa values for the
vertical axis, are in the far left column.
2) To – find – a – single – sampling – plan :
(a) Find – c – for – which – µβ / µα < LTPD/AQL.
(b) Then choose any n between µβ = µβ / LTPD and µα / µα /AQL
3) To find the acceptance probability for a given n, c and f = (i) Multiply
(n) (f). (ii) In the appropriate c column, find values above and below nf.
(iii) In the Pa column read upper and lower limits for Pa in two rows
from step (ii) (interpolate, if required).

Average Outgoing Quality

The inspection process rejects lots with high fraction defectives. After
rejection either you may stop, or you may continue the inspection of all the
items in the rejected lot and all defective items are replaced with good items.
Such a policy is known as Rectifying Inspection.

In rectifying inspection, all outgoing lots consists of N items either accepted

ones or rejected ones. Suppose a lot has incoming fraction defective f. If it is
accepted (N - n) items remain uninspected. We, therefore, expect f (N-n)
defectives in the accepted lots (assuming that the defectives found in the
sample are replaced with good ones). In contrast, if it is rejected and hence
(100 per cent rectified and inspected) there are no defectives. Thus if Pa is the
probability that the sampling plan will accept the lot,
331
Capacity Planning,
Work and Job
Design & Value
Engineering

A plot of outgoing fraction defective against incoming fraction defective (f)

is generally called the Average Outgoing Quality (AOQ) curve. Figure VI
shows the curve for sampling plan B (n = 150, c = 6) of the earlier example.
This curve has a surprising property that, as f increases, there comes a point
at which the outgoing fraction defective actually begins to improve. The
reason being that the sampling plan rejects most bad lots and they are
rectified through 100 per cent inspection.

The most critical incoming fraction defective f gives the worst outgoing
quality. On the average, the value of that critical f is not important but the
corresponding outgoing fraction defective generally known as average
outgoing quality limit (AOQL) is extremely useful. No matter what the
incoming fraction defective is, the long-run average outgoing fraction
defective will not be worse than AOQL.

Fig VI. AOQ for sampling plan B (n=150, c = 6, N=10,000)

Table 7 AOQL Factor

Acceptance Number (C) AOQL factor (Y)

0 0.3679
1 0.8400
2 1.3711
3 1.9424
4 2.5435
5 3.1682
6 3.8120
7 4.4720
8 5.1457
9 5.8314
10 6.5277
332
You do not determine AOQL by plotting the AOQ. One can use the given Value
Engineering
AOQL factor table. To get the AOQL simply use the formula and Quality
Assurance
1 1
AOQL AOQL factor
n N

Many managers prefer to use the AOQL as a criterion for designing a

sampling plan rather than trying to decide on values of AQL, LTPD, and

. Dodge and Romig (1959) present tables that are designed for this purpose.
In fact these tables meet the requirement of a specified AOQL and minimise
the expected number of items inspected per lot.

The OCC approach and AOQL based approach are but two of the many other
approaches that can be used to design a sampling plan. Choice among them is
a match of personal experience, the exact situation and the objectives of the
organisation. Regardless of the approach, all sampling plans have both an OC
curve and an AOQ curve, so the principles discussed in this unit can be used
to evaluate any sampling plan.

Double and Multiple Sampling

Extensions of the single sampling plans to double and multiple sampling

plans are also available. In a double sampling plan; after the first n1 samples
have been inspected there are three choices depending on the number of
defectives found:

1) reject the lot

2) accept the lot, and

3) draw a second sample of n2 items.

If choice (3) is made the final accept/reject decision is made on combined

sample of nl + n2 items. A multiple sampling plan operates in the same way,
but with more than two samples. Double and multiple sampling plans reduce
inspection costs because many accept/reject decisions are made based on the
first sample which is smaller than that of the single sampling plan. However,
single sampling plan is more common and easy to use. Details of multiple
sampling plan are found in references.

