Ch15 Quality Control and Process Improvement

Question 1

Cost management

Answer 1

Key to cutting cost is identifying “root causes” - eliminating activities that reate costs

Second step: cut only activities without affecting ability to achieve strategic objectivities

Cost mgmt requires a detailed knowledge of the process and roles of various process activities

Question 2

Two broad groups of activities

Answer 2

Value-added activities

Non-value-added activities - to be eliminated but not to affect strategic objectivities

Question 3

Cost of quality

Answer 3

Most expensive place to discover poor quality is after delivery to the customer.

Largest cost of quality is the opportunity cost of lost sales due to poor quality or services delivered to customers - invisible at time of fairlure, not timely

Quality should be incorporated into the design and production processes through a series of cost-benefit decisions.

Four levels of cost accumulation:
1. external failure costs (warranty costs)
2. internal failure costs (end-point inspection)
3. process costs (prototype testing)
4. prevention or planning costs (computer modelling)

Question 4

Quality measurement tools

Answer 4

1. Statistical tools
   - stats process control (inputs and process)
   - stats quality control (outputs)
   - process capability analysis (mean and stand. deviation)
   - control chartes - graphical tool monitoring a process
2. Non-stats tools
   - cause-and-effect diagrams (fishbone)
   - check sheet (list process)

Question 5

Pareto analysis - 80/20 rule

Answer 5

to identify barriers to quality and prioritize them for process improvement

80% of the problems result from 20% of the work being performed

Question 6

Fishbone diagram

Answer 6

aka. cause-and-effect diagram
ishigawa diagram
Fishigawa diagram

Question 7

Process improvement tools
- for process / performance

Answer 7

1. Lean management

Question 8

Lean management

Answer 8

focus on elimination of any element in any business process that does not add value to the final product or service that a customer purchases and / or uses.

1. JIT mgmt system - pull ssytem; minimized RM WIP and FG
2. activity analysis
   - processing
   - moving
   - storing
   - inspecting
3. zero-defects approach
   no mistakes to be passed on the the next stage
   - inspecting costs
   - internal failure costs
   - external failure costs
   (cost of quality)

Question 9

Six Sigma - TQM

Answer 9

• reducing waste in all the processes
• reduce variation continuously by defining, measuring, analyzing, controlling and placing accountability for improving operational processes

Question 10

Supply chain management

Answer 10

to maximize value, balancing cost, time and quality involved in creation and delivery of goods and services