C215
STUDY GUIDE
Operations Management
Western Governors University
This document provides a focused study guide
It summarizes key concepts, lecture highlights, and
exam-relevant material to support efficient last-
minute review. The guide is structured to help
students reinforce understanding, identify weak
areas, and prepare confidently for the assessment.
, WGU C215 STUDY GUIDE 1
CHAPTER 5: TOTAL QUALITY MANAGEMENT
DEFINING QUALITY- The difficulty in defining quality exists regardless of product, and this is true for both manufacturing and service
organizations. Today, there is no single, universal definition of quality. Some people view quality as “performance to standards.” Others view it
as “meeting the customer’s needs” or “satisfying the customer.”
Conformance to specifications measures how well the product or service meets the targets and tolerances determined by its designers. The
wait for hotel room service may be specified as 20 minutes, but there may be an acceptable delay of an additional 10 minutes. Fitness for
use focuses on how well the product performs its intended function or use. You can also see that fitness for use is a user-based definition in
that it is intended to meet the needs of a specific user group. Value for price paid is a definition of quality that consumers often use for
product or service usefulness. This is the only definition that combines economics with consumer criteria; it assumes that the definition of
quality is price sensitive. If you take the less expensive seminar, you will feel that you have received greater value for the price. Support
services provided are often how the quality of a product or service is judged. Psychological criteria is a subjective definition that focuses on
the judgmental evaluation of what constitutes product or service quality. Different factors contribute to the evaluation, such as the atmosphere
of the environment or the perceived prestige of the product.
Differences between Manufacturing and Service Organizations- Manufacturing organizations produce a tangible product that can be seen,
touched, and directly measured. Examples include cars, CD players. Quality definitions in manufacturing usually focus on tangible product
features.
The relative importance of these manufacturing quality definitions is based on the preferences of each individual customer.
In contrast to manufacturing, service organizations produce a product that is intangible. Usually, the complete product cannot be seen or
touched.
Manufacturing Organizations Service Organizations
Conformance to specifications Intangible factors
Degree to which product characteristic meets preset standards. service is experienced, perceptions can be highly subjective.
Performance Consistency
such as acceleration of a vehicle degree to which the service is the same each time
Reliability Responsiveness to customer needs
product will function as expected without failure
Features Courtesy/friendliness
extras that are included beyond the basic characteristics
Durability Timeliness/promptness
expected operational life of the product
Serviceability Atmosphere
how readily a product can be repaired
COST OF QUALITY-The reason quality has gained such prominence is that organizations have gained an understanding of the high cost of
poor quality.
The most obvious consequence occurs when poor quality creates dissatisfied customers and eventually leads to loss of business. However,
quality has many other costs, which can be divided into two categories. The first category consists of costs necessary for achieving high
quality, which are called quality control costs. These are of two types: prevention costs and appraisal costs. The second category consists of
the cost consequences of poor quality, which are called quality failure costs. These include external failure costs and internal failure costs.
Prevention costs are all costs incurred in the process of preventing poor quality from occurring. They include quality planning costs, such as
the costs of developing and implementing a quality plan. Employee training, and maintaining records.
Appraisal costs are incurred in the process of uncovering defects. They include the cost of quality inspections, product testing, Also the costs
of worker time spend measuring quality. Internal failure costs are associated with discovering poor product quality before the product
reaches the customer site. One type of internal failure cost is rework, which is the cost of correcting the defective item. Sometimes the item is
so defective that it cannot be corrected and must be thrown away. This is called scrap, and its costs include all the material, labor, and
machine cost spent in producing the defective product.
External failure costs are associated with quality problems that occur at the customer site. These costs can be particularly damaging
because customer faith and loyalty can be difficult to regain. From customer complaints, product returns, and repairs to warranty claims,
recalls, and even litigation costs resulting from product liability issues. A final component of this cost is lost sales and lost customers.
Cost of defect increases from product design to product production to the max at the customer site.
Prevent internal and external failure costs. The earlier defects are found, the less costly they are to correct. External failure costs tend to be
particularly high for service organizations. The reason is that with a service the customer spends much time in the service delivery system,
and there are fewer opportunities to correct defects than there are in manufacturing. Examples of external failure in services include
overbooking airline flights, long delays in airline service, and lost luggage.
THE EVOLUTION OF TOTAL QUALITY MANAGEMENT (TQM)
, WGU C215 STUDY GUIDE 2
Taguchi is known for applying a concept called design of experiment to product design. This method is an engineering approach based on
developing robust design, a design that results in products that can perform over a wide range of conditions. The idea is that it is easier to
design a product that can perform over a wide range of environmental conditions than it is to control the environmental conditions.
Taguchi loss function- Costs of quality increase as a quadratic function as conformance values move away from the target.
THE PHILOSOPHY OF TQM- TQM is the focus on identifying root causes of quality problems and correcting them at the source, as
opposed to inspecting the product after it has been made.