11.5 PROCESS CONTROL

Variability

All products and services have a certain amount of natural variability because
of variations in the input as well as imperfections in the process. For
example, different quality of raw materials could have been used and
different quantities of chemicals could have been used in the process. This

process variability may be measured by the process standard deviation , 333

Capacity Planning, which indicates how much the products will vary even if the process is in
Work and Job
Design & Value control.
Engineering
Products have to meet specified tolerances imposed by their intended use.
Accordingly the natural variability must be substantially smaller than the
specified tolerance. This is explained in Figure VII in which the central line
is the desired average of the process and the dashed lines are the `3-Sigma
limits' representing the natural process variability.

Fig VII Process Variability

It can be shown that variations of more than 3 from the process average are
very unlikely. In fact it is about 0.25 per cent if the process follows the
normal distribution and definitely less than 5% for most processes. The solid
lines represent the tolerances specified by the intended use of the product.

Within the specified tolerances, a certain amount of process variability is to

be expected. However, It is the goal of the statistical process control to
determine when the process variability is getting out of hand, so that
corrective action can be taken, preferably before the required tolerances are
violated. This is generally achieved by a Control Chart

Control Chart

In order to provide rapid feedback to an ongoing production process, methods

somewhat different from acceptance sampling are appropriate. Samples are
taken as soon as they are available, rather than waiting for the completion of
a lot. This affords the opportunity to detect unplanned changes in the process,
shortly after they occur and take.a quick action, such as adjusting the
machine.

The most common device used for this purpose is Shewart Control Chart
introduced in 1931. The control chart is a visual display of the result of an
inspection process incorporating carefully derived limits to indicate
unusual behaviour. A control chart can be based on categorical information
334 or actual measurement. Accordingly, they are called control chart for
variables (controlling quality through measurement) and control chart Value
Engineering
for attributes (controlling quality through counting). Since control chart and Quality
for variables are more commonly used and more powerful, we will describe Assurance

them first.

The control chart is based on the idea that the average of a sample of several
items will tend to cancel out the normal process variability, so that
undesirable changes in the process will be more visible. We will illustrate the
idea through an example.

and R chart(control charts for variables)

This chart is used for quality characteristics which are specified as variable,
i.e., on the basis of actual measurement readings taken. The purpose or
objectives of this chart are:
(a) To establish whether the process is in statistical control or not.

(b) To determine whether the process capability is compatible with the

specifications

(c) To detect trends in the process so as to assist in planning, adjustment

and resetting of the process.

(d) To show when the process is likely to be out of control.

A number of samples of component coming out of the process are taken
over a period of time. Each sample must be taken at random and the
size of sample is generally kept 5 but 10 to 15 units can be taken for
sensitive control charts. For each sample the average value of all the
measurements and the range are calculated. The grand average is
equal to the average value of all the averages and is equal to
average of all the ranges ) are found and from these we can calculate
the control limits for the and charts. Therefore, For charts:

Upper Control Limit

Lower Control Limit, LCL x X A2R

and are also called centre line values. For chart:

Here, the factors and known as the statistical factors depend on the
number of units per sample. Larger the number, the closer the limits. The
value of the factors and can be obtained from Statistical Quality
Control tables. However, for ready reference these are given below in tabular
form in Table 8. As long as and limits values for each sample are within
the control limits the process is said to be in statistical control.
335
Capacity Planning, Table 8: Statistical factors for computing control lines and control limits
Work and Job
Design & Value for , R and s charts
Engineering
No. of A2 D1 D2 D3 D4 d2*
Units in
a sample
2 1.88 0 3.687 0 3.27 1.13
3 1.02 0 4.358 0 2.57 1.69
4 0.73 0 4.698 0 2.28 2.06
5 0.58 0 4.918 0 2.11 2.33
6 0.48 0 5.078 0 2.00 2.53
7 0.42 0.205 5.203 0.08 1.92 2.70
8 0.37 0.387 5.307 0.14 1.86 2.85
9 0.33 0.546 5.394 0.18 1.82 2.97
10 0.31 0.687 5.469 0.22 1.78 3.08
11 0.29 0.812 5.534 0.26 1.74 3.17
12 0.27 0.924 5.592 0.28 1.72 3.26
13 0.25 1.026 5.846 0.31 1.69 3.34
14 0.24 1.121 5.693 0.33 1.67 3.41
15 0.22 1.207 5.737 0.35 1.65 3.47

