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Lecture 1: Introduction to
Quality
Lower Upper
specification specification

1350 ppm 1350 ppm

1.7 ppm 1.7 ppm

Process
mean
+/‐ 3 Sigma

+/‐ 6 Sigma

North South University Slide 1 of 44 School of Business

Outline
• Introduction
• Dimensions of Quality
• Definition of Quality
• Definition of Quality Improvement
• Quality Terminology
• History of Quality Improvement
• Phases of Quality Management
• Key Contributors to Quality Management
• Consequences of Poor Quality
• Costs of Quality
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Quality Management

• What does the term quality mean?

• Quality is the ability of a product or service to

consistently meet or exceed customer expectations.
• The Quality Revolution began in Japan after World
War II
• Now, it has spread to North America and other parts of
the world

North South University Slide 3 of 44 School of Business

Quality and Price

• Prior to World War II, the US companies used to focus
on price only
• Quality was secondary
• After World War II, Japanese started focusing on both
quality and price
• Japanese philosophy changes the whole idea of
business
• The revolutionary idea is “increased quality means
decreased cost”
• As a result, the Japanese captured approximately 20%
of the auto sales even in the US
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The Eight Dimensions of Quality

1. Performance  Will the product do the intended job?

2. Reliability  How often does the product fail?
3. Durability  How long does the product last?
4. Serviceability  How easy is it to repair the product?
5. Aesthetics  What does the product look like?
6. Features  What does the product do?
7. Perceived Quality  What is the reputation of the
company or its product?
8. Conformance to Standards  Is the product made
exactly as the designer intended?

North South University Slide 5 of 44 School of Business

Quality Dimensions for a Product:

Automobile
1. Performance  Everything works, fit & finish, ride, handling,
grade of materials used.
2. Reliability  Infrequency of breakdowns.
3. Durability  Useful life in miles, resistance to rust &
corrosion.
4. Serviceability  Quick and economic repair or routine
maintenance activity, Good service after sale, handling of
complaints, request for information.
5. Aesthetics  Interior design, soft touch.
6. Features  Gauge/control placement, cellular phone, CD
player.
7. Perceived Quality  Top-rated car.
8. Conformance to Standards  How well does the hood fit on a
new car? Is the gap exactly the same on all sides?
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Quality Dimensions for a Service:

Auto Repair
1. Performance  All work done, at agreed price,
friendliness, courtesy, competency, quickness.
2. Reliability  Work done correctly, ready when promised.
3. Durability  Work holds up over time.
4. Serviceability  Good service after sale, handling of
complaints, request for information.
5. Aesthetics  Clean work/waiting area.
6. Features  Location, call when ready, computer
diagnostics.
7. Perceived Quality  Award-winning service department.
8. Conformance to Standards  All required repairs
performed and met quality requirements.
North South University Slide 7 of 44 School of Business

Quality: Definition

• The traditional definition of quality is based on the

viewpoint that products and services must meet the
requirements of those who use them.

• Quality means fitness for use

• This is a traditional definition

• There are two aspects:

• Quality of design
• Quality of conformance

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Quality: Definition
• Quality of design  All goods and services are produced in
various grades or levels of quality. These variations in grades or levels
of quality are intentional, and, consequently, the appropriate technical
term is quality of design.

• Quality of conformance  The quality of conformance is how

well the product conforms to the specifications required by the design.

• Influenced by a number of factors:

• The choice of manufacturing processes
• The training and supervision of the workforce
• The types of process controls, tests, and inspection activities
• The motivation of the workforce to achieve quality

• This definition leads to much less focus on the customer

and more of a “conformance-to-specifications” approach to
quality.
North South University Slide 9 of 44 School of Business

Quality: Definition

• Quality is inversely proportional to variability

• This is a modern definition of quality
• This definition implies that if variability in the important
characteristics of a product decreases, the quality of the
product increases.

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The Transmission Example

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The Transmission Example

• There are two obvious questions here:

• Why did the Japanese do this?
• How did they do this?

