© 2004 prentice-hall, inc. basic business statistics (9 th edition) chapter 18 statistical...
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© 2004 Prentice-Hall, Inc.
Basic Business Statistics(9th Edition)
Chapter 18Statistical Applications in Quality and Productivity
Management
Chap 18-1
© 2004 Prentice-Hall, Inc. Chap 18-2
Chapter Topics
Total Quality Management (TQM) Theory of Management (Deming’s
Fourteen Points) Six Sigma® Management Approach The Theory of Control Charts
Common-cause variation versus special-cause variation
Control Charts for the Proportion of Nonconforming Items
© 2004 Prentice-Hall, Inc. Chap 18-3
Chapter Topics
Process Variability The c Chart Control Charts for the Mean and the
Range Process Capability
(continued)
© 2004 Prentice-Hall, Inc. Chap 18-4
Themes of Quality Management
1. Primary Focus on Process Improvement2. Most Variation in Process Due to System3. Teamwork is Integral to Quality
Management4. Customer Satisfaction is a Primary Goal5. Organizational Transformation Necessary6. Remove Fear7. Higher Quality Costs Less
© 2004 Prentice-Hall, Inc. Chap 18-5
Deming’s 14 Points: Point 1:
Plan
DoStudy
Act
Point 1. Create Constancy of Purpose
The Shewhart-Deming CycleFocuses on Constant Improvement
© 2004 Prentice-Hall, Inc. Chap 18-6
Point 2. Adopt New Philosophy
Better to be proactive and change before crisis occurs.
Point 3. Cease Dependence on Mass Inspection to Achieve Quality
Any inspection whose purpose is to improve quality is too late.
Deming’s 14 Points: Points 2 and 3
© 2004 Prentice-Hall, Inc. Chap 18-7
Point 4. End the Practice of Awarding Business on the Basis of Price Tag Alone
Develop long term relationship between purchaser and supplier.
Point 5. Improve Constantly and Forever
Reinforce the importance of the Shewhart-Deming cycle.
Deming’s 14 Points: Points 4 and 5
© 2004 Prentice-Hall, Inc. Chap 18-8
Deming’s 14 Points: Points 6 and 7
Point 6. Institute Training
Especially important for managers to understand the difference between special causes and common causes.
Point 7. Adopt and Institute Leadership
Differentiate between leadership and supervision. Leadership is to improve the system and achieve greater consistency of performance.
© 2004 Prentice-Hall, Inc. Chap 18-9
8. Drive Out Fear
9. Break Down Barriers between Staff Areas
10. Eliminate Slogans
11. Eliminate Numerical Quotas for Workforce and Numerical Goals for Management
12. Remove Barriers to Pride of Workmanship
Deming’s 14 Points: Points 8 to 12
300
© 2004 Prentice-Hall, Inc. Chap 18-10
Point 13. Encourage Education and Self-Improvement for Everyone
Improved knowledge of people will improve the assets of
the organization.
Point 14. Take Action to Accomplish Transformation
Continually strive toward improvement.
