Intro to Operations/Supply Chain Quality of Conformance (QOC) – degree to which the product or service Goal of SPC – to differentiate between

SPC – to differentiate between random and assignable 4) Specifications are greater than natural variation, but
OM - The design, operation, and improvement of manufacturing and is produced according to its design. This depends on design of production variation and random causes process is off centre; capable but some output will not
service systems to ensure that consumers can get what they want, where process, performance level of machinery, equipment, technology, Assignable Causes – special causes that are identifiable and meet specification.
they want it, and at a price they are willing to pay – ops is transformation materials, employee training and supervision, and statistical quality correctable; Process Capability Ratio
processes that create and deliver firm’s products control techniques (employer perspective) Random Causes – inherent in a process and are natural to
Transformation process types: physical (manufacturing), locational Total Quality Management – Involves everyone in the organization in the happen CP
(transportation), exchange (retailing), storage (warehousing), management and continual improvement of quality and customer Attributes Charts If CP > = 1, process range is less than or equal to design
physiological (health care), informational (telecommunications) satisfaction – CI, data, employee empowerment, team approach, supplier Attribute: quality characteristic with discrete response range, process is capable of meeting specs
Characteristics of goods: tangible, production/= consumption, partnership, fail-safeing P-Chart If CP < 1, process range is greater than design range,
inventoried, low customer interaction QMS: system to achieve customer satisfaction that complements other Proportion of defective items in each sample process is not capable of meeting specs
Characteristics of services: intangible, produce=consume, no inventory, company systems
Use if process is centered
high customer interaction Satisfied customers are less likely to switch to a competitor
Process Capability Index
Decision Making: strategy(design): medium to long-term, $$$ & Employee Empowerment is critical for quality improvement
operational (tactical): day-to-day decisions � = standard deviations from the process average
Participative Problem solving – employees are directly involved
Supply Chain Management - Management of the flow of information, � ̅ = sample proportion defective (estimate of process average)
Kaizen – involves everyone in process of CI
�� = standard deviation of sample proportion CPK
people, materials, products, and services across a network of customers, Quality Tools
Cpk > 1, process is capable of meeting design specs
enterprises, and supply chain partners Process Flow Chart: diagram of steps in the process
Cpk = 1, process is centred on the design target
Why Go Global – Favourable cost, Access to markets, response to change Cause and Effect Diagram (fishbone) – graph causes of quality
Cpk < 1, process has shifted toward upper or lower design
in demand, source of supply, trends Check Sheet – tallying number of defects
spec, whichever is the minimum
Scientific management: systematic analysis of work methods quality Histogram – diagram showing frequency of data C-Chart Use when process is not centered
revolution: emphasis on quality & strategic role of ops lean production: Pareto Analysis – tallying the % of defects by problem type Use when not possible to count proportions of defective items, Product and Service Design
adaptation of mass production, prizes quality & flexibility Scatter Diagram -relationship between variables so a count is used, number of defects per unit Effective design can provide a competitive edge
Productivity, Competitiveness and Strategy Statistical Process Control Chart – upper and lower limits and used at
match product (or service) characteristics with customer
Competitiveness – degree to which a firm can produce goods and CRITICAL POINTS in the process, or points that normally go out of
requirements, ensure that customer requirements are met
services that meet the needs of markets while simultaneously control/costly if it does
� = number of standard deviations from the process average in the simplest and least costly manner, reduce time
maintaining or expanding its net income Quality Circles – voluntary group of workers who address quality
