3 QUALITY MANAGEMENT

ANSWERS TO QUESTIONS

3-1. Consumers perceive quality to be how well a product meets itsintended use—that is, how well it does what it is supposed todo—whereas from the product’s perspective, quality is howwell the product conforms to its design during the productionprocess.

3-7. The contractor could be experiencing low productivity yieldsand have extensive internal failure costs, including scrap,rework, process failure, and downtime costs.

3-8. a. From the consumer’s (e.g., student or parent) perspective,quality is probably determined by whether the collegeeducation provides the job opportunity expected andwhether the graduate perceives he or she has acquired ananticipated level of knowledge that will enable thegraduate to perform the job effectively. From theproducer’s (e.g., university) perspective, quality is howeffectively it is able to deliver knowledge (i.e., requiredcourses) and provide the quality of life experienceexpected by the student.

3-2. 1. Performance: operating characteristics of a product2. Features: extra items added to basic characteristics3. Reliability: probability that a product will operate

properly4. Conformance: the degree to which a product meets

standards5. Durability: how long the product lasts6. Serviceability: ease and speed of repair and courtesy of

repair person b. The education achieved by the student provides the jobopportunities expected and a level of knowledge thatenables the graduate effectively to perform the jobachieved.

7. Aesthetics: how a product looks, feels, sounds, smells, ortastes

8. Other: subjective perceptions based on brand name oradvertising c. Quality-assurance costs include the cost of hiring the best

faculty, administrators, and support personnel, the cost ofdesigning and redesigning courses and curriculum to meetchanging needs, the cost of providing a good physical andmental environment (i.e., housing, food, entertainment,security, etc.), the cost of modern technical teachingequipment, the cost of information systems, and the costof assessing alumni satisfaction with their education.Costs of poor quality include students who fail or dropout, reduced funding from the state or private donors, andfewer enrollments.

3-3. Quality of design is the degree to which quality characteristicsare designed into a product, whereas quality of conformance ishow effectively the production process is able to conform tothe specifications required by design.

3-4. Marketing is the primary point of contact with the consumer;as such, it is responsible for determining the qualitycharacteristics the consumer wants and needs and the price theconsumer is willing to pay, which in turn is a primarydeterminant of product and process design. d. Quality circles could be developed within administrative

and operational units and academic departments. Circlesmight include both faculty or administrators and classifiedemployees. The normal quality circle stages of training,problem identification, analysis, solution, andpresentation could be followed.

Purchasing must make sure that parts and materials required byproduct specifications are of desired quality by selectingquality-conscious vendors and monitoring the quality of partsand materials.

3-5. The cost of quality assurance is the cost of maintaining aneffective quality program and includes prevention andappraisal costs. The cost of nonconformance, or poor quality,is the result of internal and external failures. These two costsreact oppositely to each other; as the cost of quality assuranceincreases, the cost of poor quality decreases.

3-9. The traditional U.S. perspective on the economics of quality isthe classical economic approach wherein the level of qualitycoincides with the minimum point on the total quality costcurve, exhibiting a trade-off between the cost of poor qualityand the cost of quality assurance. The Japanese approachshifts the optimal quality point to the right toward the100 percent quality level, believing that the U.S. perspectiveunderestimates the high cost of poor quality.3-6. Internal failure costs are incurred when poor quality is

discovered before the product is delivered to the customer,whereas external failure costs are incurred after a customerreceives a poor-quality product. Internal failure costs includescrap, rework, process failure, and downtime, whereas externalfailure costs include customer complaints, product returns,warranty claims, product liability, and lost sales.

3-10. The Japanese have a cultural affinity for group participation inquality management programs that U.S. workers andsupervisors do not share. American managers are oftenreluctant to share functional responsibilities with workers andview problem solving as part of their exclusive job domain.

8

9

3-11. The products of a fast-food franchise such as McDonald’s areboth food and rapid service. A quality assurance programmight impact the functional areas of the firm as follows.

A quality management program could incorporate a system tomonitor calls to ensure prompt, courteous, and knowledgeableservice. An employee-involvement program, whereinoperators might identify problems, would be beneficial.