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Quality Improvement

• Quality improvement is the reduction of variability in the

processes and products
• The transmission example illustrates the utility of this
definition.
• An equivalent definition is that quality improvement is the
elimination of waste.
• This is useful in service industries.

North South University Slide 13 of 44 School of Business

Management Aspects of Quality

Improvement
Effective management of quality requires the execution of
three activities:
1. Quality Planning
2. Quality Assurance
3. Quality Control and Improvement

ChapterUniversity
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Terminology
• Quality Characteristics or Critical to Quality (CTQ)
Characteristics
1. Physical: Length, weight, voltage, viscosity
2. Sensory: Taste, appearance, color
3. Time Orientation: Reliability, durability, serviceability
• Data for Statistical Methods
1. Attributes
2. Variables

North South University Slide 15 of 44 School of Business

Terminology (Cont’d)
• Specifications (desired measurements for the quality
characteristics)
– Lower specification limit
– Upper specification limit
– Target or nominal values

• Defective or nonconforming product

• Defect or nonconformity
• Not all products containing a defect are necessarily
defective

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History of Quality Improvement

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History of Quality Improvement

(Cont’d)

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Phases of Quality Management

• Its an evolutionary process

Inspection Corrective Quality built

before/after action during into the
production production process

Acceptance Process Continuous

sampling control improvement

The least The most

progressive progressive

North South University Slide 19 of 44 School of Business

Evolution of Quality Concepts

• Four domains:
– Early Stage: Inspection-based Quality
– The Next Stage: Statistical Quality Control (SQC)
– The Third Stage: Quality Assurance (QA)
– Last and Current Stage: Total Quality Management
(TQM)

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Evolution of Quality Concepts

(Cont’d)

North South University Slide 21 of 44 School of Business

Inspection

• Inspection Appraisal activities that compares goods or

services to a standard
• Basic Issues:
– How Much/How Often
– Where/When
– Centralized vs. On-site
– Attributes or variables

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Inspection Costs

Cost

Total Cost
Cost of
passing
defectives Cost of
inspection

Optimal Amount of
Inspection
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Where to Inspect in the Process

Inputs Transformation Outputs

Acceptance Process Acceptance

sampling control sampling

• Raw materials and purchased parts

• Finished products
• Before a costly operation
• Before an irreversible process
• Before a covering process
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Examples of Inspection Points

Type of Inspection Characteristics
business points
Fast Food Cashier Accuracy
Counter area Appearance, productivity
Eating area Cleanliness
Building Appearance
Kitchen Health regulations
Hotel/motel Parking lot Safe, well lighted
Accounting Accuracy, timeliness
Building Appearance, safety
Main desk Waiting times
Supermarket Cashiers Accuracy, courtesy
Deliveries Quality, quantity
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Statistical Methods for Quality

Control and Improvement

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Statistical Methods
• Statistical process control (SPC)
– Control charts, plus other problem-solving tools
– Useful in monitoring processes, reducing variability
through elimination of assignable causes
– On-line technique
• Designed experiments (DOX)
– Discovering the key factors that influence process
performance
– Process optimization
– Off-line technique
• Acceptance Sampling

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Quality Control (QC)

• QC A process that evaluates output relative to a

standard, and takes corrective action when output
doesn’t meet standards.

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Statistical Process Control

• Concerned with quality of conformance (A product
or service conforms to specifications)
Does the output of a process conform to the intent
of design?
• Statistical Process Control: Statistical evaluation of
the output of a process during production
• The Control Process
– Define
– Measure
– Compare to a standard
– Evaluate
– Take corrective action
– Evaluate corrective action

North South University Slide 29 of 44 School of Business

Key Contributors
Walter A. Shewhart (1891 -
1967)
• Trained in engineering and
physics
• Long career at Bell Labs
• Developed the first control chart
in 1924
• Control Chart: A tool to
distinguish between assignable
and chance causes of variation

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Key Contributors (Cont’d)