6R
*Process Capability = 6
d2

The various reasons for the process being out of control may be:
(i) faulty tools (ii) sudden significant change in properties of new materials in
a new consignment (ii) breakdawn of lubrication system (iv) faults in timing
of speed, mechanism etc. Tracking of these causes is sametimes simple and
straight forward but when the process is subject to the combined effect of
many factors, then it may be a lengthy and complicated business.
Example 14. The following record taken for a sample of 5 pieces from a
process each hour for a period of 24 hour.

S.No. Time Measurements × 1/1000 X R

1. 8 a.m. 995 997 1002 995 1000 0.998 0.007
2 9 a.m. 990 1002 997 1003 1005 0.099 0.015
3. 10 a.m. 1003 1005 998 1004 995 1.001 0.005
4. 11 a.m. 1002 999 1003 995 1001 1.000 0.006
5. 12 a.m. 1001 996 999 1006 1001 1.000 0.010
6. 1 p.m. 1004 1001 998 1004 997 1.000 0.007
7. 2 p.m. 1003 1002 999 1003 1004 1.002 0.006
8. 3 p.m. 1001 1007 1006 999 998 1.002 0.009
9. 4 p.m. 999 995 994 991 996 0.995 0.008
10. 5 p.m. 994 993 991 993 996 0.993 0.005
11. 6 p.m. 994 996 995 994 991 0.994 0.005
336
12. 7 p.m. 994 995 998 999 1001 0.097 0.007 Value
Engineering
13. 8 p.m. 1002 1004 1000 994 1000 1.000 0.010 and Quality
14. 9 p.m. 1003 1000 996 1000 1005 1.000 0.009 Assurance

15. 10 p.m. 996 1001 1006 1001 1008 1.103 0.012

16. 11 p.m. 995 1003 1014 1006 1008 1.003 0.012
17. 12 p.m. 1096 1005 1006 1009 1008 1.006 0.004
18. 1 a.m. 996 999 1001 1008 996 0.999 0.012
19. 2 a.m. 1001 1004 995 1001 1008 1.002 0.013
20. 3 a.m. 1003 995 1002 991 996 0.999 0.012
21. 4 a.m. 1004 991 993 997 1008 0.997 0.013
22. 5 a.m. 1003 997 998 1000 1001 0.999 0.006
23. 6 a.m. 1006 1001 999 996 997 0.999 0.010
24. 7 a.m. 1005 1000 1001 998 1000 1.001 0.007
Total 23.976 0.216
Average 0.999 0.009
Design control limits, make plot, draw inferences regarding quality.
Solution
X 0.99 and R 0.009 from table 8 for a sample size of 5, we have A2 = 0.58, D4 =
2.11, D3 = 0, then UCLx X A2R 1.004, LCLx x A2R 0.994
UCL R D4 R 0.019 and LCL R D 3R 0

Figure. VIII

Now and charts are plotted on the graph as shown in Fig. VIII taking
abscissa as sample number and ordinates as and respectively.
Inference. Let us look at the Fig. VIII. In the chart, most of the time the
plotted points representing average are well within the control limits but in
Samples 10 and 17, the plotted points fall outside the control limits.

337
Capacity Planning, It means something has probably gone wrong here with the process and
Work and Job
Design & Value a check is needed to prevent the appearance of defective products ( rectifying
Engineering inspection).

If the causes have been eliminated, the sample nos. 10 and 17 will stay well
within the control limits, but if more points fall outside the control limits then
a thorough investigation should be made, even if it is necessary to shut down
production temporarily until every thing is adjusted again and no more points
fall outside.

