Introduction to Quality and Quality Control

Prepared By
Dr. M. S. Memon
Department of Industrial Engineering and Management
Mehran University of Engineering & Technology
Jamshoro, Sindh, Pakistan

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 Quality

• What is quality?

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 What is Quality?

• Meeting customer’s requirement or ‘Fitness for Use’

• Right the first time (freedom from defects)
• Consistency (Reduce variation)
• Continuous improvement
• Attitude

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 QUALITY

• The notion of quality has been defined in different ways by various

authors.
• Garvin (1984) divides the definition of quality into five categories:
transcendent, product-based, user-based, manufacturing-based, and value-
based.
• Furthermore, he identifies a framework of eight attributes that may be used
to define quality: performance, features, reliability, conformance, durability,
serviceability, aesthetics, and perceived quality.
• This frequently used definition is attributed to Crosby (1979): "Quality is
conformance to requirements or specifications."
• A more general definition proposed by Juran (1974) is as follows: "Quality
is fitness for use."

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 QUALITY

• Hence, quality may be defined as follows:

The quality of a product or service is the fitness of that product or
service for meeting or exceeding its intended use as required by
the customer.
• So, who is the driving force behind determining the level of
quality that should be designed into a product or service? The
customer!. Therefore, as the needs of customers change, so
should the level of quality.

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 Goal of Quality

• Improve Customer Satisfaction

• Improve Yield (Productivity)

• Reduce Variation

• Reduce Defects

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 Why Quality?

To increase THIS, cost must go down

Profit = (Price – Cost) x Units Sold

Depend on Market
THIS will not increase if quality is poor

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 Definitions of Quality
• Transcendent definition: excellence
• Product-based definition: quantities of product attributes
• User-based definition: fitness for intended use
• Value-based definition: quality vs. price
• Manufacturing-based (Little Q) definition: conformance to
specifications

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Quality Perspectives

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Quality Perspectives

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Quality Perspectives

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Quality Perspectives

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Quality Perspectives

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 Quality Characteristics

• The preceding example demonstrates that one or more elements

define the intended quality level of a product or service.
• These elements, known as quality characteristics, can be
categorized in these groupings:
– Structural characteristics include such elements as the length of a part,
the weight of a can, the strength of a beam, the viscosity of a fluid, and so
on;
– sensory characteristics include the taste of good food, the smell of a sweet
fragrance, and the beauty of a model, among others;
– time-oriented characteristics include such measures as a warranty,
reliability, and maintainability; and
– ethical characteristics include honesty, courtesy, friendliness, and so on.

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 Dimensions of Manufacturing Quality

• Performance (Fuel Consumption)

• Reliability (e.g., Failure probability , MTBF)
• Durability (Strength)
• Serviceability (Speed, Ease to repair)
• Aesthetics (Beauty)
• Additional Features (Flexibility in Design)
• Perceived Quality (After sales Experience)
• Conformance to Standards (Consistency/Precision in product)

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 Dimension of Service Quality

• Reliability: Perform promised service

dependably and accurately.
• Responsiveness: Willingness to help
customers promptly.
• Assurance: Ability to convey trust
(e.g. Knowledge) and confidence.
• Empathy: Caring and approachable.
• Tangibles: Physical facilities and
goods.

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 Dimension of Service Quality

Expected Service
+ • Delight
• Satisfaction
Gap in Service Quality • Dissatisfaction
• Anger
• Disgust
Actual / Perceived -
Service

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 Dimension of Service Quality

Service Expectation
What service “can be” or “should be”
Expectation Level

Desired service
Customer will accept variability
Zone of Tolerance

Adequate Service Minimum tolerable expectation

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 Aspects of Quality

• Quality of Design (Features or Design flexibility)

• Quality of Conformance (Freedom from any defect)

• Quality of Performance (Functions or service when put to use)

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 CUSTOMER NEEDS AND MARKET SHARE

• For the manufacturing or service sector, satisfying the customers—

both internal and external—is fundamental to growth and
improving market share.
• An important aspect of the quality of design phase deals with
identification of customer needs and wants.
• These customer needs may be grouped into the three broad
categories of critical to quality, critical to delivery, and critical to
cost.
• Not all needs are of equal importance to the customer. Moreover,
some are expressed while others are taken for granted.

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 CUSTOMER NEEDS AND MARKET SHARE

• What is Voice of Customer (VoC)?

• A burger company wishes to add home delivery to its service in order to
increase business
• Surveys of potential customers were taken in order to determine what
would make them order the burger instead of a competitor's burger.
• Summarized VOC reveals that when customers order in pizza they want
– Hot burger (VOC1)
– quickly (VOC2)
– with my choice of toppings (VOC3)
– at a reasonable cost (VOC4)
– …

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 CUSTOMER NEEDS AND MARKET SHARE
Burger Example [Relate to VOC and CTQ]
Whenever I Service Availability Order Queue
want the Burger 11am to 11pm
time< 5min

Make time
Answer on 1st ring <5min
Speed and easy
to order Bake time
Call length <60 sec
“Quickly” Out of door <5min
time <30min
Minimum time Package time
Delivery ASAP
from call to door <5min
Delivery
time <15min Wait time
<5min
Customer Voice Product design level (CTQ)
Process design level

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 CUSTOMER NEEDS AND MARKET SHARE

Kano Model
• Noriaki Kano, a Japanese consultant, developed a model relating design characteristics to
customer satisfaction (Cohen 1995).
• Customer needs or expectations can be divided into three prioritized categories:
• basic needs (dissatisfiers); performance needs (satisfiers); and excitement needs (delighters).
• Basic needs are those that are taken for granted by the customer. Meeting these needs may
not steeply increase customer satisfaction; but not meeting them will definitely cause
dissatisfaction.
• For example, in a city public library, it is taken for granted that current editions of popular
magazines will be available. Not having them will lead to dissatisfied consumers.