� ̅ = mean number of defects per item required to design a new product or service, minimize
Productivity - measurement of competitiveness and how well resources problems
�� = sample standard deviation, �� = √ (� ̅) revisions necessary to make a design workable
are utilized to maintain a certain level of output Benefits of Quality
Variable Charts Design Process: Idea Generation (perceptual maps,
Single Factor Productivity – Output/labour Higher Profitability from Improved product quality and in turn premium
Variable: Quality charac. that is continuous and measurable benchmarking, reverse engineering), Feasibility Study
Multi-Factor Productivity – Output/Labour + Materials + Overhead process or lower manufacturing/warranty expenses
Mean (market, economic, tech/strategy, performance),
Total Factor: goods & services produced/all inputs used to produce them Costs of Quality
When Sigma is Known – indicates how sample mean relates to Prototyping (form design = how product looks, functional
Factors Affecting Productivity – methods and management, equipment Prevention Costs: incurred in product design including planning, product
process average or mean design = how product performs, production design = how
and technology, labour force design, process, training, and information costs
product will be made – simplification, standardization,
Strategy - Provides direction for achieving the company’s mission Appraisal Costs: Measuring, testing, and analysing including inspection
modular, design for manufacture), final design & process
Mission Statement – concise view of what company does and sells and and testing, test equipment and operator costs
plans
the marketplace it operates in Internal Failure: discovered before delivery including scrap, rework, �_� ̅ = standard deviation of the distribution of sample means Design defines appearance, sets standards, materials,
Vision – direction to take the company (5 to 10 years) downtime, and price reductions (�� ̅ =�/√�) dimensions and tolerances
Values – common beliefs that individuals share within the company External Failure: Discovered after delivery including complaints, returns, �= process standard deviation Reliability - probability that a product will perform its
Strategy formulation warranty, liability �= sample size intended function for a specified period of time under
Define Primary Task: purpose of firm/what they do Doing things wrong costs 20-30% of revenues while doing something �= number of samples normal conditions of use
Assess core competencies: what firm does better than anyone else right is only 3-4% �= number of standard deviations from the process mean Reliability can be improved through:
Determine order winners and order qualifiers Cost of Good Quality (Prevention/Appraisal) – Fails are COPQ � ̿= average of the sample means (process mean) Overdesign: Enhance reliability by using more durable,
Positioning the firm: how firm chooses to compete Quality Index Measures When Sigma is UNKNOWN more expensive materials to avoid a particular type of
Deploying strategy: balanced scorecard (financial, customer, process, Labour Index: Quality Cost/ Labour Hours
product failure
learning) Cost Index: Quality Cost/Manufacturing Cost
Design Simplification: Reduce the number of parts thereby
Factors affecting Firm Competitiveness and Positioning Sales Index: Quality Cost/Sales
reducing failures points and increasing the probability that
Cost: removing waste, lean production, examine cost structure Production Index: Quality cost/ output �_2 obtained from Control Factors Table the system is going to work as planned
Flexibility: adjust to changes, mass customization (Nike ID) Quality index: total quality costs/base*(100) � ̅= average of sample ranges Redundancy in Design (backup): This means that if you
Quality: minimizing defects, conforming to specs (Ritz Carleton) Yield � ̿= average of the sample means (process mean) want to increase the probability that the car will start,
Speed: fast moves and adaptations (McDonalds) Product Yield = (total input) (% good units) + (total input) (1−%good Range provide a second starter that can be used in the event that
Innovation: corporate culture encourages risk taking, learning units) (% reworked) UCL = D4R-bar, LCL = D3R-bar, R-bar = sum(R)/k the first starter fails
Operations Strategy Product Cost
A set of coordinated policies, objectives, and action plans, directly Cost = (KD*I + KR*R)/Y Both Process average and variability must be in control.