Marketing: Ascertain what food products the consumerdesires, the expected quality level of the product, includingingredients, and the level of service (speed) with which theproduct should be delivered.

3-16. Prevention costs are directed at preventing poor qualityproducts from reaching the customer, thus avoiding the variousinternal and external failure costs associated with poor quality.

Engineering: Design the food product to meet customerexpectations, including size, smell, taste, appearance, etc. 3-17. It is important to have a means for assessing the impact of

quality improvement programs on the organization’sprofitability and productivity.

Purchasing: Select vendors that meet quality standards foringredients.Employees: Prepare quality products, maintain a sanitaryworkplace, and participate in employee-involvement programsto make certain problems are addressed or brought tornanagement’s attention.

3-18. The traits are focusing quality management on continuousprocess improvement, emphasizing statistical quality processcontrol, providing extensive worker training, assumingmanagement responsibility for quality improvement, andproviding employee involvement in quality improvementprograms.

Personnel: Train employees and local franchise managers sothat food is prepared properly and delivered on time withcourteous service.Management: Implement food processing and productionaccording to quality specifications, and assure that employeesare preparing food products according to specifications,equipment is functioning properly, and schedules are met forrapid service.

3-19. W.E. Deming: Introduced the Japanese to quality managementprinciples and philosophy, embodied in his 14 points.Joseph Juran: A major contributor to the Japanese qualitymovement.

Inspection. Monitor food products and service levels to makesure they conform to quality specifications

Phillip Crosby: Changed general perceptions of cost of qualityand promoted zero defects.

Packaging: Make sure packaging is attractive, makes foodappetizing and sanitary, and controls food temperatureproperly.

Armand Feigenbaum: Introduced the concept of total qualitycontrol, a total company-wide approach to qualitymanagement.

Customer service: Provide a system for customer feedback. Kuro Ishikawa: Introduced quality circles and cause and effectdiagrams.

3-12. Improving quality will increase product yield—that is, thenumber of acceptable units—thus increasing productivity.

Genichi Taguchi: Developed the Taguchi method for productand process design.

3-13. The cost of poor quality could include external failure costs forcustomer complaints, returned VCRs to be repaired underwarranty, lost future sales, and liability costs if someone is hurtbecause of the problem. Costs of quality assurance mightinclude improved design costs for the VCR, process costs, andinspection costs for the final product and at various stages ofthe VCR-production process.

3-20. The Baldrige Award has had a pervasive impact on Americancompanies, in general promoting quality improvement.Thousands of companies request award applications each yearto use simply to establish quality management programs basedon Baldrige Award criteria.

3-21. This should be a student project. The journal can be found inmost libraries, and the articles are generally easy to read.

3-14. VCR: Visual attractiveness, size, weight, clarity of sound andpicture, and features for rewind and fast-forward, programsearch, programming, playback, etc.

3-22. The student could provide many reasons for failure includinglack of total commitment, ineffective planning, goals too easyor too difficult to achieve, improper measurement techniques,ineffective leadership, not enough employee training, etc.

Pizza: Size, ingredients, taste, smell, service in delivery,temperature.Running shoes: Size, weight, comfort, visual attractiveness,durability. 3-23. The dimensions of quality for a service company are located in

the text. The student should identify these or similar ones forthe company they select.3-15. The input is customer inquiries and the final product is

responses that result in customer satisfaction. Associatedquality costs might include prevention costs, such as designinga telephone system to ensure prompt connections withoutwaiting and a properly designed computer system to provideaccurate customer account information, and training costs tomake certain service operators are courteous andknowledgeable. Appraisal costs might include the cost ofmonitoring service calls to ascertain response rates andoperator courtesy. Poor quality might result in complaintsfrom customers and lost accounts.

3-24. The two service companies should be in the community andthe quality characteristics the students will tend to focus onwill include courtesy, and, quickness of service.

