MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 1 Chapter 14 Statistical Process Control

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Acceptance Sampling  Purposes  Determine quality level  Ensure quality is within predetermined level Lot received for inspection Sample selected and analyzed Results compared with acceptance criteria Accept the lot Send to production or to customer Reject the lot Decide on disposition

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 3 Statistical Process Control (SPC)  A methodology for monitoring a process to identify special causes of variation and signal the need to take corrective action when appropriate  SPC relies on control charts  SPC is a preventative approach to insuring Quality

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 4 Histograms vs. Control Charts  Histograms do not take into account changes over time.  Control charts can tell us when a process changes

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 5 Key Idea Process capability calculations make little sense if the process is not in statistical control because the data are confounded by special causes that do not represent the inherent capability of the process.

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 6 Capability Versus Control Control Capability Capable Not Capable In Control Out of Control IDEAL

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 7 Commonly Used Control Charts  Variables data  x-bar and s-charts (used when there is an abundance of data and the standard deviation can be accurately calculated)  x-bar and R-charts (used for small amounts of data using the Range divided by 6 as an approximation of the standard deviation)  I-MR charts for individuals (called x-charts or I-Charts) when the variation of individual measurements is critical, and you wish to perform process capability calculations; the moving range (MR) is the difference between successive measurements  Attribute data  p-chart and np-charts - used to track the proportion or percentage of *defectives”  c-charts and u-charts - used to track the number of “defects” Note that smaller sample sizes are needed for variables data!

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 8 Control Chart Formulas

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 9 Choosing the Right Control Chart Data Type Attribute Continuous Count P-Chart (% Defectives) U-Chart (# of Defects/Unit, or DPU) I-MR Chart (n = 1) X Bar-R Chart (n = 2 to 5) X Bar-S Chart (n>6) Note: The NP Chart and C Chart are alternatives to the P and U Charts, respectively, but can only be used for constant sample sizes.

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 10 Key Idea Control charts for individuals offer the advantage of being able to draw specifications on the chart for direct comparison with the control limits. Note that process capability calculations are only meaningful for individual measurements! Why is this the case?

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 11 Developing Control Charts 1. Prepare  Choose measurement and identify type  Determine how to collect data, sample size, and frequency of sampling  Set up an initial control chart 2. Collect Data  Record data  Calculate appropriate statistics  Plot statistics on chart

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 12

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 13 Next Steps 3. Determine trial control limits  Center line (process average)  Compute UCL, LCL 4. Analyze and interpret results  Determine if in control  Eliminate out-of-control points  Recompute control limits as necessary

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 14 Key Idea When a process is in statistical control, the points on a control chart fluctuate randomly between the control limits with no recognizable pattern.

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 15 Typical Out-of-Control Patterns  Point outside control limits  Sudden shift in process average  Cycles  Trends  Hugging the center line  Hugging the control limits  Instability

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 16 Shift in Process Average

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 17 Identifying Potential Shifts

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 18 Cycles

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 19 Trend

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 20 Final Steps 5. Use as a problem-solving tool  Continue to collect and plot data  Take corrective action when necessary 6. Compute process capability (variables data only) Question: What are the customer specifications for an attribute measure, such a number of defects or percentage of defectives?

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 21 Key Ideas Control charts indicate when to take action, and more importantly, when to leave a process alone. Dr. Deming coined the term “tampering” to refer to managers who make unnecessary changes to processes. Question: What does it mean to manage by exception? How do you do it?

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 22 Spreadsheet Template

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 23

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 24 Key Idea In determining the method of sampling, samples should be chosen to be as homogeneous as possible so that each sample reflects the system of common causes or assignable causes that may be present at that point in time.

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 25 Economic Tradeoffs Three standard deviations are typically used to create control charts. However, a balance must be established between false signals and missing special causes. If the consequence of missing a special cause is great, you can choose to use two (2) standard deviations for your control chart. Question: What will be the cost of making this decision?

MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 26 Control Charts and Dashboards nominal value Green Zone Yellow Zones Red Zone Red Zone LTLUTL