Control chart x̅ and R charts with x n (for variables)

Consider XYZ Company that uses an automatic machine to fill 1kg. boxes of
sugar. The tolerances are specified as 1.000 kg. on the lower side (legal
requirement) and 1.005 kg. on the high side (no point,wasting sugar). Since
the spread is only 0.005 they selected a machine that has a natural process
variability of = 0.0003. The three sigma limits of the machine therefore are
3(.0003) = .0009 kg. above and below the mean. The spread is .0018 which is
narrower than the specified tolerance of .005. They adjust the machine to fill
boxes with an average 1.0025 kg. half way between the tolerance limits.

An x̅ Chart (Average Control Chart) was set-up to detect when the machine
goes out of control. In order to reduce the natural process variability, samples
of n = 5 boxes were weighed, and the average weight per box, x̅, was
recorded for each sample.

Figure IX shows the control chart used for this machine and the four points
plotted on the chart represent the values from four samples (a total of twenty
1 kg. boxes). We shall examine the details of the chart. There is an apparent
trend in x̅. The sample seem to be getting progressively heavier. However,
despite the appearances, the trend in fig. IX, it may be due to random
fluctuations. It is for this reason that we must incorporate the concept of
statistical significance in our discussion. The standard deviation of the
sample average is expressed through the formula x
n

•
•
• •

Fig. IX- x̅ chart

338
 Value
Therefore, the averages of boxes of sugar should have a standard Engineering
and Quality
Assurance
deviation of . The control limits represent 3

sigma limits and are therefore (3) above and below

the intended average of If a sample average falls outside these

control limits the deviation from the process average is statistically
significant.

The fourth sample falls is on the control limit and therefore there is a strong
statistical evidence that more sugar is put into the boxes than what was
intended and the machine needs adjustment. The R Chart (Range Control
Chart) is also used to control the processes. The range of a sample is the

largest value minus the smallest. An chart is appropriate if process

sometimes goes out of control in such a way that there is inconsistency in the
values, but no shift in the mean value of the process. For example, a worker
who is basically good might produce an inconsistent set of sizes (of some
manufactured product) when he is fatigued. The R chart used to plot the data

of XYZ Company appears in Figure . is given to be

Fig X-R chart

'The control limits for R chart are determined differently. There is no need for

lower control limit which is generally (for n 6 it is zero) zero. Table 9 an

extract from the Table 8 (Factors for computing central lines and control
limits) is used to set the upper control limit for an R chart and factor D2 from
the table is multiplied by the ' process standard deviation, σ . In the case of
XYZ Company data, D2=4.918 (for a sample size of 5) and hence upper
control limit=(0.0003) (4.918)=0.00148. As can be seen in Figure X no
statistically significant shifts are present.

Table 9: R chart Factor(extract from Table 8)

Sample size D3 D2
2 0 3.686
3 0 4.358
4 0 4.698
339
Capacity Planning, 5 0 4.918
Work and Job
Design & Value 6 0 5.078
Engineering 7 0.205 5.203
8 0.387 5.307
9 0.546 5.394
10 0.687 5.469

Other Control Charts

There are several other control charts, including the p-chart which is used to
control the process when the measurement is by attributes. In other words the
decision is only to decide whether or not the sample item is acceptable. No
measurement is taken. For example in using the GO/NO GO gauges one gets
only such a measurement.

p-chart: The p-chart is based on the fraction defective, p, in a sample of n

items. If po represents the normal process defective (i.e. when the process is
in control) then the 3 sigma control limits are,

This is based on the fact that the number of defectives has the binomial
probability. The control chart is used just like an x̅ chart, except that the
fraction defective p is calculated rather than X for each sample of n items and
a lower control limit is often omitted.

This is based on the fact that the number of defectives has the binomial
probability. The control chart is used just like an X chart, except that the
fraction defective p is calculated for each sample of n items and a lower
control limit is often omitted.

Sample sizes are typically larger for p-charts than for x̅ -charts. Since the
information content of a yes/no measurement is much smaller than the actual
variable measurement, the required sample size can be computed
approximately from the following formula.

In this formula po is the normal process fraction defective, p1 is the specified

fraction defective that is unacceptable. (po like AQL and p1 is like LTPD in
acceptance sampling).