3-25. Although students in this class might suggest that grades are aquality measurement a more realistic approach to evaluationare student evaluations of the class or surveys of students.Quality characteristics might include course organization,presentation of lectures, class environment, physical

10

appearance of the classroom, schedule (i.e., are the lecturescompleted on time), the quality of supplementary material,physical appearance and demeanor of the instructor, includingfriendliness and courtesy, the accuracy and completeness ofassignments, etc.

reaching the consumer, as evidenced by the sharp declinein external failure costs.

b.Prevention costs as

% of quality costs:

Appraisal costs as

% of quality costs:

or 1.71%; or 14.04%

or .3%; or

or or

or or

or or

19953 2

187 20 0171

26 3

187 201404

199610 7

20170 0530 5

29 2

201701448 14.48%

199728 3

212 501332 13.32%;

30 6

212 50144 14.4%

199842 6

193 90 2197 21.97%;

241

193 901243 12.43%

199950

166 90 2996 29.96%;

19 6

166 901174 11.74%

:.

.. ,

.

.. ,

:.

.. ,

.

.. ,

:.

.. ,

.

.. ,

:.

.. ,

.

.. ,

:.

. ,.

.. ,

= =

= =

= =

= =

= =

3-26. The answer depends on the company selected by the student.For example, there is a particular hotel that has never gotten aroom reservation right for us, and, the instructions for orderingtickets at the web site for the 1996 Olympics in Atlanta werelittered with pitfalls. Airlines are a favorite example of a poorquality service for students who travel.

3-27. A similar question to 26. Restaurants, retail stores and grocerystores are examples of local businesses that, in our experience,tend to vary in quality. We have never had a bad orderingexperience with L.L. Bean although that’s not true of someother mail order operations we have dealt with. In most cases,if a service has been identified by the student it will be becauseof courteous, helpful employees, while if a manufacturingproduct has been identified, it will be because of superiorphysical traits, such as durability.

The increase in prevention costs as a percentage of totalquality costs indicates that Backwoods American isplacing more emphasis on prevention of defects ratherthan correction of them. Perhaps they are spending morein the areas of quality planning, product design, process,training, and information. This is contributing to adecline in the need for inspection and testing, equipmenttesting, and operators to test quality; thus appraisal costsdecline, both absolutely and as a percentage of total costs.Prevention also contributes to the decline in external andinternal failures, because fewer defective products areproduced to begin with. Increases in preventionexpenditures will result in a decrease in all other qualitycosts.

3-28. TQM tends to give some focus and structure to strategicplanning. TQM provides identifiable goals, and many well-documented initiatives for quality improvement such as qualitycircles, employee training, empowerment, etc. TQM alsoprovides a means for measuring success which is essential in astrategic planning process.

3-29. Many U.S. suppliers cannot do business with companiesoverseas unless they have ISO certification. In addition, manyU.S. companies also desire or request their suppliers to complywith ISO 9000 standards.

c.Quality Sales Index Quality-Cost Index

1995 6.93 44.481996 7.50 47.64

3-30. Common characteristics that the students will discover includestrong leadership at the top, total company commitment,employee training, involvement and empowerment,challenging goals for quality achievement, focus on customersatisfaction, and extensive use of statistical quality controltechniques, among other things.

1997 7.85 50.041998 6.90 44.461999 5.79 38.32

These index values do not provide much informationregarding the effectiveness of the quality assuranceprogram. They are, however, useful in makingcomparisons from one period to the next and in showingtrends in product quality over time.

SOLUTIONS TO PROBLEMS

3-1. a. Failure costs as percentage of quality costs: d. Examples of quality-related costs:• Prevention: Market research, that is, producing what

consumers want; purchasing only high-quality downand other materials, designing an efficient andeffective manufacturing process; training employeesin making quality products.

1995157 7

187 20 8424 84 24%

19961618

20170 8022 80 22%

1997153 6

212 50 7228 72.28%

1998127 2

193 90 6560 65.6%

199997 3

166 90 5830 58.3%

:.

.. ,

:.

.. , .

:.

.. ,

:.

.. ,

:.

.. ,

or .

or

or

or

or

=

=

=

=

=

• Appraisal: Inspection of raw materials, work-in-process, and finished product; equipment testing(pattern cutter, sewing machines, etc.), inspection.