Deming’s 14 Points: Points 13 and 14
Quality is important
© 2004 Prentice-Hall, Inc. Chap 18-11
Six Sigma® Management A Managerial Approach Designed to
Create Processes that Result in No More Than 3.4 Defects Per Million
A Method for Breaking Processes into a Series of Steps in Order to Eliminate Defects and Produce Near Perfect Results (1) Define:Define: Define the problem along with
costs, benefits and the impact on customers (2) MeasureMeasure: Develop operational definitions
for each Critical-to-Quality characteristic and verify measurement procedure to achieve consistency over repeated measurements
© 2004 Prentice-Hall, Inc. Chap 18-12
Six Sigma® Management
(3) AnalyzeAnalyze: Use control charts to monitor defects and determine the root causes of defects
(4) ImproveImprove: Study the importance of each process variable on the Critical-to-Quality characteristic to determine and maintain the best level for each variable in the long term
(5) ControlControl: Avoid potential problems that occur when a process is changed and maintain the gains that have been made in the long term
(continued)
© 2004 Prentice-Hall, Inc. Chap 18-13
Control Charts
Monitor Variation in Data Exhibit trend - make correction before
process is out of control A Process - A Repeatable Series of Steps
Leading to a Specific Goal
© 2004 Prentice-Hall, Inc. Chap 18-14
Control Charts
Show When Changes in Data are Due to: Special or assignable causes
Fluctuations not inherent to a process Represent problems to be corrected Data outside control limits or trend
Chance or common causes Inherent random variations Consist of numerous small causes of random
variability
(continued)
© 2004 Prentice-Hall, Inc. Chap 18-15
Graph of sample data plotted over time
Process Control Chart
020406080
1 2 3 4 5 6 7 8 9 101112
X
Time
Special Cause Variation
Common Cause Variation
Process Average
Mean
UCL
LCL
© 2004 Prentice-Hall, Inc. Chap 18-16
Control Limits
UCL = Process Average + 3 Standard Deviations
LCL = Process Average - 3 Standard Deviations
Process Average
UCL
LCL
X
+ 3
- 3
TIME
© 2004 Prentice-Hall, Inc. Chap 18-17
Types of Error
First Type: Belief that observed value represents special
cause when, in fact, it is due to common cause
Second Type: Treating special cause variation as if it is
common cause variation
© 2004 Prentice-Hall, Inc. Chap 18-18
Comparing Control Chart Patterns
X XX
Common Cause Variation: No Points
Outside Control Limits
Special Cause Variation: 2 Points
Outside Control Limits
Downward Pattern: No Points Outside Control Limits but
Trend Exists
© 2004 Prentice-Hall, Inc. Chap 18-19
When to Take Corrective Action
Corrective Action Should Be Taken When Observing Points Outside the Control Limits or when a Trend Has Been Detected Eight consecutive points above the center
line (or eight below) Eight consecutive points that are increasing
(decreasing)
© 2004 Prentice-Hall, Inc. Chap 18-20
Out-of-Control Processes
If the Control Chart Indicates an Out-of-Control Condition (a Point Outside the Control Limits or Exhibiting Trend) Contains both common causes of variation
and assignable causes of variation The assignable causes of variation must be
identified If detrimental to quality, assignable causes of
variation must be removed If increases quality, assignable causes must
be incorporated into the process design
© 2004 Prentice-Hall, Inc. Chap 18-21
In-Control Process
If the Control Chart is Not Indicating Any Out-of-Control Condition, then Only common causes of variation exist It is sometimes said to be in a state of
statistical control If the common-cause variation is small, then
control chart can be used to monitor the process
If the common-cause variation is too large, the process needs to be altered
© 2004 Prentice-Hall, Inc. Chap 18-22
p Chart Control Chart for Proportions
Is an attribute chartattribute chart Shows Proportion of Nonconforming Items
E.g., Count # of nonconforming chairs & divide by total chairs inspected
Chair is either conforming or nonconforming Used with Equal or Unequal Sample Sizes
Over Time Unequal sizes should not differ by more than
±25% from average sample size
© 2004 Prentice-Hall, Inc. Chap 18-23
p Chart Control Limits
(1 )3p
p pLCL p
n
(1 )3p
p pUCL p
n
1
k
ii
nn
k
Average Group Size
1
1
k
ii
k
ii
Xp
n
Average Proportion of Nonconforming Items
# Defective Items in Sample i
Size of Sample i
# of Samples
© 2004 Prentice-Hall, Inc. Chap 18-24
p Chart Example
You’re manager of a 500-room hotel. You want to achieve the highest level of service. For 7 days, you collect data on the readiness of 200 rooms. Is the process in control?
© 2004 Prentice-Hall, Inc. Chap 18-25
p Chart Hotel Data
# NotDay # Rooms Ready Proportion
1 200 16 0.0802 200 7 0.0353 200 21 0.1054 200 17 0.0855 200 25 0.1256 200 19 0.0957 200 16 0.080
© 2004 Prentice-Hall, Inc. Chap 18-26
1
1
121.0864
1400
k
ii
k
ii
Xp
n
p Chart Control Limits Solution
16 + 7 +...+ 16
1 1400200
7
k
ii
nn
k
1 .0864 1 .08643 .0864 3
200
.0864 .0596 or .0268,.1460
p pp
n
© 2004 Prentice-Hall, Inc. Chap 18-27
Mean
p Chart Control Chart Solution
UCL
LCL
0.00
0.05
0.10
0.15
1 2 3 4 5 6 7
P
Day
Individual points are distributed around without any pattern. Any improvement in the process must come from reduction of common-cause variation, which is the responsibility of the management.
