(C215-WGU) WGU C215 Operations Management Study Guide

TQM: Total Quality Management - is an integrated organizational effort designed to improve quality at every level. Customer Defined Quality - TQM is about meeting quality expectations as defined by the customer. Conformance to specification - measures how well the product or service meets the targets and tolerances determined by its designers. Example of Conformance to specification - The wait for hotel room service may be specified as 20 minutes, but there may be an acceptable delay of an additional 10 minutes. Also, consider the amount of light delivered by a 60-watt light bulb. If the bulb delivers 50 watts, it does not conform to specifications. Fitness for use - focuses on how well the product performs its intended function or use. Example of Fitness for use - For example, a Mercedes-Benz and a Jeep Cherokee both meet a fitness for use definition if one considers transportation as the intended function. However, if the definition becomes more specific and assumes that the intended use is for transportation on mountain roads and carrying fishing gear, the Jeep Cherokee has a greater fitness for 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 a 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. Examples of Value for a price paid - For example, suppose that you wish to sign up for a personal finance seminar and discover that the same class is being taught at two different colleges at significantly different tuition rates. 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. Quality does not apply only to the product or service itself; it also applies to the people, processes, and organizational environment associated with it. Example of Support Services - For example, the quality of a university is judged not only by the quality of staff and course offerings but also by the efficiency and accuracy of processing paperwork. 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. Examples of Psychological Criteria - For example, a hospital patient may receive average healthcare, but a very friendly staff may leave the impression of high quality. Similarly, we commonly associate certain products with excellence because of their reputation; Rolex watches and Mercedes-Benz automobiles are examples. Manufacturing Organizations - Manufacturing organizations produce a tangible product that can be seen, touched, and directly measured. Examples include cars, CD players, clothes, computers, and food items. Quality in manufacturing organizations - quality definitions in manufacturing usually focus on tangible product features. Common quality definition in manufacturing - 1. Conformance: the degree to which a product characteristic meets preset standards. 2. Performance: such as acceleration of a vehicle 3. Reliability: meaning that the product will function as expected without failure 4. Features: the extras that are included beyond the basic characteristics 5. Durability: the expected operational life of the product 6. Serviceability: how readily a product can be repaired Service Organizations - service organizations produce a product that is intangible. Usually, the complete product cannot be seen or touched. Rather, it is experienced. The intangible nature of the product makes defining quality difficult. Examples of Service Organizations - delivery of healthcare, the experience of staying at a vacation resort, and learning at a university. Quality of Service is defined by perceptual factors - 1. Responsiveness to customers needs/ 2. Courtesy and friendliness of staff. 3. Promptness in resolving complains. 4. Atmosphere 5. Time: the amount of time a customer has to wait for the service. 6. Consistency: the degree to which service is the same each time. Quality Control Costs - Cost necessary for achieving high quality. Two types of Quality Control Costs - 1. Prevention costs. 2. Appraisal costs. Prevention Costs - are all costs incurred in the process of preventing poor quality from occurring. Costs includes the following. 1. quality planning costs, such as the costs of developing and implementing a quality plan. 2. cost of product and process design. 3. Employee training in quality measurement. 4. Cost of maintaining records of information and data related to quality. Appraisal Costs - incurred in the process of uncovering defects. They include the following; 1. Cost of quality inspections. 2. Product testing. 3. performing audits to make sure that quality standards are being met. 4. costs of worker time spent measuring quality 5. cost of equipment used for quality appraisal. Quality Failure Costs - Cost consequences of poor quality. Two types of Quality Failure Costs - 1. External Failure Costs 2. Internal Failure Costs Internal Failure Costs - are associated with discovering poor product quality before the product reaches the customer site. 1. rework: the cost of correcting the defective item. 2.Scrap: when item is so defective that it cannot be fixed and must be thrown away. Scrap cost includes all the material, labor, and machine cost spent in producing the defective product. 3. cost of machine downtime due to failures in the process and the costs of discounting defective items for salvage value. 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. 