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 CUSTOMER NEEDS AND MARKET SHARE

Kano Model
• Performance needs are those that the consumer expects. Thus, the better
these are met, the more satisfied the customer. Typically, customer
satisfaction increases as a linear function of the degree to which such needs
are met. Ease of checking out a book or video at a city library could be one
such need.
• Excitement needs, also known as delighters, are those that surprise the
customer unexpectedly. The consumer does not necessarily expect these
and hence may not express them. So, when they are met, it increases
customer satisfaction in an exponential manner.
– For example, if the city library offered free consultation on tax-form preparation,
customers might be delighted beyond bounds.

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 CUSTOMER NEEDS AND MARKET SHARE

Kano Model
• Figure shows the Kano model,
relating the degree of meeting
customer needs and customer
satisfaction. Note the three curves
associated with basic,
performance, and excitement needs
and their relative impact on
increasing customer satisfaction.

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 Quality Function Deployment

“House of Quality”

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 Quality Function Deployment

“House of Quality”

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 Variables and Attributes

• Quality characteristics fall into two broad classes:

– Variables and Attributes.
• Characteristics that are measurable and are expressed on a
numerical scale are called variables.
– The waiting time in a bank before being served, expressed in minutes,
is a variable, as are the density of a liquid in grams per cubic
centimeter and the resistance of a coil in ohms.

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 Variables and Attributes

• Prior to defining an attribute, we should defined a nonconformity and a

nonconforming unit.
• A nonconformity is a quality characteristic that does not meet its stipulated
specifications.
• Let's say that the specification on the fill volume of soft drink bottles is 750
± 3 milliliters (mL). If we have a bottle containing 745 mL, its fill volume
is a nonconformity.
• A nonconforming unit has one or more nonconformities such that the unit is
unable to meet the intended standards and is unable to function as required.
• An example of a nonconforming unit is a cast iron pipe whose internal
diameter and weight both fail to satisfy specifications, thereby making the
unit dysfunctional.

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 Variables and Attributes

• A quality characteristic is said to be an attribute if it is classified as

either conforming or nonconforming to a stipulated specification. A
quality characteristic that cannot be measured on a numerical scale
is expressed as an attribute.
• For example, the smell of a cologne is characterized as either
acceptable or is not; the color of a fabric is either acceptable or is
not. However, there are some variables that are treated as attributes
because it is simpler to measure them this way or because it is
difficult to obtain data on them. Examples in this category are
numerous.

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 Variables and Attributes

• For instance, the diameter of a bearing is, in theory, a variable.

• However, if we measure the diameter using a go/no-go gage and
classify it as either conforming or nonconforming (with respect to
some established specifications), the characteristic is expressed as
an attribute. The reasons for using a go/no-go gage, as opposed to a
micrometer, could be economic; that is, the time needed to obtain a
measurement using a go/no-go gage may be much shorter and
consequently less expensive.
• Alternatively, an inspector may not have enough time to obtain
measurements on a numerical scale using a micrometer, so such a
classification of variables would not be feasible.

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 Defects

• A defect is associated with a quality characteristic that does not

meet certain standards.
• Furthermore, the severity of one of more defects in a product or
service may cause it to be unacceptable (or defective). The
modern term for defect is nonconformity, and the term for
defective is nonconforming item.

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 Standard or Specification

• Since the definition of quality involves meeting the requirements of

the customer, these requirements need to be documented. A
standard, or a specification, refers to a precise statement that
formalizes the requirements of the customer; it may relate to a
product, a process, or a service.
• For example, the specifications for an axle might be 2 ± 0.1
centimeters (cm) for the inside diameter, 4 ± 0.2 cm for the outside
diameter, and 10 ± 0.5 cm for the length. This means that for an
axle to be acceptable to the customer, each of these dimensions
must be within the values specified. Definitions given by the
National Bureau of Standards (NBS, 2005) are as follows:

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 Standard or Specification

– Specification: a set of conditions and requirements, of specific and limited

application, that provide a detailed description of the procedure, process, material,
product, or service for use primarily in procurement and manufacturing. Standards
may be referenced or included in a specification.
– Standard: a prescribed set of conditions and requirements, of general or broad
application, established by authority or agreement, to be satisfied by a material,
product, process, procedure, convention, test method; and/or the physical,
functional, performance, or conformance characteristic thereof. A physical
embodiment of a unit of measurement (for example, an object such as the
standard kilogram or an apparatus such as the cesium beam clock).
• Acceptable bounds on individual quality characteristics (say, 2 ± 0.1 cm for
the inside diameter) are usually known as specification limits, whereas the
document that addresses the requirements of all the quality characteristics is
labeled the standard.

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Accuracy (Mean) Vs Precision (Variance)

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Accuracy (Mean) Vs Precision (Variance)

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 Types of Variation

Types of variation

Common Cause Special Cause Systematic Cause

Unbiased sampling variation Abnormal variation Experimental variation

Out of specification
Common cause

Special cause

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 Types of Variation
• Special Causes
– Variability caused by special or assignable causes is something that is not inherent
in the process. That is, it is not part of the process as designed and does not affect
all items. Special causes can be the use of a wrong tool, an improper raw material,
or an incorrect procedure.
– Deming believed that 15% of all problems are due to special causes.

• Common Causes
– Variability due to common or chance causes is something inherent to a process. It
exists as long as the process is not changed and is referred to as the natural
variation in a process. It is an inherent part of the process design and effects all
items.
– A process operating under a stable system of common causes is said to be in
statistical control.

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 Reduce Variation

• Inspection (Acceptance Sampling)

• Statistical Process Control (SPC)

• Design of Experiments (DOE)

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 QUALITY CONTROL

• Quality control may generally be defined as a system that

maintains a desired level of quality, through feedback on
product/service characteristics and implementation of remedial
actions, in case of a deviation of such characteristics from a
specified standard.
• This general area may be divided into three main subareas:
– off-line quality control,
– statistical process control, and
– acceptance sampling plans.