• Internal failure: Wasted materials and labor,defective products discovered during inspection, useof inefficient processes, equipment downtime, poorlytrained employees.

• External failure: Defective products, customercomplaints, warranty costs, lost sales, loss of goodwill.

The failure costs decrease as a percentage of total qualitycosts. This may be attributed to an increase in productmonitoring and inspection. Fewer defective products are

11

3-2. a. Product yield In this case total direct manufacturing cost = $278,000 , and

total direct rework cost = ( )( )( ) =32,000 0 22 0 25 2 520. . $3,1995 20 000 0 83 20 000 1 0 83 0 20 16 600 680

17 280

: , . , . . ,

parkas

( ) ( )( )+ − = += , 1998: Yield

Product Cost

= + (= + == + ÷ =

( ) ( ) )

( )

34 600 0 83 34 600 017 0 25

28 718 1 470 50 30 188 50

291 000 2 941 30 188 50 74

, . , . .

, , . , .

, , , . $9.

1996 20 000 0 85 20 000 015 0 20 17 000 600

17 600

: , , .

parkas

. . ,

,

( + ( = +=

) )( )

1997 20 000 0 87 20 000 013 0 20 17 400 520

17 920

: , . , . ,

parkas

( ) ( )( )+ = +=

.

, 1999: Yield

Product Cost

= + (= + == +( ÷ =

( ) ( ) )

)

35 500 0 9 35 500 01 0 25

31 950 887 50 32 837 50

305 000 1 775 32 837 50 34

, . , . .

, . , .

, , , . $9.

1998 20 000 0 89 20 000 011 0 20 17 800 440

18 240

: , . , .

parkas

( ) ( )( )+ = +=

. ,

,1999 20 000 0 91 20 000 0 09 0 20 18 200 360

18 560

: , , . ,

parkas

. .

,

( ) ( )( )+ = += Percentage change:

b. Manufacturing cost per good parka: 1997-1998: –7.60%1998-1999: –4.10%

1995420 900 12 680

17 280

429 060

17 28083

1996423 400 12 600

17 600

430 600

17 60047

1997424 700 12 520

17 920

430 940

17 92005

1998436 106 12 440

18 240

441380

18 24020

1999435 500 12 360

18 560

439 820

18 56070

:,

,

,

,$24.

:,

,

,

,$24.

:,

,

,

,$24.

:,

,

,

,$24.

:,

,

,

,$23.

+ = =

+ = =

+ (= =

+ = =

+ = =

( )

( )

)

( )

( )

3-6. a. Product yield

cabinets

= ( )( )( )( )( )( )=

300 087 0 91 0 94 0 93 0 93 0 96

185

. . . . . .

b. For a yield of 300, input would have to be

I

I

I

087 0 91 0 94 0 93 0 93 0 96 300

0 6179 300

486 cabine

. . . . . .

.

( )( )( )( )( )( ) =( ) =

= ts

3-7. a. Alt. 1: 300 0 93 0 91 094 0 93 0 93 0 96 198. . . . . .( )( )( )( )( )( ) =

Alt. 2: 300 087 096 0 94 0 97 0 93 0 96 203. . . . . .( )( )( )( )( )( ) = ←Improving the quality assurance program has resulted infewer defective parkas, lower rework costs, and greaterproductivity. This has lowered the per-unitmanufacturing costs without additional capitalinvestment.

Greatest yieldAlt. 3: 300 087 091 0 94 0 93 097 0 98 197. . . . . .( )( )( )( )( )( ) =Alt. 4: 300 087 097 0 94 0 93 093 0 96 197. . . . . .( )( )( )( )( )( ) =

b. Alternative 2 will result in the highest yield and will bethe most effective.

3-3. a. y I G I G R= ( )( ) + ( ) −( )( )= ( )( ) + ( ) −( )( )=

% % %

. . .

.

