Operation Management Simulation: Quality Analytics

MBA 513 Barinder Mangat, Rushabh Vedia

The purpose of this simulation is to help us understand about managing quality in different
settings through analytics related to statistical process control, process capability, and the cost of
quality.
There are two kind of defects
Internal Defects
They are also known as In-house defects. These defects occur when internally there are issues of
scraps or when there is rework to be done. Higher scraps leads to higher wastages and could lead
to underutilization of resources. Rework or repairs increases the lead time or cycle time since the
flow of production is disrupted.
External Defects
Many goods that are returned due to lower quality or some sort of damage ads to the inventory
and rework areas thereby increasing the costs. Customers feedback is crucial as any changes in
the goods to be made can be done at the production line.
Simulation Learning
Managing Control Limit
Using Control Limit to Control Process
Analysing the Control Charts
Making managerial investments to minimize the total cost of quality
In the 1
st
challenge - On each simulation run a random sample is collected from the batch and the
mean(X-bar) and range(R-chart) are calculated. We could observe the fluctuations in the data
which helped us understand how to calculate the control limits.
In the 2
nd
challenge - Whenever we have processes that are out of control we can either change
the labour or recalibrate the equipment or do both. There was cost associated with every option
that was selected. Thus there should exists a balance between the labours employed and the
machines that are running /installed, only then there would be a lower cost in conducting the
processes.
In the 3
rd
challenge - Process capability index (CPK) is the measure of process capability and it
helps understand and calculate the capability index and the process which ought to be
implemented under the limits.
In the 4
th
Challenge - Factors such as investment in labour training and equipment are necessary
to reduce the costs. Higher investment in equipment and no investment in labour training hours
would still have multiple defects in the production. Labour training investment kept at $1250 and
equipment investment of $4000 or higher along with sample size of 5 to $5.50, there will be a
reduction in the total cost of quality up to $8.4K which includes 0 defects.