affecting the operations function KD = Direct Manufacturing Cost Xbar chart detects shift in central tendency
Quality Management I = Input R Chart detects increase in dispersion
Quality – ability of good/service to consistently meet/exceed KR = Rework Cost Per unit System Availability (maintainability)
To identify a pattern, look for:
expectations of the consumers – satisfy needs R = Reworked Units 8 consecutive points on one side of the center line
Fitness for use: how well product/service does what it’s supposed to do Y = Yield 8 consecutive points up or down
Quality of design: degree to which quality characteristics designed into Yield for a Multistage Process 14 points alternating up or down MTBF = time/#failures = mean time between failures
product/service (consumers perspective) Yield = Input * good quality percentages at different stages 2 out of 3 consecutive points in zone A (on one side) MTTR = mean time to repair
Quality Control – monitoring, testing, and correcting quality problems Initial Batch Size = Yield/Percentages at different stages 4 out of 5 consecutive points in zone A or B (on one side) Services are…
after they occur Quality Productivity Ratio Process Capability – ability of a process to produce acceptable characterized by high levels of customer contact
Quality Assurance – providing confidence that a products quality will be QPR = [Good Quality Units/ (Input) (Processing Cost) + (Reworked Units) outputs that conform to design specifications (tolerance) intangible, perishable, and cannot be inventoried
good by preventing defects before they occur (Rework cost)] *100 Comparing natural variability and design variability inseparable from the service delivery
Dimensions of Quality – Products: Performance, Special Features, Statistical Process Control – method that uses sampling and charts to Natural Variability – what is measured with control charts often decentralized and geographically dispersed (e.g.,
Reliability, Conformance, Durability, Serviceability, Aesthetics, Safety, monitor the production process to evaluate, detect and prevent bad Design Specifications – product requirements hotels, banks, restaurants)
Perceptions quality. 4 States can be easily emulated
Dimensions of Quality – Services: Timeliness, Completeness, Courtesy, Process is in control if: 1)No sample points outside of the acceptable 1) Natural variation exceeds design specifications; process is not output is variable
Consistency, Accessibility and convenience, accuracy, responsiveness limits 2) Most points are near process average 3) Approximately an even capable of meeting specs all of the time Elements of Waiting Line Analysis: Calling population
number of points above and below mean 4) Points are randomly 2) Natural variation and design specs are the same; process is (source of customers, infinite or finite), channels (number
distributed capable of meeting specs almost all of the time of parallel servers), phases (number of servers in a
3) Design specs are greater than natural variation; process is sequence customers must go through)
capable of meeting specs all of the time
Waiting Line Analysis Psychology: anxiety makes waiting seem longer, Breakeven Analysis Mixed-model assembly line: produce multiple models, Learning percentage may differ between organizations and by type
uncertain & unexplained & solo waiting is worse than opposites, give ppl Assumptions: number of units produced can be sold, fixed costs are reduce changeover time, cross-training, u-shape of work, making it better to base learning percentage on empirical
something to do while waiting, more valuable – longer wait worth constant regardless of units produced, variable costs vary with volume of Many objectives of facility layout design: studies within an organization rather than assumed percentage
Queuing Theory units produced, TR = TC Ensure smooth flow of work, material, people, and (from some other organization)
Arrival rate: rate at which customers arrive at the service facility Easy Formula: information Projections based on learning curves should be regarded as
follows a probability distribution, usually Poisson with mean (λ) (Fixed cost B – Fixed Cost A / Variable Cost A – Variable Cost B) Minimize movement and material-handling costs approximations of actual times and treated accordingly
Service rate: rate at which customers are served, follows a probability Breakeven Analysis for Process Selection Use space and labor efficiently Considerable care should be taken to ensure that the first unit time
distribution, usually Poisson with mean (μ) time required to serve a 1) Formulate total cost equation for each process considered and order Eliminate production bottlenecks and increase capacity is valid. It may be desirable to revise the first unit time as it may
customer, usually described by negative exponential distribution with from smallest fixed cost to largest Facilitate communication and interaction (workers, change due to time compression, design changes, equipment
mean (1/ μ) 2) Eliminate redundant ones (if higher FC & VC) supervisors, customers) problems, etc.