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 Off-Line Quality Control

• Off-line quality control procedures deal with measures to select and choose
controllable product and process parameters in such a way that the
deviation between the product or process output and the standard will be
minimized.
• Much of this task is accomplished through product and process design. The
goal is to come up with a design within the constraints of resources and
environmental parameters such that when production takes place, the output
meets the standard. Thus, to the extent possible, the product and process
parameters are set before production begins.
• Principles of experimental design and the Taguchi method, discussed in a
later chapter, provide information on off-line process control procedures.

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 Statistical Process Control

• Statistical process control involves comparing the output of a process or service

with a standard and taking remedial actions in case of a discrepancy between the
two.
• It also involves determining whether a process can produce a product that meets
desired specifications or requirements.
• For example, to control paperwork errors in an administrative department,
information might be gathered daily on the number of errors. If the number
observed exceeds a specified standard, then on identification of possible causes,
action should be taken to reduce the number of errors. This may involve training
the administrative staff, simplifying operations if the error is of an arithmetic
nature, redesigning the form, or taking other appropriate measures.
• Online statistical process control means that information is gathered about the
product, process, or service while it is functional.

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 Acceptance Sampling Plans

• Acceptance sampling plans involve inspection of a product or service.

• When 100% inspection of all items is not feasible, a decision has to be made as to
how many items should be sampled or whether the batch should be sampled at
all.
• The information obtained from the sample is used to decide whether to accept or
reject the entire batch or lot.
• In the case of attributes, one parameter is the acceptable number of
nonconforming items in the sample. If the number of nonconforming items
observed is less than or equal to this number, the batch is accepted. This is known
as the acceptance number.
• In the case of variables, one parameter may be the proportion of items in the
sample that are outside the specifications. This proportion would have to be less
than or equal to a standard for the lot to be accepted.

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 Quality Assurance
...is any action directed toward providing
customers with goods and services of
appropriate quality.

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 QUALITY ASSURANCE

• Quality is not just the responsibility of one person in the

organization—this is the message.
• Everyone involved directly or indirectly in the production of an
item or the performance of a service is responsible. Unfortunately,
something that is viewed as everyone's responsibility can fall apart
in the implementation phase and become no one's responsibility.
• This behavior can create an ineffective system where the quality
assurances exist only on paper.
• Thus, what is needed is a system that ensures that all procedures
that have been designed and planned are followed. This is precisely
the role and purpose of the quality assurance function.

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 QUALITY CIRCLES AND QUALITY IMPROVEMENT TEAMS

• A quality circle is typically an informal

group of people that consists of operators,
supervisors, managers, and so on, who get
together to improve ways to make a product
or deliver a service.
• The concept behind quality circles is that in
most cases, the persons who are closest to
an operation are in a better position to
contribute ideas that will lead to an
improvement in it.
• Thus, improvement-seeking ideas do not
come only from managers but also from all
other personnel who are involved in the
particular activity.

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 QUALITY CIRCLES AND QUALITY IMPROVEMENT TEAMS

• A quality improvement team is another means of

identifying feasible solutions to quality control
problems. Such teams are typically cross-functional in
nature and involve people from various disciplines.
• It is not uncommon to have a quality improvement team
with personnel from design and development,
engineering, manufacturing, marketing, and servicing.
• A key advantage of such a team is that it promotes
cross-disciplinary flow of information in real time as it
solves the problem.
• When design changes are made, the feasibility of
equipment and tools in meeting the new requirements
must be analyzed. It is thus essential for information to
flow between design, engineering, and manufacturing.

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 Total Quality System

• Quality is everyone's responsibility. This means that comprehensive plans

should be developed to show the precise responsibilities of the various
units, procedures should be defined to check their conformance to the
plans, and remedial measures should be suggested in the event of
discrepancies between performance and standard. The quality assurance
function, as defined earlier, monitors the system.
• The systems approach to quality integrates the various functions and
responsibilities of the various units and provides a mechanism to ensure
that organizational goals are being met through the coordination of the
goals of the individual units. The ISO, in conjunction with ANSI and ASQ,
has developed standards ANSI/ISO/ASQ 9000-9004 (ASQ 2004) that
describe quality systems.

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 QUALITY AND RELIABILITY

• Reliability refers to the ability of a product to function effectively over a

certain period of time. Reliability is related to the concept of quality of
performance.
• Since the consumer has the ultimate say on the acceptability of a product or
service, the better the performance over a given time frame, the higher the
reliability and the greater the degree of customer satisfaction. Achieving
desirable standards of reliability requires careful analysis in the product
design phase.
• Analysis of data obtained on a timely basis during product performance
keeps the design and production parameters updated so that the product
may continue to perform in an acceptable manner.
• Reliability is built in through quality of design.

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 Continuous Improvement

• Enhancing value through new products and

services
• Reducing errors, defects, waste, and costs
• Increasing productivity and effectiveness
• Improving responsiveness and cycle time
performance

“Quality is a race without a finish line.”

- David Kearns

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 QUALITY IMPROVEMENT

• Efforts to reduce both the variability of a process and the production of

nonconforming items should be ongoing because quality improvement is a
never-ending process. Whereas process control deals with identification and
elimination of special causes (those for which an identifiable reason can be
determined) that force a system to go out of control (e.g., tool wear,
operator fatigue, poor raw materials), quality improvement relates to the
detection and elimination of common causes.
• Common causes are inherent to the system and are always present. Their
impact on the output may be uniform relative to that of special causes. An
example of a common cause is the variability in a characteristic (say, a
diameter) caused by the inherent capability of the particular equipment used
(say, a milling machine). This means that all other factors held constant, the
milling machine is unable to produce parts with exactly the same diameter.

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 QUALITY IMPROVEMENT

• To reduce the inherent variability of that machine, an

alternative might be to install a better or more sophisticated
machine. Special causes are controllable mainly by the
operator, but common causes need the attention of
management.
• Therefore, quality improvement can take place only through the
joint effort of the operator and management, with the emphasis
primarily on the latter. For instance, a decision to replace the
milling machine must be made by management.