p
p
© 2004 Prentice-Hall, Inc. Chap 18-28
p Chart in PHStat
PHStat | Control Charts | p Chart …
Excel Spreadsheet for the Hotel Room Example
Microsoft Excel Worksheet
© 2004 Prentice-Hall, Inc. Chap 18-29
Worker Day 1 Day 2 Day 3 All Days
A 9 (18%) 11 (12%) 6 (12%) 26 (17.33%)
B 12 (24%) 12 (24%) 8 (16%) 32 (21.33%)
C 13 (26%) 6 (12%) 12 (24%) 31(20.67%)
D 7 (14%) 9 (18%) 8 (16%) 24 (16.0%)
Totals 41 38 34 113
Understanding Process Variability:
Red Bead Example
Four workers (A, B, C, D) spend 3 days to collect beads, at 50 beads per day. The expected number of red beads to be collected per day per worker is 10 or 20%.
© 2004 Prentice-Hall, Inc. Chap 18-30
Average Day 1 Day 2 Day 3 All Days
X 10.25 9.5 8.5 9.42
p 20.5% 19% 17% 18.83%
Understanding Process Variability:
Example Calculations
113.1883
50(12)p
(1 ) .1883(1 .1883)3 .1883 3
50 .1883 .1659
p pp
n
_
.1883 .1659 .0224
.1883 +.1659 .3542
LCL
UCL
© 2004 Prentice-Hall, Inc. Chap 18-31
0 A1 B1 C1 D1 A2 B2 C2 D2 A3 B3 C3 D3
Understanding Process Variability:
Example Control Chart
.30
.20
.10
p
UCL
LCL
_
© 2004 Prentice-Hall, Inc. Chap 18-32
Morals of the Example
Variation is an inherent part of any process. The system is primarily responsible for worker performance. Only management can change the system. Some workers will always be above average, and some will be below.
© 2004 Prentice-Hall, Inc. Chap 18-33
The c Chart
Control Chart for Number of Nonconformities (Occurrences) in a Unit (an Area of Opportunity) Is an attribute chartattribute chart
Shows Total Number of Nonconforming Items in a Unit E.g., Count # of defective chairs
manufactured per day Assume that the Size of Each Subgroup
Unit Remains Constant
© 2004 Prentice-Hall, Inc. Chap 18-34
c Chart Control Limits
3cLCL c c 3cUCL c c
1
k
ii
cc
k
Average Number of Occurrences
# of Samples
# of Occurrences in Sample i
© 2004 Prentice-Hall, Inc. Chap 18-35
c Chart: Example
You’re manager of a 500-room hotel. You want to achieve the highest level of service. For 7 days, you collect data on the readiness of 200 rooms. Is the process in control?
© 2004 Prentice-Hall, Inc. Chap 18-36
c Chart: Hotel Data
# NotDay # Rooms Ready
1 200 162 200 73 200 214 200 175 200 256 200 197 200 16
© 2004 Prentice-Hall, Inc. Chap 18-37
c Chart: Control Limits Solution
1 16 7 19 1617.286
7
3 17.286 3 17.285 4.813
3 29.759
k
ii
c
c
cc
k
LCL c c
UCL c c
© 2004 Prentice-Hall, Inc. Chap 18-38
c Chart: Control Chart Solution
UCL
LCL0
10
20
30
1 2 3 4 5 6 7
c
Day
c
Individual points are distributed around without any pattern. Any improvement in the process must come from reduction of common-cause variation, which is the responsibility of the management.
c
© 2004 Prentice-Hall, Inc. Chap 18-39
Variables Control Charts: R Chart
Monitors Variability in Process Characteristic of interest is measured on
numerical scale Is a variables control chartvariables control chart
Shows Sample Range Over Time Difference between smallest & largest
values in inspection sample E.g., Amount of time required for luggage to
be delivered to hotel room
© 2004 Prentice-Hall, Inc. Chap 18-40
R Chart Control Limits
Sample Range at Time i or Sample i
# Samples
From Table4RUCL D R
3RLCL D R
1
k
ii
RR
k
© 2004 Prentice-Hall, Inc. Chap 18-41
R Chart Example
You’re manager of a 500-room hotel. You want to analyze the time it takes to deliver luggage to the room. For 7 days, you collect data on 5 deliveries per day. Is the process in control?