For example, consider ABC Company that makes ready-made shirts. It has
been found that 4 per cent of the shirts are defective when the process is
under control. ABC Company wants to be able to detect a shirt to 12 per cent
defective on the basis of one sample of n items. Here p0=0.04,p1=0.12

340
therefore n=197 from the above formula. Hence the upper control limit is Value
Engineering
equal to and Quality
Assurance

i.e 8.19%

c-Chart: c-chart is used in situations wherein opportunities for a defect in

each production unit or a complaint from a customer are very large while the
probability of their occurrence per unit tends to be very small or constant.
The outcome of such a sampling process can be described by a Poisson
distribution, Here the average number of defects is equal to:

and UCL c c 3 c and LCL c c 3 c

11.16 USE OF COMPUTERS IN QUALITY

CONTROL
Now-a-days with most of the computers including personal computers well
written quality control packages are available. In some special cases these
computers can be linked directly to take the sample measurements and
control the process on-line.

These packages are likely to take much of the chores associated with the
lengthy calculations and make the application of quality control techniques
far more easy and yet effective.

11.17 SUMMARY
Value Engineering/Value Analysis is a systematic and organised effort to
identify the functions of a product, system or procedure and to attain that
function with minimum cost without jeopardising quality, aesthetics and
appearance etc. The Systematic procedure is known as VE Job Plan. Its phases
include General Information, Function, Creation, Evaluation, lnvestigation
and Recommendation. Each phase has a set techniques associated with it.
FAST diagram is another powerful technique for VE. Other important
techniques are functional analysis, function-cost matrix, paired comparison and
decision matrix. Value Engineering requires a good team spirit and an effective
organisation. Benefits of VE in cost reduction and value improvement are
tremendous. 1t is equally applicable to hardware and software projects.

Quality is fitness for use. Using this definition leads to many opportunities to
improve both quality and productivity simultaneously. Many quality
problems have causes that cross departmental boundaries. So a good quality 341
Capacity Planning, management system must make the entire organisation responsible for
Work and Job
Design & Value quality. Statistical methods are important tools for quality control. They
Engineering separate random variations from real assignable causes of deviations from
normal. Acceptance sampling helps in deciding the quality of a large batch
(lot) from an inspection of small sample. The operating characteristic curve
(OCC) precisely gives the risks associated with any sampling plan. The
design of a sampling plan can be based on Operating Characteristic Curve as
well as Average Outgoing Quality. Control charts display the results of
inspecting a continuous process. This provides convenient and rapid feedback
suggesting when feedback, overhaul or adjustment, may be needed. The
design of control chart is based on sound statistical principle regarding the
behaviour of sample mean.

The statistical methods described in this unit are used widely in

manufacturing and service industry. They are also the basis for many of the
commonly used, yet more complex, schemes described in the references.

11.18 KEY WORDS

Brainstorming: The process of generating creative ideas in a group by
permitting free and uninhibited discussions among the team members.

Decision Matrix: A technique of evaluating finite number of alternatives against

a multiplicity of factors.

Esteem Value: The properties, features or attractiveness which create a desire to

possess the article.

FAST: Function Analysis System Technique; it looks like a network

representation of various basic and secondary functions showing their inter-
relationships.

Function: The term used to mean the purpose or use of a product.

Function Analysis: A technique to describe function of a product or system

using two words-a verb and a noun.

Function Cost Matrix: A tool for identifying poor value areas by showing
percentage importance of a function in a product and percentage cost spent in
accomplishing that function.

Job Plan: A systematic procedure consisting of seven phases to carry out a

Value Engineering Project.

Mental Roadblocks: Conditions of mind due to beliefs, resistance and fear etc.
which retard creativity and idea generation.

Primary (Basic) Function: It is the basic or specific purpose for which the
component or assembly was designed.

342
Paired-Comparison: A technique of determining relative importance of Value
Engineering
functions in Value Engineering by comparing two functions at a time. and Quality
Assurance
Secondary Function: A function which does not directly contribute to the
basic function or is only needed to support the achievement of a primary
function playing enabling role.