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 PRODUCT AND SERVICE COSTING

• In costing a product or service, the broad categories of direct

and indirect costs come into play.
• Direct costs, such as direct labor and materials, are a function
of the number of units of the manufactured product or the
number of customers serviced.
• On the contrary, indirect costs do not change with each unit
produced or each customer served, such as machine setup for
the same product, depreciation of building, property taxes, and
so on.

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 PRODUCT AND SERVICE COSTING

• Traditional accounting methods can lead to misleading

product/service costs where indirect costs are allocated based
on direct labor or direct material.
• However, the actual use of the resource is not necessarily a
function of the direct labor or direct material cost. In such
cases, a better estimate of product costing is arrived at by using
activities that measure the degree of use of the particular
resource. This is known as activity-based costing.

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 Activity-Based Costing

• Activities are tasks performed by a specialized group or

department, say the purchasing unit in an organization, also
known as an activity or cost center. The types of transactions
that generate costs are identified as cost-drivers.
• For instance, the number of purchase orders processed is a
cost-driver. Whether the purchase order is for one product
item or 50, it uses the same amount of the purchasing
department resource.
• Thus, allocation of the indirect costs associated with use of
the purchasing department should incorporate the number of
purchase orders, not the number of direct labor hours or direct
material costs in making the product, as this represents a
better picture of the resource use by the product/service.

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 Activity-Based Costing

• Cost-drivers are typically categorized into four groups.

1. Unit-level costs
2. Batch-level costs
3. Product/service-level cost
4. Production/service-sustaining cost level

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 Activity-Based Costing

• Cost-drivers are typically categorized into four groups.

• Unit-level costs comprise those activities that are associated with each product/service unit.
Direct labor and material, machining, and assembly costs are examples.
• Batch-level costs are based on activities that are performed once for each lot or batch of
products and are not influenced by the number of units in the batch. A machine setup for an
operation for a batch, or invoicing for a batch, are examples. Hence, the number of batches
will influence the allocation of costs.
• The next level of cost driver is the product/service-level cost which is based on the type of
product/service. In engineering design, if two products are being made, the resource spent on
each product design will be an example of such a cost.
• Finally, there is the production/service-sustaining cost level which incorporates activities
that use all other resources necessary to maintain operations. Building depreciation,
insurance, and property taxes are examples in this category. These do not depend on the
number of product/service units, batches, or product/service lines.

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Activity-Based Costing - examples

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 BENEFITS OF QUALITY CONTROL AND THE TOTAL QUALITY SYSTEM

• The goal of most companies is to conduct business in such a manner

that an acceptable rate of return is obtained by the shareholders.
• What must be considered in this setting is the short term goal versus
the long-term goal.
• If the goal is to show a certain rate of return this coming year, this
may not be an appropriate strategy because the benefits of quality
control may not be realized immediately.
• However, from a long-term perspective, a quality control system
may lead to a rate of return that is not only better but is also
sustainable.

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 BENEFITS OF QUALITY CONTROL AND THE TOTAL QUALITY SYSTEM

• The advantages of a quality control system, however, become obvious in

the long run.
• First and foremost is the improvement in the quality of products and
services. Production improves because a well-defined structure for
achieving production goals is present.
• Second, the system is continually evaluated and modified to meet the
changing needs of the customer. Therefore, a mechanism exists for rapid
modification of product or process design, manufacture, and service to meet
customer requirements so that the company remains competitive.
• Third, a quality control system improves productivity, which is a goal of
every organization. It reduces the production of scrap and rework, thereby
increasing the number of usable products.

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 BENEFITS OF QUALITY CONTROL AND THE TOTAL QUALITY SYSTEM

• Fourth, such a system reduces costs in the long run. The notion that improved
productivity and cost reduction do not go hand in hand is a myth. On the contrary,
this is precisely what a quality control system does achieve. With the production
of few nonconforming items, total costs decrease, which may lead to a reduced
selling price and thus increased competitiveness. Fifth, with improved
productivity, the lead time for producing parts and subassemblies is reduced,
which results in improved delivery dates. One again, quality control keeps
customers satisfied. Meeting or exceeding their needs on a timely basis helps
sustain a good relationship.
• Last, but not least, a quality control system maintains an "improvement"
environment where everyone strives for improved quality and productivity. There
is no end to this process—there is always room for improvement. A company that
adopts this philosophy and uses a quality control system to help meet this
objective is one that will stay competitive.

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 QUALITY COSTS

• The value of a quality system is reflected in its ability to satisfy the

customer. In this context, quality costs reflect the achievement or
non achievement of meeting product or service requirements, as
determined from the perspective of the customer.
• These requirements may include design specifications of a product,
operating instructions, government regulations, timely delivery,
marketing procedures, and servicing commitments, among others.
• The various components of quality costs are designated based on
product/service conformance or nonconformance.
• The four major categories of quality costs are discussed here.

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 QUALITY COSTS

• There are four

major categories of
quality costs are
discussed here.

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 QUALITY COSTS

1. Prevention Costs
• Prevention costs are incurred in planning, implementing, and
maintaining a quality system to prevent poor quality in products and
services.
• They include salaries and developmental costs for product design,
process and equipment design, process control techniques (through
such means as control charts), information systems design, and all
other costs associated with making the product right the first time.
• Prevention costs increase with the introduction of a quality system
and, initially, may be a significant proportion of the total quality
costs. However, the rate of increase slows with time.

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 QUALITY COSTS

2. Appraisal Costs
• Appraisal costs are those associated with measuring, evaluating, or auditing
products, components, purchased materials, or services to determine their
degree of conformance to the specified standards.
• Such costs include dealing with the inspection and testing of incoming
materials as well as product inspection and testing at various phases of
manufacturing and at final acceptance.
• Other costs in this category include the cost of calibrating and maintaining
measuring instruments and equipment and the cost of materials and
products consumed in a destructive test or devalued by reliability tests.
Appraisal costs typically occur during or after production but before the
product is released to the customer.