Continuous improvement, called kaizen by the Japanese, requires that the company continually strive to be better through learning and
problem solving. Because we can never achieve perfection, we must always evaluate our performance and take measures to improve it.
The Plan–Do–Study–Act Cycle
Plan The first step in the PDSA cycle is to plan. Managers must evaluate the current process and make plans based on any problems they find.
They need to document all current procedures, collect data, and identify problems.
Do The next step in the cycle is implementing the plan (do).
Study The third step is to study the data collected in the previous phase. The data are evaluated.
Act The last phase of the cycle is to act on the basis of the results of the first three phases.
Benchmarking
Another way companies implement continuous improvement is by studying business practices of companies considered “best in class.” This is
called benchmarking. The ability to learn and study how others do things is an important part of continuous improvement. Company does not
need to be in the same industry.
Employee Empowerment- TQM differentiates between external and internal customers. External customers are those that purchase the
company’s goods and services. Internal customers are employees of the organization who receive goods or services from others in the
company.
Team Approach-One of the most common types of teams is the quality circle, a team of volunteer production employees and their supervisors
whose purpose is to solve quality problems.
Use of Quality Tools
Cause-and-effect diagrams identify potential causes of particular quality problems. A flowchart is a schematic diagram of the sequence of
steps involved in an operation or process. A checklist is a list of common defects and the number of observed occurrences of these defects. It
is a simple yet effective fact-finding tool that allows the worker to collect specific information regarding the defects observed. Control
charts are a very important quality control tool. These charts are used to evaluate whether a process is operating within expectations relative
to some measured value such as weight, width, or volume. Scatter diagrams are graphs that show how two variables are related to one
another. They are particularly useful in detecting the amount of correlation, or the degree of linear relationship, between two variables.
Pareto analysis is a technique used to identify quality problems based on their degree of importance. The logic behind Pareto analysis is that
only a few quality problems are important, whereas many others are not critical. A histogram is a chart that shows frequency distribution of
observed values of a variable. We can see from the plot what type of distribution a particular variable displays, such as whether it has a
normal distribution & whether distribution is symmetrical.
Product Design- A useful tool for translating the voice of the customer into specific technical requirements is quality function deployment
(QFD).
QFD begins by identifying important customer requirements, which typically come from the marketing department. These requirements are
numerically scored based on their importance, and scores are translated into specific product characteristics. Evaluations are then made of
STUDY GUIDE
Operations Management
Western Governors University
This document provides a focused study guide
It summarizes key concepts, lecture highlights, and
exam-relevant material to support efficient last-
minute review. The guide is structured to help
students reinforce understanding, identify weak
areas, and prepare confidently for the assessment.
, WGU C215 STUDY GUIDE 1
CHAPTER 5: TOTAL QUALITY MANAGEMENT
DEFINING QUALITY- The difficulty in defining quality exists regardless of product, and this is true for both manufacturing and service
organizations. Today, there is no single, universal definition of quality. Some people view quality as “performance to standards.” Others view it
as “meeting the customer’s needs” or “satisfying the customer.”
Conformance to specifications measures how well the product or service meets the targets and tolerances determined by its designers. The
wait for hotel room service may be specified as 20 minutes, but there may be an acceptable delay of an additional 10 minutes. Fitness for
use focuses on how well the product performs its intended function or use. You can also see that fitness for use is a user-based definition in
that it is intended to meet the needs of a specific user group. Value for price paid is a definition of quality that consumers often use for
product or service usefulness. This is the only definition that combines economics with consumer criteria; it assumes that the definition of
quality is price sensitive. If you take the less expensive seminar, you will feel that you have received greater value for the price. Support
services provided are often how the quality of a product or service is judged. Psychological criteria is a subjective definition that focuses on
the judgmental evaluation of what constitutes product or service quality. Different factors contribute to the evaluation, such as the atmosphere
of the environment or the perceived prestige of the product.
Differences between Manufacturing and Service Organizations- Manufacturing organizations produce a tangible product that can be seen,
touched, and directly measured. Examples include cars, CD players. Quality definitions in manufacturing usually focus on tangible product
features.
The relative importance of these manufacturing quality definitions is based on the preferences of each individual customer.
In contrast to manufacturing, service organizations produce a product that is intangible. Usually, the complete product cannot be seen or
touched.
Manufacturing Organizations Service Organizations
Conformance to specifications Intangible factors
Degree to which product characteristic meets preset standards. service is experienced, perceptions can be highly subjective.
Performance Consistency
such as acceleration of a vehicle degree to which the service is the same each time
Reliability Responsiveness to customer needs
product will function as expected without failure
Features Courtesy/friendliness
extras that are included beyond the basic characteristics
Durability Timeliness/promptness
expected operational life of the product
Serviceability Atmosphere
how readily a product can be repaired
COST OF QUALITY-The reason quality has gained such prominence is that organizations have gained an understanding of the high cost of
poor quality.