© 2004 Prentice-Hall, Inc. Chap 18-42
R Chart and Mean Chart Hotel Data
Sample SampleDay Average Range
1 5.32 3.852 6.59 4.273 4.88 3.284 5.70 2.995 4.07 3.616 7.34 5.047 6.79 4.22
© 2004 Prentice-Hall, Inc. Chap 18-43
R Chart Control Limits Solution
From Table (n = 5)
1 3.85 4.27 4.223.894
7
k
ii
RR
k
4
3
2.114 3.894 8.232
0 3.894 0
R
R
UCL D R
LCL D R
© 2004 Prentice-Hall, Inc. Chap 18-44
R Chart Control Chart Solution
UCL
02468
1 2 3 4 5 6 7
Minutes
Day
LCL
R_
© 2004 Prentice-Hall, Inc. Chap 18-45
Variables Control Charts: Mean Chart (The Chart)
Shows Sample Means Over Time Compute mean of inspection sample over
time E.g., Average luggage delivery time in hotel
Monitors Process Average Must be preceded by examination of the R
chart to make sure that the process is in control
X
© 2004 Prentice-Hall, Inc. Chap 18-46
Mean Chart
Sample Range at Time i
# Samples
Sample Mean at Time i
Computed From Table
2XUCL X A R
2XLCL X A R
1 1 and
k k
i ii i
X RX R
k k
© 2004 Prentice-Hall, Inc. Chap 18-47
Mean Chart Example
You’re manager of a 500-room hotel. You want to analyze the time it takes to deliver luggage to the room. For 7 days, you collect data on 5 deliveries per day. Is the process in control?
© 2004 Prentice-Hall, Inc. Chap 18-48
R Chart and Mean Chart Hotel Data
Sample SampleDay Average Range
1 5.32 3.852 6.59 4.273 4.88 3.284 5.70 2.995 4.07 3.616 7.34 5.047 6.79 4.22
© 2004 Prentice-Hall, Inc. Chap 18-49
Mean Chart Control Limits Solution
1
1
2
2
5.32 6.59 6.795.813
7
3.85 4.27 4.223.894
7
5.813 0.577 3.894 8.060
5.813 0.577 3.894 3.566
k
i
i
k
ii
X
X
XX
k
RR
k
UCL X A R
LCL X A R
From Table E.9 (n = 5)
© 2004 Prentice-Hall, Inc. Chap 18-50
Mean Chart Control Chart Solution
UCL
LCL
02468
1 2 3 4 5 6 7
Minutes
Day
X__
© 2004 Prentice-Hall, Inc. Chap 18-51
R Chart and Mean Chartin PHStat
PHStat | Control Charts | R & Xbar Charts …
Excel Spreadsheet for the Hotel Room Example
Microsoft Excel Worksheet
© 2004 Prentice-Hall, Inc. Chap 18-52
Process Capability Process Capability is the Ability of a Process
to Consistently Meet Specified Customer-Driven Requirements
Specification Limits are Set by Management in Response to Customer’s Expectations
The Upper Specification Limit (USL) is the Largest Value that Can Be Obtained and Still Conform to Customer’s Expectation
The Lower Specification Limit (LSL) is the Smallest Value that is Still Conforming
© 2004 Prentice-Hall, Inc. Chap 18-53
Estimating Process Capability
Must Have an In-Control Process First Estimate the Percentage of Product or
Service Within Specification Assume the Population of X Values is
Approximately Normally Distributed with Mean Estimated by and Standard Deviation Estimated by
X
2/R d
© 2004 Prentice-Hall, Inc. Chap 18-54
Estimating Process Capability
For a Characteristic with an LSL and a USL
where Z is a standardized normal random variable
(continued)
2 2
P(an outcome will be within specification)
P( )
= P/ /
LSL X USL
LSL X USL XZ
R d R d
© 2004 Prentice-Hall, Inc. Chap 18-55
Estimating Process Capability
For a Characteristic with Only a LSL
where Z is a standardized normal random variable
(continued)
2
P(an outcome will be within specification)
P( )
= P/
LSL X
LSL XZ
R d
© 2004 Prentice-Hall, Inc. Chap 18-56
Estimating Process Capability
For a Characteristic with Only a USL
where Z is a standardized normal random variable
(continued)
2
P(an outcome will be within specification)
P( )
= P/
X USL
USL XZ
R d
© 2004 Prentice-Hall, Inc. Chap 18-57
You’re manager of a 500-room hotel. You have instituted a policy that 99% of all luggage deliveries must be completed within 10 minutes or less. For 7 days, you collect dataon 5 deliveries per day. Is the process capable?