Mean service rate (per hour) must be greater than mean arrival rate (per 3) Calculate point of indifference (TCA = TCB) Reduce manufacturing cycle time and customer service time
hour) i.e., λ < μ, otherwise the queue will become infinitely long. 4) For volumes GREATER THAN point of indifference, choose alternative Fixed-position layouts: used for projects in which product Learning curves are not useful for mass production because the
Littles Law: The average number of customers in the queuing system is with HIGHER FC or LOWER VC cannot be moved associated tasks are usually simple, and learning takes place
equal to the product of the mean arrival rate into the system and the 5) For volumes LOWER THAN point of indifference, choose alternative with Process (functional) layouts: group similar activities together quickly before the curve flattens
average time a customer spends waiting in a system LOWER FC or HIGHER VC according to process or function they perform Users of learning curves sometimes fail to include carryover effects
L=λW Capacity and Facility Design Product (assembly line) layouts: arrange activities in line that some workers might have from pervious jobs; previous
Lq= λqWq Capacity is the throughput, or the maximum number of units a facility can according to sequence of operations for a particular product experience with similar activities can reduce unit times
Operating Characteristics hold, receive, store, or produce in a given period of time. or service Learning curve applications: most important in complex, repetitive
L = average number of customers in system (wait & serve) = λ/ μ- λ Levels: Long-term (overall level of resources in the long term 1yr+), Assembly Line Balancing operations where work pace is determined by people, not
LQ = average number of customers waiting in line = λ 2/ μ (μ- λ) intermediate-term (aggregate planning), short-term (capacity requirement Assumptions: workstations in serial, processing times known machines
W = Average time customer spends in system (wait & serve) = L/λ planning) Let j be the number of distinct tasks that must be performed Other information
Wq = Average time customer spends in line = Lq / λ A bottleneck is the operation with lowest capacity in a process on each unit processed on the assembly line Quality Gurus
p = probability that server is busy, and a customer must wait = utilization Factors affecting Capacity Let tj be the time required to complete tasks j W. Edwards Deming - Developed courses during WW II to teach
rate = λ/μ Facilities and Machines: floorspace, layout / Product Mix: standardized vs statistical quality-control techniques to engineers and executives of
Flow Time (time to complete a unit)
I = Probability that server is idle and another customer can be served high variety / Workers: skills, training / Planning and Operational Factors: military suppliers. After war, began teaching statistical quality
= 1-p = 1- λ/μ = P0 Theoretical Minimum # of Workstations (round up)
scheduling, inventory / External Factors: product standards, pollution control to Japanese companies
P0 = Probability that no customers are in the system = 1- λ/μ
Philip Crosby - In 1979, emphasized that costs of poor quality far
Pn = Probability of n customers in system = (λ/μ) n (1- λ/μ) Capacity planning is the process of establishing the overall level of a firm’s Measures of Line Balance Efficiency outweigh cost of preventing poor quality. In 1984, defined
Process Planning and Analysis productive resources and involves strategic activities such as acquiring new
absolutes of quality management—conformance to requirements,
Process: a group of related tasks with specific inputs and outputs facilities, technologies, or businesses.
Process design: defines what tasks need to be done and how they are prevention, and “zero defects”
When to increase capacity and by how much?
coordinated among functions, people, and organizations volume and certainty of anticipated demand Kaoru Ishikawa - Promoted use of quality circles, developed
Process strategy: an organization’s overall approach for physically n = actual # of workstations, “fishbone” diagram
strategic objectives (growth, customer service, competition)
producing goods and services (vertical integration, capital intensity, Ca = actual cycle time, max(t1, t2, t3) Deming’s 14 Points
costs of expansion and operation
process flexibility, customer involvement) Desired Cycle Time: Production time available/desired units Create a constancy of purpose toward product improvement to
Process planning: determines how firm produces product/service of output = Cd achieve long-term organizational goals.
Importance of Long-term capacity Planning
(decide to make/buy, select production process, develop specifications of Line Balancing Procedure: 1) Draw precedence diagram 2)
Impacts ability to meet future demands and customer responsiveness Adopt a philosophy of preventing poor-quality products
production) find Cd 3) find N 4) group tasks into workstations 5)measure
Affects operating costs, Major determinant of initial costs, Involves long Eliminate the need for inspection to achieve quality by relying
Vertical integration: extent to which firm will produce inputs and control efficiency 6) determine if E is good, if not do 4
term commitment, Affects competitiveness, Affects ease of management, instead on statistical quality control to improve product and
outputs of each stage of production process Learning Curves
Requires Advanced Planning process design.