65
 QUALITY COSTS

3. Internal Failure Costs

• Internal failure costs are incurred when products, components,
materials, and services fail to meet quality requirements prior to
the transfer of ownership to the customer.
• These costs would disappear if there were no nonconformities
in the product or service.
• Internal failure costs include scrap and rework costs for the
materials, labor, and overhead associated with production.

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 QUALITY COSTS

4. External Failure Costs

• External failure costs are incurred when a product does not perform
satisfactorily after ownership is transferred to the customer or
services offered are nonconforming.
• If no nonconforming units were produced, this cost would vanish.
• Such costs include those due to customer complaints, which include
the costs of investigation and adjustments, and those associated with
receipt, handling, repair, and replacement of nonconforming
products.

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 QUALITY COSTS

5. Hidden Failure Costs

• The measurable components of failure costs include those
associated with scrap, rework, or warranty, which are easily tracked
by accounting systems. A significant segment of the failure costs are
"hidden."
• These include management and engineering time associated with
cause identification and determination of remedial actions
associated with failures.
• Line downtime, the necessity to carry increased inventory, the
decrease in available capacity, and orders lost due to poor quality
are examples of costs not easily tracked by accounting systems.

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 Quality Costs Data Requirements

• Quality costs should be monitored carefully. Because indirect costs

are as important as such direct costs as raw material and labor, well-
defined accounting procedures should be set up to determine
realistic quality cost estimates. Consider the case where quality cost
data cross departmental lines.
• This occurs, for example, when a quality control supervisor in a
staff position identifies the reason for scrap or rework, and a
machine operator conducts an extra operation to rework those
items. Similarly, should rework or scrap inspire a change in the
product design, the redesign time is assigned to quality costs.

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 Quality Costs Data Requirements

• Figure shows the data

requirements at various
management levels.

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 MEASURING QUALITY COSTS

• The magnitude of quality costs is important to management because

such indices as return on investment are calculated from it.
• However, for comparing quality costs over time, magnitude may not
be the measure to use because conditions often change from one
quarter to the next.
• The number of units produced may change, which affects the direct
costs of labor and materials, so the total cost in dollars may not be
comparable. To alleviate this situation, a measurement base that
accounts for labor hours, manufacturing costs, sales dollars, or units
produced could be used to produce an index.
• These ideas are discussed here.

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 MEASURING QUALITY COSTS

1. Labor-based index. One commonly used index is the quality costs

per direct-labor hour.
• The information required to compute this index is readily available,
since the accounting department collects direct-labor data.
• This index should be used for short periods because over extended
periods, the impact of automation on direct-labor hours may be
significant. Another index lists quality costs per direct-labor dollar,
thus eliminating the effect of inflation.
• This index may be most useful for line and middle management.

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 MEASURING QUALITY COSTS

2. Cost-based index. This index is based on calculating the quality

costs per dollar of manufacturing costs.
• Direct-labor, material, and overhead costs make up
manufacturing costs, and the relevant information is readily
available from accounting.
• This index is more stable than the labor base index because it is
not significantly affected by price fluctuations or changes in the
level of automation.
• For middle management, this might be an index of importance.

73
 MEASURING QUALITY COSTS

3. Sales-based index. For top management, quality costs per sales

dollar may be an attractive index.
• It is not a good measure for short-term analysis, but for strategic
decisions, top management focuses on long-term outlook. Sales lag
behind production and are subject to seasonal variations (e.g.,
increased sales of livestock during Eid-ul-Adha).
• These variations have an impact in the short run. However, they
smooth out over longer periods of time. Furthermore, changes in
selling price also affect this index.

74
 MEASURING QUALITY COSTS

4. Unit-based index. This index calculates the quality costs per

unit of production.
• If the output of different production lines is similar, this index is
valid. Otherwise, if a company produces a variety of products,
the product lines would have to be weighted and a standardized
product measure computed.
• For an organization producing refrigerators, washers, dryers,
and electric ranges, for example, it may be difficult to calculate
the weights based on a standard product.

75
 7 BASIC QUALITY TOOLS FOR PROCESS IMPROVEMENT

• The Seven Basic Tools of

Quality is a designation given
to a fixed set of graphical
techniques identified as being
most helpful
in troubleshooting issues related
to quality.
• They are called basic because
they are suitable for people with
little formal training in
statistics.

76
 7 BASIC QUALITY TOOLS FOR PROCESS IMPROVEMENT

The seven tools are:

1. Cause-and-effect diagram (also called Ishikawa or fishbone chart): Identifies many
possible causes for an effect or problem and sorts ideas into useful categories.
2. Check sheet: A structured, prepared form for collecting and analyzing data; a generic tool
that can be adapted for a wide variety of purposes.
3. Control charts: Graphs used to study how a process changes over time.
4. Histogram: The most commonly used graph for showing frequency distributions, or how
often each different value in a set of data occurs.
5. Pareto chart: Shows on a bar graph which factors are more significant.
6. Scatter diagram: Graphs pairs of numerical data, one variable on each axis, to look for a
relationship.
– Stratification: A technique that separates data gathered from a variety of sources so that patterns
can be seen (some lists replace “stratification” with “flowchart” or “run chart”).
7. Flow Chart: A flowchart is a picture of the separate steps of a process in sequential order.

77
 FISHBONE DIAGRAM

• This cause analysis tool is considered one of the seven basic

quality tools.
• The fishbone diagram identifies many possible causes for an
effect or problem.
• It can be used to structure a brainstorming session.
• It immediately sorts ideas into useful categories.

78
 WHEN TO USE A FISHBONE DIAGRAM

• When identifying possible causes for a problem

• When a team’s thinking tends to fall into ruts

79
 FISHBONE DIAGRAM PROCEDURE

1. Agree on a problem statement (effect). Write it at the center right of the

flipchart or whiteboard. Draw a box around it and draw a horizontal arrow
running to it.
2. Brainstorm the major categories of causes of the problem. If this is
difficult use generic headings:
– Methods
– Machines (equipment)
– People (manpower)
– Materials
– Measurement
– Environment
3. Write the categories of causes as branches from the main arrow.