The most obvious consequence occurs when poor quality creates dissatisfied customers and eventually leads to loss of business. However,
quality has many other costs, which can be divided into two categories. The first category consists of costs necessary for achieving high
quality, which are called quality control costs. These are of two types: prevention costs and appraisal costs. The second category consists of
the cost consequences of poor quality, which are called quality failure costs. These include external failure costs and internal failure costs.
Prevention costs are all costs incurred in the process of preventing poor quality from occurring. They include quality planning costs, such as
the costs of developing and implementing a quality plan. Employee training, and maintaining records.
Appraisal costs are incurred in the process of uncovering defects. They include the cost of quality inspections, product testing, Also the costs
of worker time spend measuring quality. Internal failure costs are associated with discovering poor product quality before the product
reaches the customer site. One type of internal failure cost is rework, which is the cost of correcting the defective item. Sometimes the item is
so defective that it cannot be corrected and must be thrown away. This is called scrap, and its costs include all the material, labor, and
machine cost spent in producing the defective product.
External failure costs are associated with quality problems that occur at the customer site. These costs can be particularly damaging
because customer faith and loyalty can be difficult to regain. From customer complaints, product returns, and repairs to warranty claims,
recalls, and even litigation costs resulting from product liability issues. A final component of this cost is lost sales and lost customers.
Cost of defect increases from product design to product production to the max at the customer site.
Prevent internal and external failure costs. The earlier defects are found, the less costly they are to correct. External failure costs tend to be
particularly high for service organizations. The reason is that with a service the customer spends much time in the service delivery system,
and there are fewer opportunities to correct defects than there are in manufacturing. Examples of external failure in services include
overbooking airline flights, long delays in airline service, and lost luggage.
THE EVOLUTION OF TOTAL QUALITY MANAGEMENT (TQM)
, WGU C215 STUDY GUIDE 2
Taguchi is known for applying a concept called design of experiment to product design. This method is an engineering approach based on
developing robust design, a design that results in products that can perform over a wide range of conditions. The idea is that it is easier to
design a product that can perform over a wide range of environmental conditions than it is to control the environmental conditions.
Taguchi loss function- Costs of quality increase as a quadratic function as conformance values move away from the target.
THE PHILOSOPHY OF TQM- TQM is the focus on identifying root causes of quality problems and correcting them at the source, as
opposed to inspecting the product after it has been made.
Continuous improvement, called kaizen by the Japanese, requires that the company continually strive to be better through learning and
problem solving. Because we can never achieve perfection, we must always evaluate our performance and take measures to improve it.
The Plan–Do–Study–Act Cycle
Plan The first step in the PDSA cycle is to plan. Managers must evaluate the current process and make plans based on any problems they find.
They need to document all current procedures, collect data, and identify problems.
Do The next step in the cycle is implementing the plan (do).
Study The third step is to study the data collected in the previous phase. The data are evaluated.
Act The last phase of the cycle is to act on the basis of the results of the first three phases.
Benchmarking
Another way companies implement continuous improvement is by studying business practices of companies considered “best in class.” This is
called benchmarking. The ability to learn and study how others do things is an important part of continuous improvement. Company does not
need to be in the same industry.
Employee Empowerment- TQM differentiates between external and internal customers. External customers are those that purchase the
company’s goods and services. Internal customers are employees of the organization who receive goods or services from others in the
company.
Team Approach-One of the most common types of teams is the quality circle, a team of volunteer production employees and their supervisors
whose purpose is to solve quality problems.
Use of Quality Tools
Cause-and-effect diagrams identify potential causes of particular quality problems. A flowchart is a schematic diagram of the sequence of
steps involved in an operation or process. A checklist is a list of common defects and the number of observed occurrences of these defects. It
is a simple yet effective fact-finding tool that allows the worker to collect specific information regarding the defects observed. Control
charts are a very important quality control tool. These charts are used to evaluate whether a process is operating within expectations relative
to some measured value such as weight, width, or volume. Scatter diagrams are graphs that show how two variables are related to one
another. They are particularly useful in detecting the amount of correlation, or the degree of linear relationship, between two variables.
Pareto analysis is a technique used to identify quality problems based on their degree of importance. The logic behind Pareto analysis is that
only a few quality problems are important, whereas many others are not critical. A histogram is a chart that shows frequency distribution of
observed values of a variable. We can see from the plot what type of distribution a particular variable displays, such as whether it has a
normal distribution & whether distribution is symmetrical.
Product Design- A useful tool for translating the voice of the customer into specific technical requirements is quality function deployment
(QFD).
QFD begins by identifying important customer requirements, which typically come from the marketing department. These requirements are
numerically scored based on their importance, and scores are translated into specific product characteristics. Evaluations are then made of