Scope-lines: Used in FAST diagram to delineate the scope of responsibility of

VE study.

Unnecessary cost: Also termed as hidden or invisible cost which does not
improve the quality, features required by customer or the product utility but only
increase the cost; for example, materials handling cost.

Use value: The properties which accomplish a use, work or service. The use
value is equal to the value of the functions performed.

Value Engineering (Value Analysis): A systematic organised approach to

determine the function of a product and system and find least cost ways of
achieving it.,

Value Index: It is a ratio of worth of an article to its cost and is equal to . It

may also be expressed as a ratio of relative importance of a function to its
relative cost. (Value Index- the greater, the better.)

Vendor: Supplier of materials, products or services who can play an effective

role in cost reduction and value improvement.

Worth: Relative importance of a function.

Consumer's Risk: Probability of accepting a bad lot.

Producer's Risk: Probability of rejecting a good lot.

OCC: Operating Characteristic curve.

AQL: Acceptable Quality Level.

LTPD: Lot Tolerance Per cent Defective.

AOQ: Average Outgoing Quality.

AOQL: Average Outgoing Quality Limit.

Control Limits: Limits if exceeded imply that the process is out of control.

11.19 SELF-ASSESSMENT
QUESTIONS/EXERCISES
Value Engineering

1) Identify five products in your day-to-day life and determine reasons for
poor value in them. 343
Capacity Planning, 2) Applying the Function Analysis approach write down the basic functions
Work and Job
Design & Value of the following objects in two words:
Engineering
i) Umbrella
ii) Ash Tray
iii) Paper Weight
iv) Wrist Watch
v) House.

3) Suppose the following five attributes are identified to evaluate a value

alternative initial cost; functional performance; reliability and
maintainability; product appearance and dependence on supplier. Use
paired comparison approach to determine the relative importance of
these attributes.

4) Identify the basic and secondary functions of a typewriter and arrange

them in a descending order of importance.

5) Write an essay on how to organise value engineering function in an

electronic industry.

6) Why are suppliers sometimes helpful in value analysis programmes? How

can they help? Does it violate your concept of good business ethics to
involve them in your problems?

7) Critically examine the following statement: ”Value Engineering is more

of a human relations, team building and motivation programme than
anything else”.

8) Study the following situation and attempt to answer the questions

raised:
Thomas is a purchasing manager of a company making do-it-yourself
power tools. The president of the. company entrusted him the task of cost
reduction through value analysis.

Thomas organised a display of all bought out parts and sub-assemblies and the
fancy Drill-A-Thon, made of castings, stampings and turnings to draw the most
attention. It had been designed and turned over to a supplier before
purchasing became a separate profit centre under the president. In response to
his queries to improve the assembly he got the following responses from three
visiting salesmen.

The first company said that they would really gain price advantage if plastic
instead of metal was accepted. The second company offered to make the product
with fewer parts while the third company suggested that the best way was to
assemble it within and they would supply parts at rock bottom prices.

Vice President of the Deen Dayal Industries Pvt. Ltd. who are the present
suppliers rang up to Thomas to express his concern in offering the products his
344
company had been supplying for long to others and wondered whether these Value
Engineering
newcomers could make a better offer. He expressed a desire to be given a and Quality
chance to reduce cost by trying value analysis. The chief design engineer also Assurance

ridiculed the idea of going for plastic in place of metals and saw in it a
conspiracy to cheapen their merchandise.
Thomas thus faces a conflict of view points. The president has given
an ultimatum to reduce cost by at least 5 per cent, and his company's
design experts are uneasy about outside interference. Would-be-
suppliers are anxious in re-designing Drill-A-Thon to promote their
own shops.
Now, answer the following queries:
i) How can Thomas start a sound value analysis programme?
ii) How should he handle the reactions of his present supplier?
iii) In what way can he use the offered help of the would-be-suppliers who
can be genuinely helpful?
Quality Assurance

9) What is the fundamental difference between the use of acceptance

sampling plans and process control charts?