80
 FISHBONE DIAGRAM PROCEDURE

4. Brainstorm all the possible causes of the problem. Ask "Why does
this happen?" As each idea is given, the facilitator writes it as a
branch from the appropriate category. Causes can be written in
several places if they relate to several categories.
5. Again ask "Why does this happen?" about each cause. Write sub-
causes branching off the causes. Continue to ask "Why?" and
generate deeper levels of causes. Layers of branches indicate
causal relationships.
6. When the group runs out of ideas, focus attention to places on the
chart where ideas are few.

81
 FISHBONE DIAGRAM EXAMPLE 1

• This fishbone diagram was

drawn to understand the
phenomenon to be explained
is “Lost control of car.”.
• The team used the four main
causes to prompt ideas.
• Each of these major
categories of causes may, in
turn, have multiple causes.

82
 FISHBONE DIAGRAM EXAMPLE

• For example, A flat tire may come

from a nail, a rock, glass, or a
blow-out from material failure.
• Lost control may arise from a
mechanical failure; that failure
may be a brake failure, which, in
turn, may come either from fluid
loss or from worn pads.
• You can probably think of other
factors to add to this diagram.

83
FISHBONE DIAGRAM EXAMPLE 2

84
 FISHBONE DIAGRAM EXAMPLE

• https://videos.asq.org/the-cause-and-effect-diagram

85
 Check Sheet

• A check sheet is a structured, prepared form for collecting and

analyzing data.
• Also called as defect concentration diagram.
• This is a generic data collection and analysis tool that can be
adapted for a wide variety of purposes and is considered one of
the seven basic quality tools.

86
 WHEN TO USE A CHECK SHEET

• When data can be observed and collected repeatedly by the

same person or at the same location.
• When collecting data on the frequency or patterns of events,
problems, defects, defect location, defect causes, or similar
issues.
• When collecting data from a production process.

87
 CHECK SHEET PROCEDURE

1. Decide what event or problem will be observed. Develop operational

definitions.
2. Decide when data will be collected and for how long.
3. Design the form. Set it up so that data can be recorded simply by making
check marks or X's or similar symbols and so that data do not have to be
recopied for analysis.
4. Label all spaces on the form.
5. Test the check sheet for a short trial period to be sure it collects the
appropriate data and is easy to use.
6. Each time the targeted event or problem occurs, record data on the check
sheet.

88
 CHECK SHEET EXAMPLE

• The figure below shows a check sheet used to collect data on

telephone interruptions. The tick marks were added as data was
collected over several weeks.

89
 CONTROL CHART

• The control chart is a graph used to study how a process changes over time.
• Data are plotted in time order.
• A control chart always has a central line for the average, an upper line for
the upper control limit, and a lower line for the lower control limit. These
lines are determined from historical data.
• By comparing current data to these lines, you can draw conclusions about
whether the process variation is consistent (in control) or is unpredictable
(out of control, affected by special causes of variation).
• This versatile data collection and analysis tool can be used by a variety of
industries and is considered one of the seven basic quality tools.

90
 WHEN TO USE A CONTROL CHART

• When controlling ongoing processes by finding and correcting

problems as they occur
• When predicting the expected range of outcomes from a process
• When determining whether a process is stable (in statistical control)
• When analyzing patterns of process variation from special causes
(non-routine events) or common causes (built into the process)
• When determining whether your quality improvement project
should aim to prevent specific problems or to make fundamental
changes to the process

91
 BASIC PROCEDURE

1. Choose the appropriate control chart for your data.

2. Determine the appropriate time period for collecting and
plotting data.
3. Collect data, construct your chart and analyze the data.
4. Look for "out-of-control signals" on the control chart. When
one is identified, mark it on the chart and investigate the cause.
Document how you investigated, what you learned, the cause
and how it was corrected.

92
 BASIC PROCEDURE

Out-of-control signals
• A single point outside the control limits. In Figure, point
sixteen is above the UCL (upper control limit).
• Two out of three successive points are on the same side
of the centerline and farther than 2 σ from it. In Figure,
point 4 sends that signal.
• Four out of five successive points are on the same side of
the centerline and farther than 1 σ from it. In Figure,
point 11 sends that signal.
• A run of eight in a row are on the same side of the
centerline. Or 10 out of 11, 12 out of 14, or 16 out of 20.
In Figure 1, point 21 is eighth in a row above the
centerline.
• Obvious consistent or persistent patterns that suggest
something unusual about your data and your process.

93
 BASIC PROCEDURE

5. Continue to plot data as they are generated. As each new data

point is plotted, check for new out-of-control signals.
6. When you start a new control chart, the process may be out of
control. If so, the control limits calculated from the first 20
points are conditional limits. When you have at least 20
sequential points from a period when the process is operating
in control, recalculate control limits.

94
 Control Chart Case Study

• Click here to download

95
 HISTOGRAM

• A frequency distribution shows how often each different value

in a set of data occurs.
• A histogram is the most commonly used graph to show
frequency distributions.
• It looks very much like a bar chart, but there are important
differences between them.
• This helpful data collection and analysis tool is considered one
of the seven basic quality tools.