Capital intensity: mix of capital (i.e., equipment, automation) and labor The learning curve reflects the fact that each time the
number of units produced doubles, the processing time per Select a few suppliers or vendors based on quality
resources used in production process Considerations for capacity planning
unit decreases by a constant percentage Constantly improve the production process by focusing on the two
Process flexibility: ease with which resources can be adjusted in 1)Design flexibility into systems
10% decrease in task time is represented by a 90% learning primary sources of quality problems, the system and employees,
response to changes in demand, technology, products or services, and 2)Differentiate between new and mature products
resource availability curve. The lower the learning curve, the greater the benefit thus increasing productivity and reducing costs.
3)Take a “big picture” approach to capacity changes
Customer involvement: role of the customer in the production process The unit time (i.e., the number of direct labor hours Institute worker training that focuses on the prevention of quality
4)Choose capacity timing and increments
Process Selection Chart: required) for the nth unit can be calculated using the problems and the use of statistical quality-control techniques.
5)Prepare to deal with capacity “chunks” by developing cushion, large (20%)
formula: tn = t1nb Instill leadership among supervisors to help employees perform
for industries where demand is variable and customer service, small for
where: better.
capital-intensive industries
tn = time for the nth unit Encourage employee involvement by eliminating the fear of
Attempt to smooth out capacity requirements
t1 = time for the first unit reprisal for asking questions or identifying quality problems.
Use capacity cushion (% of capacity held in reserve for unexpected
n = cumulative number of units produced
occurrences) to offset surges in demand and work stoppages Eliminate barriers between departments, promote cooperation
b = ln r/ln 2 where r is the learning curve percentage in
Aim is to achieve the best operating level and teamwork
decimal (90% = 0.9)
Economies of scale: unit cost down, output volume up – opposite of Eliminate slogans and numerical targets
diseconomies of scale Eliminate numerical quotas
Calculating Number of Units Required
Enhance worker pride
Capacity Expansion Strategies
b = ln (learning percentage/100) ÷ ln (2) Institute vigorous education and training programs in the
Lead – expanded in anticipation of demand growth.
Applications include: methods of quality improvement throughout the organization,
Average – expanded to coincide with average expected demand.
Negotiated selling/purchasing prices from top management down, so that continuous improvement can
Lag – expanded after an increase in demand has been documented.
Labor planning and scheduling occur.
Assessing labor training needs and performance Develop a commitment to quality from top management
Layout refers to the arrangement of activities, processes, departments,
Outsource or not: cost, capacity, quality, speed, reliability, expertise Forecasting our ability to meet future needs for services Wheel: plan, do, check, act
workstations, storage areas, aisles, and common areas within a facility
Process plans are a set of documents and drawings that detail such as health care
Goal: minimize material handling costs
manufacturing and service delivery specifications [assembly charts (bill
of materials), operations sheets, quality-control check-sheets] Changes to pre-production factors such as tooling and
Cellular layout: (group dissimilar machines into work centres/cells,
Process Analysis: A systematic examination of all aspects of a process to machine upgrades
combine flexibility of process w/ efficiency of assembly)
improve its operation – faster, more efficient, less costly, more responsive Increases pre-process employee training and motivation
Advantages: reduce material handling/transit time, reduce setup, reduce
Tools for Process Analysis: Process changes/improvements
WIP inventory, better use of HR, easier to control, easier to automate
Process Flowchart: show sequence of ops, define boundaries/capacity Product redesign
Disadvantages: Inadequate part families, poorly balanced cells, expanded
limitations, define units of flow, facilitate observation of process and data Changes in layout
training & scheduling of workers, capital investment
collection Improvements in support services
Flexible Manufacturing System: programmable machine tools, automated
Process Map: Map out activities performed by various ppl in the process Lot size increases
tool changing, controlled by computer