W. Edwards Deming (1900 - 1993)
• Taught engineering, physics in the
1920s, finished PhD in 1928
• Met Walter Shewhart at Western Electric
• Long career in government statistics,
USDA, Bureau of the Census
• During WWII, he worked with US
defense contractors, deploying statistical
methods
• Sent to Japan after WWII to work on the
census
• 14 points; special & common causes of
variation

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Deming’s 14 Points
1. Create constancy of purpose toward improvement
2. Adopt a new philosophy, recognize that we are in a time of
change, a new economic age
3. Cease reliance on mass inspection to improve quality
4. End the practice of awarding business on the basis of price
alone
5. Improve constantly and forever the system of production and
service
6. Institute training
7. Improve leadership, recognize that the aim of supervision is
help people and equipment to do a better job
8. Drive out fear
9. Break down barriers between departments

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14 Points (Cont’d)
10. Eliminate slogans and targets for the workforce such as zero
defects
11. Eliminate work standards
12. Remove barriers that discourage employees from doing their
jobs
13. Institute an ongoing program of education and self-
improvement
14. Create a structure in top management that will advocate the
first 13 points

Note that the 14 points are about

organizational change

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Deming’s Deadly Diseases of

Management
1. Lack of constancy of purpose
2. Emphasis on short-term profits
3. Performance evaluation, merit rating, annual reviews
4. Mobility of top management
5. Running a company on visible figures alone
6. Excessive medical costs for employee health care
7. Excessive legal damage awards

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Key Contributors (Cont’d)

Joseph M. Juran (1904 - 2008)
• Born in Romania, immigrated to the
US
• Worked at Western Electric,
influenced by Walter Shewhart
• Emphasizes a more strategic and
planning oriented approach to
quality than does Deming
• Quality is fitness for use; quality
trilogy: Quality planning, quality
control and quality improvement
• Juran Institute is still an active
organization promoting the Juran
philosophy and quality improvement
practices

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Some of the Other “Gurus”

• Kaoru Ishikawa
– promoted widespread use of basic tools
– Cause-and effect diagrams; quality circles; concept of internal
customers

• Armand Feigenbaum
– Author of Total Quality Control, promoted overall organizational
involvement in quality,
– Three-step approach emphasized quality leadership, quality
technology, and organizational commitment

• Taguchi
– Taguchi loss function

• Crosby
– Quality is free; zero defects

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The Consequences of Poor Quality

• Loss of business
• Liability
• Productivity
• Costs

North South University Slide 37 of 44 School of Business

Why “Quality Improvement” is

Important: A Simple Example
• Consider a visit to a fast-food store. The customer orders
a typical meal: a hamburger (bun, meat, special sauce,
cheese, pickle, onion, lettuce, tomato), fries, and a soft
drink. This product has 10 components. Is 99% good
quality okay?
• The probability of a good meal: P (single meal good) =
(0.99)10 = 0.9044.
• Now, suppose that the customer is a family of four.
• The probability that all visits during the year are good: P
(all meals good) = (0.9044)4 = 0.6690.

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Why “Quality Improvement” is

Important: A Simple Example
• Now, suppose that this hypothetical family of four visits
this restaurant once a month.
• The probability that all four meals are good: P (all visits
during the year good) = (0.6690)12 = 0.0080.
• What about 99.9% good quality?
• P (single meal good) = (0.999)10 = 0.9900.
• P (monthly visit good) = (0.9900)4 = 0.9607.
• P (all visits during the year good) = (0.9607)12 = 0.6186.

North South University Slide 39 of 44 School of Business

Costs of Quality
• Failure Costs - costs incurred by defective
parts/products or faulty services.
• Internal Failure Costs
– Costs incurred to fix problems that are detected
before the product/service is delivered to the
customer.

• External Failure Costs

– All costs incurred to fix problems that are
detected after the product/service is delivered to
the customer.

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Costs of Quality (continued)

• Appraisal Costs
– All product and/or service inspection costs.

• Prevention Costs
– All Quality training, Quality planning, customer assessment,
process control, and quality improvement costs to prevent
defects from occurring

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Example of Quality Costs

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Optimum Quality Cost:

Juran Model

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Optimum Quality Cost:

Alternate View

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