96
 WHEN TO USE A HISTOGRAM

Use a histogram when:

• The data are numerical
• You want to see the shape of the data’s distribution, especially when determining
whether the output of a process is distributed approximately normally
• Analyzing whether a process can meet the customer’s requirements
• Analyzing what the output from a supplier’s process looks like
• Seeing whether a process change has occurred from one time period to another
• Determining whether the outputs of two or more processes are different
• You wish to communicate the distribution of data quickly and easily to others

97
 HOW TO CREATE A HISTOGRAM

1. Collect at least 50 consecutive data points from a process.

2. Use the histogram worksheet to set up the histogram. It will help you determine
the number of bars, the range of numbers that go into each bar, and the labels for
the bar edges. After calculating W in Step 2 of the worksheet, use your judgment
to adjust it to a convenient number. For example, you might decide to round 0.9
to an even 1.0. The value for W must not have more decimal places than the
numbers you will be graphing.
3. Draw x- and y-axes on graph paper. Mark and label the y-axis for counting data
values. Mark and label the x-axis with the L values from the worksheet. The
spaces between these numbers will be the bars of the histogram. Do not allow
for spaces between bars.
4. For each data point, mark off one count above the appropriate bar with an X or
by shading that portion of the bar.

98
 HISTOGRAM ANALYSIS

• Before drawing any conclusions from your histogram, be sure

that the process was operating normally during the time period
being studied.
• If any unusual events affected the process during the time
period of the histogram, your analysis of the histogram shape
likely cannot be generalized to all time periods.
• Analyze the meaning of your histogram's shape.

99
 PARETO CHART

• A Pareto chart is a bar graph.

• The lengths of the bars represent frequency or cost (time or
money), and are arranged with longest bars on the left and the
shortest to the right.
• In this way the chart visually depicts which situations are more
significant. This cause analysis tool is considered one of the
seven basic quality tools.
• Also called as Pareto diagram, Pareto analysis

100
 WHEN TO USE A PARETO CHART

• When analyzing data about the frequency of problems or causes

in a process
• When there are many problems or causes and you want to focus
on the most significant
• When analyzing broad causes by looking at their specific
components
• When communicating with others about your data

101
 PARETO CHART PROCEDURE

1. Decide what categories you will use to group items.

2. Decide what measurement is appropriate. Common measurements are frequency, quantity,
cost and time.
3. Decide what period of time the Pareto chart will cover: One work cycle? One full day? A
week?
4. Collect the data, recording the category each time, or assemble data that already exist.
5. Subtotal the measurements for each category.
6. Determine the appropriate scale for the measurements you have collected. The maximum
value will be the largest subtotal from step 5. (If you will do optional steps 8 and 9 below,
the maximum value will be the sum of all subtotals from step 5.) Mark the scale on the left
side of the chart.
7. Construct and label bars for each category. Place the tallest at the far left, then the next
tallest to its right, and so on. If there are many categories with small measurements, they
can be grouped as “other.”

102
 PARETO CHART PROCEDURE

Note: Steps 8 and 9 are optional but are useful for analysis and communication.
8. Calculate the percentage for each category: the subtotal for that category
divided by the total for all categories. Draw a right vertical axis and label it with
percentages. Be sure the two scales match. For example, the left measurement
that corresponds to one-half should be exactly opposite 50% on the right scale.
9. Calculate and draw cumulative sums: add the subtotals for the first and second
categories, and place a dot above the second bar indicating that sum. To that
sum add the subtotal for the third category, and place a dot above the third bar
for that new sum. Continue the process for all the bars. Connect the dots,
starting at the top of the first bar. The last dot should reach 100% on the right
scale.

103
 PARETO CHART EXAMPLES

• Figure 1 shows how many

customer complaints were
received in each of five
categories.

104
 PARETO CHART EXAMPLES

• Figure 2 takes the largest category,

"documents," from Figure 1, breaks
it down into six categories of
document-related complaints, and
shows cumulative values.
• If all complaints cause equal
distress to the customer, working on
eliminating document-related
complaints would have the most
impact, and of those, working on
quality certificates should be most
fruitful.

105
 SCATTER DIAGRAM

• The scatter diagram graphs pairs of numerical data, with one

variable on each axis, to look for a relationship between them.
If the variables are correlated, the points will fall along a line or
curve. The better the correlation, the tighter the points will hug
the line. This cause analysis tool is considered one of the seven
basic quality tools.

106
 WHEN TO USE A SCATTER DIAGRAM

• When you have paired numerical data

• When your dependent variable may have multiple values for each
value of your independent variable
• When trying to determine whether the two variables are related,
such as:
– When trying to identify potential root causes of problems
– After brainstorming causes and effects using a fishbone diagram to
determine objectively whether a particular cause and effect are related
– When determining whether two effects that appear to be related both occur
with the same cause
– When testing for autocorrelation before constructing a control chart

107
 SCATTER DIAGRAM PROCEDURE

1. Collect pairs of data where a relationship is suspected.

2. Draw a graph with the independent variable on the horizontal axis
and the dependent variable on the vertical axis. For each pair of
data, put a dot or a symbol where the x-axis value intersects the y-
axis value. (If two dots fall together, put them side by side,
touching, so that you can see both.)
3. Look at the pattern of points to see if a relationship is obvious. If
the data clearly form a line or a curve, you may stop because
variables are correlated. You may wish to use regression or
correlation analysis now. Otherwise, complete steps 4 through 7.

108
 SCATTER DIAGRAM PROCEDURE

4. Divide points on the graph into four quadrants. If there are X

points on the graph:
– Count X/2 points from top to bottom and draw a horizontal line.
– Count X/2 points from left to right and draw a vertical line.
– If number of points is odd, draw the line through the middle point.
5. Count the points in each quadrant. Do not count points on a
line.

109
 SCATTER DIAGRAM PROCEDURE

6. Add the diagonally opposite quadrants. Find the smaller sum

and the total of points in all quadrants.

A = points in upper left + points in lower right

B = points in upper right + points in lower left
Q = the smaller of A and B
N =A+B

110
 SCATTER DIAGRAM PROCEDURE

7. Look up the limit for N on

the trend test table.
– If Q is less than the limit, the
two variables are related.
– If Q is greater than or equal to
the limit, the pattern could
have occurred from random
chance.

111
 SCATTER DIAGRAM EXAMPLE

• The ZZ-400 manufacturing team

suspects a relationship between
product purity (percent purity) and
the amount of iron (measured in
parts per million or ppm). Purity
and iron are plotted against each
other as a scatter diagram, as shown
in the figure below.