1. Customer complaints 2. Product returns 3. repairs to warranty claims 4. recalls 5. litigation costs resulting from product liability issues 6. lost sales and lost customers Example of External Failure Costs - manufacturers of lunch meats and hot dogs whose products have been recalled due to bacterial contamination have had to struggle to regain consumer confidence. Other examples include auto manufacturers whose products have been recalled due to major malfunctions such as problematic braking systems and airlines that have experienced a crash with many fatalities. External failure can sometimes put a company out of business almost overnight. External Failure Costs are particularly high where? - 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. Walter A. Shewhart - "grandfather of quality control" -developed quality control charts that are used to identify whether the variability in the process is random or due to an assignable cause, such as poor workers or miscalibrated machinery. W. Edwards Deming - "father of quality control" -Deming prize: an annual award given to firms that demonstrate outstanding quality. -"14 points": upper management must develop a commitment to quality and provide a system to support this commitment that involves all employees and suppliers. Joseph M. Juran - -considered to have had the greatest impact on quality management. -defines quality as fitness for use which takes in to account customer intentions for use of the product instead of focusing on technical specifications. -develpped the concept of cost of quality which allows measuring quality in dollar terms rather than on the basis of subjective evaluations. -originated the quality trilogy. Quality Trilogy - 1. quality planning 2. quality control 3. quality improvement. Quality planning - companies identify their customers, product requirements, and overriding business goals. Process set up so quality standards can be met. Quality control - stresses the regular use of statistical control methods to ensure that quality standards are met and to identify variation from the standards. Quality improvement - quality improvement should not be just breakthroughs, but continuous as well. Armand V. Feigenbaum - -introduced the concept of quality control. -promoted idea that quality developments are integrated throughout the entire organization/ -managers & employees have a total commitment to improve quality and people can learn from each other's success. -adapted by the Japanese and called "company-wide quality control. Philip B. Crosby - -developed phrase "Do it right the first time" and the notion of zero defects, assuming that no amounts of defects should be considered acceptable. -coined the phrase "quality is free" and for pointing out the many costs of quality. -stressed role of management in the quality improvement effort and the use of statistical control tools in measuring and monitoring quality. Kaoru Ishikawa - -development of quality tools called cause-and-effect diagrams aka fishbone or Ishikawa diagrams. -diagrams are used for quality problem solving. -first quality guru to emphasize the importance of the "internal customer" and total company quality control. - a proponent of implementation of quality circles. Quality circle - employees who volunteer to solve quality problems. They solve quality problem through a preset of a process for analyzing and solving quality problems. -Team approach Genichi Taguchi - -product design -about 80% of all defective items are caused by poor product design. -stresses effort on design stage. -apply a concept called design of experiment to product design based on robust design. -Taguchi loss function. Robust design - a design that results in products that can perform over a wide range of conditions. It is easier to design a product that can perform over a wide range of environmental conditions that it is to control the environment conditions. Taguchi Loss Function - as conformance values move away from the target, loss increases as a quadratic function. -smaller differences from target result in smaller cost. -larger differences from target result in larger cost. TQM Philosophy - 1. Customer focus 2. Continuous improvement 3. Employee empowerment 4. use of quality tools 5. product design 6. process management 7. managing supplier quality Customer focus - goal is to identify and meet customer needs. Quality is customer driven. Companies continue to gather information via focus groups, market surveys, and customer interviews to know what they want. Continuous improvement - a philosophy of never-ending improvement. Japanese believe lasting changes come from gradual improvements. Kaizen: called by the Japanese requires that the company continually strive to be better through learning and problem solving. Employee empowerment - employee are expected to seek out, identify, and correct quality problems. They are rewarded for uncovering quality problems not punished. They're given training in quality measurement tools. To further stress their role, TQM differentiates between internal and external customers. Use of quality tools - ongoing employee training in the use of quality tools. Product design - products need to be designed to meet customer expectations. Process management - quality should be built into the process; sources of quality problems should be identified and corrected. Managing supplier quality - quality concepts must extend to a company's suppliers. Kaizen - requires that company continually strive to be better through learning and problem solving. Plan-Do-Study-Act Cycle (PSDA) Cycle aka Shewhart cycle or the Deming wheel. - describes the activity a company needs to perform in order to incorporate continuous improvement in its operation. -circular nature of the cycle demonstrates that improvement is a never-ending process. PSDA Cycle steps - 1. plan: managers must evaluate the current process and make plans based on any problems they find. Document procedures, collect data, and identify problems. 2. Do: during the implementation process, managers should document all changes made and collect data for evaluation. 3. Study: study the data collected and see whether the plan is achieving the goals established in the plan phase. 