Process Capability Example
© 2004 Prentice-Hall, Inc. Chap 18-58
Process Capability:Hotel Data
Sample SampleDay Average Range
1 5.32 3.852 6.59 4.273 4.88 3.284 5.70 2.995 4.07 3.616 7.34 5.047 6.79 4.22
© 2004 Prentice-Hall, Inc. Chap 18-59
Process Capability:Hotel Example Solution
5.813X 3.894R 2and 2.326d
P(A delivery is made within specification)
= P( 10)
10 5.813= P
3.894 / 2.326
= P( 2.50) .9938
X
Z
Z
5n
Therefore, we estimate that 99.38% of the luggage deliveries will be made within the 10 minutes or less specification. The process is capable of meeting the 99% goal.
© 2004 Prentice-Hall, Inc. Chap 18-60
Capability Indices
Aggregate Measures of a Process’ Ability to Meet Specification Limits The larger (>1) the values, the more capable
a process is of meeting requirements Measure of Process Potential Performance
Cp>1 implies that a process has the potential of having more than 99.73% of outcomes within specifications
2
specification spread
process spread6 /p
USL LSLC
R d
© 2004 Prentice-Hall, Inc. Chap 18-61
Capability Indices
Measures of Actual Process Performance For one-sided specification limits
CPL (CPU) >1 implies that the process mean is more than 3 standard deviations away from the lower (upper) specification limit
(continued)
23 /
X LSLCPL
R d
23 /
USL XCPU
R d
© 2004 Prentice-Hall, Inc. Chap 18-62
Capability Indices
For two-sided specification limits Cpk = 1 indicates that the process average is 3
standard deviations away from the closest specification limit
Larger Cpk indicates larger capability of meeting the requirements
(continued)
min ,pkC CPL CPU
© 2004 Prentice-Hall, Inc. Chap 18-63
You’re manager of a 500-room hotel. You have instituted a policy that all luggage deliveries must be completed within 10 minutes or less. For 7 days, you collect data on 5 deliveries per day. Compute an appropriate capability index for the delivery process.
Process Capability Example
© 2004 Prentice-Hall, Inc. Chap 18-64
Process Capability:Hotel Data
Sample SampleDay Average Range
1 5.32 3.852 6.59 4.273 4.88 3.284 5.70 2.995 4.07 3.616 7.34 5.047 6.79 4.22
© 2004 Prentice-Hall, Inc. Chap 18-65
Process Capability:Hotel Example Solution
5.813X 3.894R 2and 2.326d 5n
Since there is only the upper specification limit, we need to only compute CPU. The capability index for the luggage delivery process is .8337, which is less than 1. The upper specification limit is less than 3 standard deviations above the mean.
2
10 5.8130.833672
3 3.894 / 2.3263 /
USL XCPU
R d
© 2004 Prentice-Hall, Inc. Chap 18-66
Chapter Summary
Described Total Quality Management (TQM)
Addressed the Theory of Management Deming’s 14 Points
Described the Six Sigma® Management Approach
Discussed the Theory of Control Charts Common-cause variation versus special-
cause variation
© 2004 Prentice-Hall, Inc. Chap 18-67
Chapter Summary
Computed Control Charts for the Proportion of Nonconforming Items
Described Process Variability Described c Chart Computed Control Charts for the Mean
and the Range Discussed Process Capability
(continued)