112
 SCATTER DIAGRAM EXAMPLE

• There are 24 data points. Median lines are drawn so that 12 points
fall on each side for both percent purity and ppm iron.
To test for a relationship, they calculate:
A = points in upper left + points in lower right = 9 + 9 = 18
B = points in upper right + points in lower left = 3 + 3 = 6
Q = the smaller of A and B = the smaller of 18 and 6 = 6
N = A + B = 18 + 6 = 24
• Then they look up the limit for N on the trend test table. For N = 24,
the limit is 6.
• Q is equal to the limit. Therefore, the pattern could have occurred
from random chance, and no relationship is demonstrated.

113
 Additional Scatter Diagram Examples

• Below are some examples of situations in which might you use a scatter
diagram:
– Variable A is the temperature of a reaction after 15 minutes. Variable B measures
the color of the product. You suspect higher temperature makes the product
darker. Plot temperature and color on a scatter diagram.
– Variable A is the number of employees trained on new software, and variable B is
the number of calls to the computer help line. You suspect that more training
reduces the number of calls. Plot number of people trained versus number of calls.
– To test for autocorrelation of a measurement being monitored on a control chart,
plot this pair of variables: Variable A is the measurement at a given time. Variable
B is the same measurement, but at the previous time. If the scatter diagram shows
correlation, do another diagram where variable B is the measurement two times
previously. Keep increasing the separation between the two times until the scatter
diagram shows no correlation.

114
 SCATTER DIAGRAM CONSIDERATIONS

• Even if the scatter diagram shows a relationship, do not assume that one
variable caused the other. Both may be influenced by a third variable.
• When the data are plotted, the more the diagram resembles a straight line,
the stronger the relationship.
• If a line is not clear, statistics (N and Q) determine whether there is
reasonable certainty that a relationship exists. If the statistics say that no
relationship exists, the pattern could have occurred by random chance.
• If the scatter diagram shows no relationship between the variables, consider
whether the data might be stratified.
• If the diagram shows no relationship, consider whether the independent (x-
axis) variable has been varied widely. Sometimes a relationship is not
apparent because the data do not cover a wide enough range.

115
 STRATIFICATION

• Stratification is defined as the act of sorting data, people, and

objects into distinct groups or layers.
• It is a technique used in combination with other data analysis
tools. When data from a variety of sources or categories have
been lumped together, the meaning of the data can be difficult
to see.
• This data collection and analysis technique separates the data so
that patterns can be seen and is considered one of the seven
basic quality tools.

116
 WHEN TO USE STRATIFICATION

• Before collecting data

• When data come from several sources or conditions, such as shifts, days of the week,
suppliers, or population groups
• When data analysis may require separating different sources or conditions
• Here are examples of different sources that might require data to be stratified:
– Equipment
– Shifts
– Departments
– Materials
– Suppliers
– Day of the week
– Time of day
– Products

117
 STRATIFICATION PROCEDURE

• Before collecting data, consider which information about the sources of the
data might have an effect on the results. Set up the data collection so that
you collect that information as well.
• When plotting or graphing the collected data on a scatter diagram, control
chart, histogram, or other analysis tool, use different marks or colors to
distinguish data from various sources. Data that are distinguished in this
way are said to be "stratified."
• Analyze the subsets of stratified data separately. For example, on a scatter
diagram where data are stratified into data from source 1 and data from
source 2, draw quadrants, count points, and determine the critical value
only for the data from source 1, then only for the data from source 2.

118
 STRATIFICATION EXAMPLE

• The ZZ-400 manufacturing team drew a

scatter diagram to test whether product
purity and iron contamination were
related, but the plot did not demonstrate
a relationship.
• Then a team member realized that the
data came from three different reactors.
The team member redrew the diagram,
using a different symbol for each
reactor’s data (Figure1).

119
 STRATIFICATION EXAMPLE

• Now patterns can be seen. The data

from reactor 2 and reactor 3 are circled.
Even without doing any calculations, it
is clear that for those two reactors,
purity decreases as iron increases.
• However, the data from reactor 1, the
solid dots that are not circled, do not
show that relationship. Something is
different about reactor 1.

120
 STRATIFICATION ANALYSIS CONSIDERATIONS

• Survey data usually benefit from stratification.

• Always consider before collecting data whether stratification
might be needed during analysis. Plan to collect stratification
information.
• On your graph or chart, include a legend that identifies the
marks or colors used.

121
 Flowchart

• A flowchart is a picture of the separate steps of a process in

sequential order. It is a generic tool that can be adapted for a wide
variety of purposes, and can be used to describe various processes,
such as a manufacturing process, an administrative or service
process, or a project plan. It's a common process analysis tool and
one of the seven basic quality tools.

• Elements that may be included in a flowchart are a sequence of

actions, materials or services entering or leaving the process (inputs
and outputs), decisions that must be made, people who become
involved, time involved at each step, and/or process measurements.

122
 WHEN TO USE A FLOWCHART

• To develop understanding of how a process is done

• To study a process for improvement
• To communicate to others how a process is done
• When better communication is needed between people involved
with the same process
• To document a process
• When planning a project

123
 FLOWCHART BASIC PROCEDURE

Materials needed: Sticky notes or cards, a large piece of flipchart paper or newsprint, and
marking pens.

• Define the process to be diagrammed. Write its title at the top of the work surface.
• Discuss and decide on the boundaries of your process: Where or when does the process start?
Where or when does it end? Discuss and decide on the level of detail to be included in the
diagram.
• Brainstorm the activities that take place. Write each on a card or sticky note.
• Arrange the activities in proper sequence.
• When all activities are included and everyone agrees that the sequence is correct, draw
arrows to show the flow of the process.
• Review the flowchart with others involved in the process (workers, supervisors, suppliers,
customers) to see if they agree that the process is drawn accurately.

124
FLOWCHART EXAMPLES

125