4. Act: act on the basis of the results of the first three phrases by communicating the result to other members of the company and then implement the new procedure if it has been successful. Benchmarking - studying business practices of companies considered "best in class." Internal Customers - are employees of the organization who receive goods or services from others in the company. In order words, if a defective item cannot be pasted on to an external customer, it shouldn't to an internal. External Customers - are those that purchase the company's goods and services. Seven Tools of Quality Control - 1. Cause-and-Effect Diagram 2. Flowchart 3. Checklist 4. Control Chart 5. Scatter Diagram 6. Pareto Chart 7. Histogram Cause-and-Effect Diagram aka fishbone diagram - Identify potential causes of particular quality problems. Flowcharts - a schematic diagram of sequence of steps involved in an operation or process. A visual tool that helps develop a clear picture of how operation works and possible problem locations. Checklists - a list of common defected the # of observed occurences. Collect specific information regarding defects observed. Control Charts - very important quality control tool. Used to evaluate whether a process is operating within expectations relative to measured value. When it is, it's "in control." -UCL: upper control limit -LCL: lower control limit within these two lines, okay. outside, not ok. Scatter Diagrams - shows how two variables are related to one another. Correlations could be positive or negative. Example: increased production speed & number of defects could correlate positively. -greater the correlation, the more linear and less, the more scatter. -Inverted U: observing relationship between two variables. Pareto Analysis - technique used to identify problem based on their degree of importance. The 80-20 rule in respect that most quality problems are a result of only a few causes and the trick is to identify the causes. -ranks causes of poor quality in decreasing order based on the percentage of defects each has caused. Histograms - a chart that shows frequency distribution of observed values of a variable. If distribution is normal or symmetrical. Example, Kroger must record and monitor product quality of incoming produce. Quality tools are used to evaluate the acceptability of product quality and to monitor product quality from individual suppliers. Quality Function Deployment (QFD) - a useful tool in translating the voice of the customer into specific technical requirements. Useful in enhancing communication between different functions, such as marketing, operations, and engineering. -house of quality: goals set to address identified problems. QFD List - 1. Customer requirements 2. competitive evaluations 3. product characteristics 4. relationship matrix 5. the trade-off matrix 6. setting targets ISO 14000 - a set of international standards and a certification focusing on a company's environmental responsibility Descriptive statistics - Can be helpful in describing certain characteristics of a product and a process. Most important descriptive statistics are... - 1. central tendency (mean) 2. measures of variability (standard deviation) 3. measures of distribution of data Mean (average) - is a statistic that measures the central tendency of a set of data. -calculated by the sum of all observation and divide by the total number of observation. Example of Mean - average soft drink bottle is filled with 16 ounces of liquid. 16 is the mean. Range and standard deviation - information provides us with the amount of variability of the data. It tells us how spread out the data are around the mean. Just-in-time (JIT) philosophy - Getting the right quantity of goods at the right place at the right time. The goods arrive just in time. Waste - Anything that does not add value. a broad view of JIT - A philosophy that encompasses the entire organization. everyone should have a broad view of the organization and work towards the same goal and that is serving the customers. Central belief of JIT - Elimination of waste broad view of operations simplicity continuous improvement visibility flexibility Types of waste - material energy time space Simplicity - provide a simpler solution. JIT encourages staff to think about the problem and come up with a simple solution. Continuous Improvement aka Kaizen - never-ending improvement always continue to improve since you will never be perfect. Kaizen Blitz - This process allows a small group of people to concentrate on a bite-size chunk of the problem for a short period of time and deliver improvement. Visiblilty - Problems must be visible to be identified and solved. JIT facilities are open and clean. Visibility allows us to readily see waste. We can then eliminate it. Flexibility (ways) - 1. A company can quickly adapt to the changing needs of its customers. 2. being able to produce a wide variety of products. JIT system - 1. just-in-time manufacturing 2. total quality management 3. respect for people Just-in-time manufacturing - focuses directly on the production system to make this possible Manufacturing process in JIT - starts with the final assembly schedule, often called the master production schedule master production schedule - a statement of which products and quantities will be made in specific time periods -usually fixed for few months ahead. Kanban - to pull the needed products through the production system. For this reason, JIT is often referred to as a pull system. The kanban specifies what is needed. setup cost - Cost incurred when setting up equipment for a production run. acceptable quality level (AQL) - Traditional quality control systems . indicate the acceptable number of defective parts Quality at the source - objective is not only to identify a quality problem but to uncover its root cause respect for people - An element of JIT that considers human resources as an essential part of the JIT philosophy.