1

150 083 150 1 083 0 60

139 8 file cabinets

3-8. 320 1 012 1 0 08 1 0 04 320 088 0 92 0 96

248 errorl

−( ) −( ) −( ) = ( )( )( )=

. . . . . .

ess orders

b. 145 150 150 1 0 60

145 150 150 150 0 60

145 150 90 90

55 60

55

600 916 916%

= ( )( ) + ( ) −( )( )= + −( )( )= + −=

= = =

% % .

.

. .

G G

G G

G G

G

G

3-9. a. QPR = +(+ (

=)( )

( ) )

585 16 100

650 18 16 3 75511

..

b. QPR = +( )( )( ) + ( )

=720 20 100

800 18 20 375511

..

c. QPR =+(

( +=

)( )

) ( )

585 16 100

650 16 50 16 3 205 58

. ..

3-4. Cost =( ) + ( )

= + = =27 150 8 15

139

4,050 120

139

4,170

139$30 d. QPR =

++ (

=( )( )

( ) )

604 11 100

650 18 11 3 755 24

..

per cabinet if quality is 90%,

Cost =( ) + ( )

= =27 150 8 9

144

4,122

14463$28. per cabinet 3-10. a. QPR =

( )( ) + ( )

=250 100

250 47 33 162 04.

if quality is 83%b. QPR =

+=

( )

( ) ( )

320 100

320 42 19 2 122 34

..

3-5. Manufacturing cost per good product:

1997: Yield

Product Cost

= + (= + == +( ÷ =

( ) ( ) )

)

32 000 0 78 32 000 0 22 0 25

24 960 1 760 26 720

278 000 3520 26 720 54

, . , . .

, , ,

, , $10.

12

3-11. a. Product cost =( ) + ( )

=( )( ) + ( )( )

=

=

K I K R

Yd r� � � �

$6. . .

..

.$6.

15 680 175 2 72

65552418676

6555238

process. However, in a university environment, is the product also thecustomer? This is an interesting question to begin with.

An initial step should be to develop a customer definition ofquality—that is, what are the dimensions of quality in an educationthat parents, students, and legislators expect? This step can beaccomplished by surveying alumni, potential employers, parents,students, and legislators. It would also be beneficial to see what thecompetition (other colleges and universities) does.

b. Product cost

Cost savings order

Annual savings order day

days year

=( )( ) + ( )( )

=

=== ××=

$6. . .

..

.$6.

$0.

$0.

$29,

20 680 175 0 68

67388421719

6738826

12

12 680 orders

365

784

The various support functions in the university should be identified interms of a production process. For example, the admissions office isanalogous to the purchasing department. A key problem here in aTQM approach is that the university has little, if any, control oversuppliers (high schools). As a result, admissions must instituteinspection and process control procedures to ensure high-quality rawmaterial (i.e., students), is admitted.

The product-design function, or curriculum design, is typicallydecentralized in a university among various colleges and departments.In some cases, the university administration will design a corecurriculum for the first two years and college and departments willdesign the curriculum for the last two.

c. It is likely that some customers who receive defectiveorders will not return, thus, fewer defective orders willretain more customers and also increase the number oforders.

3-12. a. QPR =( )( ) + ( )( )

( ) =65552

680 615 2 72 175100 1566

.

. . ..

The production process is the movement of students through thecurriculum to graduation. Discussion should focus on how to instituteprocess control in order to avoid final product “defects.” Thisobviously requires a definition as to what a defective item is—astudent who enters but fails to graduate, a student who graduates butdoes not gain employment, or a graduate who indicatesdisappointment with his or her education five years from now. Anarea on which to focus is the degree to which quality control toolssuch as brainstorming, quality circles, histograms, check sheets, andfishbone diagrams can be used to evaluate the process.

b. QPR =( )( ) + ( )( )

( ) =67388

680 6 20 0 68 175100 1598

.

. . ..