10) Why are averages of samples used in control charts rather than
individual readings?

11) Comment on the following:

a) It is important to inspect the inspector.

b) As a quality improvement programme is established, cost of quality
increases.

12) In the example in the text, the sampling plan A with n = 35 and c=1 has
α = 0.16 and β = 0.14, both too large to be acceptable.

a) What would happen to α and β if c were increased but n remained at

35?
b) Why do we need to increase both n and c to lower both α and β?
c) If a batch contains 8% defective items, what is the probability that it
would be rejected by the plan n = 40 and c = 1 ?
d) Find a sampling plan for AQL = 0.008, LTPD = 0.01, α = 5%, β =10
per cent. [Ans: Follow example 7]

13) A manufacturing company produces a small product in lots of 10,000.

They want to be 90 per cent sure of accepting the lot with fraction
defective of 0.01 and 95 per cent sure of rejecting a lot with a fraction
defective of 0.08. They do not know anything about sampling plan
design. They intuitively decide that they will take a sample size of 100
and accept if not more than 4 defective items are found. The reasoning
345
Capacity Planning, is that it amounts to 4/100 = 0.04 fraction defective which is roughly
Work and Job
Design & Value the mid point of their acceptable and rejectable quality.
Engineering
a) Does their plan achieve their goals? [Ans: NO]
b) Suggest a better plan. [Ans: sample size should lie between 67 and 82
and c=2.Take n=75(midway)]
c) What are the AOQL values for these plans? [Ans: AOQL=0.0181]

14) A process which is under statistical control has a population mean of

10.000 cms and a population standard deviation of 0.002 cms.
Determine.

(a) The natural tolerance limits of the process

[Ans: 9.994,10.006 cms]

(b) If the specification limits are 10.002 ± 0.004 cms, what percentage of
the product is defective, assuming that the process output deviations are
normally distributed?

[Ans: 9.998,10.006(specification limits), total defective percentage = 4.56%]

15) In a single sampling plan the following data are known.

Lot size =500,sample size=71,acceptance

number=1,AQL=0.005,LTPD=0.05

Determine producer’s risk and consumer’s risk and draw OCC.

[Ans: α = 5%, β = 13.07%]

11.20 FURTHER READINGS

Duncan, A.J.,. Quality Control and Industrial Statistics,. Irwin (Indian
Reprint-Taraporewala): Bombay.

Dodge, H.F. and H.G. Romig,. Sampling Inspection Tables: Single and
Double Sampling, John Wiley: 'London.

Feigenbaum, A.V.,. Total Quality Control,. McGraw Hill: Delhi. Ingle, S and
N. Ingle,. Quality Circles in Service Industries, Prentice Hall: Englewood-
Cliffs.

Juran, J'.M. and F.M. Gryna,. Quality Planning and Analysis, McGraw Hill
(Indian Reprint-TMH): Delhi,

McClain, J.O., and L.J. Thomas,. Operations Management,. Prentice Hall:

Englewood-Cliffs.

Shore, B.,. Operations Managements, McGraw Hill (Indian Reprint-TMH):

Delhi.

346
Demarle, D.J. and L.M. Shillito, 1982. Value Engineering, Chapter 7-3 in G. Value
Engineering
Salvendy (ed)., Handbook of Industrial Engineering', John Wiley: New York. and Quality
Assurance
Dobler, D. W, Lee, Lamar Jr. and D.N. Burt, 1984. Purchasing and Materials
Management: Text and cases, McGraw-Hill Book Co.: New York.

Greve, J.W. and F.W. Wilson, (eds.). Value Engineering in Manufacturing,

Prentice-Hall: Englewood-Cliffs.

Miles, L.D. Techniques of Value Analysis and Engineering, McGraw-Hill:

New York.

Mudge, Arther E. Value Engineering: A Systematic Approach, McGraw-hill:

New York.

Reuter, V.G. Becoming Competitive with Value Engineering/Value Analysis

”Journal of Systems Management". (October 1985, 24-31).

347
Capacity Planning,
Work and Job
Design & Value
Engineering

348