CASE: Designing A Quality Management Program for theInternet at D4Q

This can be an instructive, hands-on case project. The students shouldfirst search the Internet for different web sites at which retail items canbe ordered. They should next develop a list of quality characteristicsor dimensions to focus on. These might include the visualappearance of the web site, the friendliness of the language used, theaccuracy of instructions, the availability of e-mail or telephonesupport, etc. An attractive web site should probably include photos ofthe catalog items, for example book jackets, CD covers and videojackets, instead of just item titles. Instructions for ordering should bedetailed and accurate with help icons located at every step. Customersupport should be easy to access with e-mail or by telephone.Responses to requests for support should be quick. Servicemeasurement is difficult in this type of operation. If an order center isused then the company can count the number of customers who enterthe center then abort as the result of poor instructions. Follow upsurveys of customers who place orders or request hard copy catalogs isa good way to evaluate service. From the server end, the serverresponses to customer inquiries can be monitored for accuracy,completeness and timeliness. These are just a few of the possiblequality initiatives you might suggest to develop a high quality web siteordering system.

Customer service would seem to be an integral part of a TQMapproach in the university. This service would focus on supportservices such as dining, recreation, housing, advising, counseling,extracurricular activities, entertainment, placement, alumni services,etc.

Depending on the time designated to spend on this case, studentsmight interview various administrators at their own university todetermine where TQM can be applied in the university and obstaclesto a TQM approach.

CASE: Product Yield at Continental Luggage Company

Average Weekly Yield

Stage 1 yield: Y I G I G R

Y

1

1

1

500 094 500 0 06 0 23

470 6 9

4769

= ( )( ) + −( )( )= ( ) + ( )( )= +=

% % %

. . .

.

.CASE: TQM at State University Stage 2 yield: Y

Y

2

2

4769 0 96 4769 0 04 0 91

457 82 17 36

4752

= ( )( ) + ( )( )= +=

. . . . .

. .

.In general the student should respond to this case by attempting to gothrough the chapter and to discuss each major topic in terms of auniversity environment. This will require that they first identify theproduct and the process, obviously the student and the educational

13

Stage 3 yield: Y

Y

3

3

4752 095 4752 0 05 0 67

4514 1591

467 3

= ( ) + ( )( )= +=

. . . . .

. .

.

Increasing Good Quality Yield by 1% at Each Stage

Stage 1 yield: Y

Y1

1

500 0 95 500 0 05 0 23

480 75

= ( ) + ( )( )=

. . .

.Stage 4 yield: Y

Y

4

4

467 3 097 467 3 0 03 089

4533 12 48

4658

= ( ) + ( )( )= +=

. . . . .

. .

.

Stage 2 yield: Y

Y2

2

48075 0 97 48075 0 03 0 91

479 45

= ( ) + ( )( )=

. . . . .

.

Stage 3 yield: Y

Y3

3

479 45 0 96 479 45 0 04 0 67

47312

= ( ) + ( )( )=

. . . . .

.Stage 5 yield: Y

Y

5

5

4658 098 4658 0 02 072

4565 6 71

4632

= ( ) + ( )( )= +=

. . . .

. .

.Stage 4 yield: Y

Y4

4

47311 0 98 47311 0 02 089

472 07

= ( ) + ( )( )=

. . . . .

.Average weekly product yield = =Y5 4632� � . units

Stage 5 yield: Y

Y5

5

472 07 0 99 472 07 001 0 72

470 75

= ( ) + ( )( )=

. . . . .

.Input to Achieve Output of 500 unitsDifference in yields = − =470 75 463 2 7 55. . . units

Percentage increase = =7 55

463 2162%

.

..Y

Y Y

Y

Y

Y Y

Y

Y

Y Y

Y

Y

Y Y

Y

Y

I I

5

4 4

4

4

3 3

3

3

2 2

2

2

1 1

1

1

500

500 0 98 0 02 072

500 09944

502 82

502 82 0 97 0 03 089

502 82 09967

504 48

504 48 0 95 0 05 067

504 48 09835

512 94

512 94 0 96 0 04 0 91

512 94 09964

514 79

514 79 0 94 0 06 0

== ( ) + ( )( )=== ( ) + ( )( )=== ( ) + ( )( )=== ( ) + ( )( )=== ( ) + ( )

. . .

.

.

. . . .

. .

.

. . . .

. .

.

. . . .

. .

.

. . . .23

514 79 09538

539 72

( )==

. .

.

I

I or approximately 540 units