Chapter 7, Problem 1QRD Nest Stepa/4 a | purchaser should be fara with the mathematics of quality control, especialy “probability and statistics, dicinlin of mathematic, forthe folowing feasons described boi. Step 2/4 A ‘Arobust supply management proces will have the fllowing rine steps: |The frst and crucial step in the processis proper and timely recognition of the need 2.The next sep isto describe the need ina correct and detailed way so tha there sno ambiguity in understanding the need 3. The subsequent stp isthe identification and analysis of possible sources of supply ofthe product or sevice identities 4. Suppter selection and determination of terms isthe nest step. Detaled analysis oftechrical capabilities ofthe Supater, quality pring, terms, cect, warranties, afer sales suppor besides past rack record and so on go into the Eslaction ofthe right suppl. Ths may alsa Involve negottions 5. The subsequent step isthe preparation and placement of order. 6 After order preparation and placement, the next step i the fllow up and expediting ofthe order. 7. The next step in the supply management process is recsintand inspection This isto ensure thatthe quantity and ‘ualty ordered have been delvered in good condition as pe the stipulate terms ofthe purchase order. This may not aways be the case as (there could have been piferage or damage during transit i) under wesghment i wrong ‘mates sent to wrong addresses and soon. Once the inspection shows thatthe supp is as per the purchase order, ‘he inventory records are updated {The subsequent step in the supply management proces inice clearing and payment 9-The as and one ofthe most impertant steps inthe supply management proces isthe maintenance of records and talatonshins. The supplier performance records ae a goad database fr future decisions on choice of suppliers.= | Chapter 7, Problem 10RD Nese 6 After order preparation and placement, the next step i the fllow up and expediting ofthe order. 7 The nex step in the supply management proces is csi and inspection This sto ensure thatthe quantity and {qualty ordered have been delvered in good condition as pe the stipulate terms of the purchase order. This may not ‘always be the case as () there could have been pferage or damage during tarsi i) under weighment (i wong ‘materials sent to wrong addresses and soon. Once the inspection shows that the suppl is as pr the purchase order, the inventory records are updated £8. The subsequent step inthe supply management process incic clearing and payment. 9.The ast and one ofthe most important steps inthe supply management process isthe maintenance of records and telatonshing. The supplier performance records are a goad database fr future decisions an chee of Supple. step 3/4 5 In tap of the supply management process, the purchaser has to assess the capably ofthe suppliers in terms of ‘ualy This may involve a saisticl sampling of telcorocesses to check whether they can delve. A good sampiing procedure wil be cst efecve instead ofa comprehensive and complete check on ther processes. Sampling fechniques involve a good knowledge of mathematics, especial “probabil and statsies step la a In ten, the purchaser has to ensue thatthe quantity and quality ordered have been delivered good condition as Per the stipulated terms ofthe purchase order the order was fr 100,000 pieces of bits and nuts by an automobile Unit, tis prohibitively expensive for someone from the purchase department to count individual al the bolts and ‘Puts delivered, offen, the purchaser wil ask the supplier to pack lots of 100 sets of bolts and ruts Therefor, from ‘he 100 [ots delivered a sample of 10 (Gctermined through “probability and statistes packs may be soocted ‘andomiy and te number of ses of bolts and nuts may be counted to check whether the quantity ordered has been Gelvered. From these 10 lots, perhaps 10 sets of bots and ruts determined through “probability and statistics’) ‘would be selected andthe dimensions, material properties, fish and so on would be checked. In ten) the past records are maintained of supplies and supplied materials his data can again be statistically analyzed aso thereto of each of the suppers in terms of quently, quali, delvery, service and price for vatlous pparts and components.= | Chapter 7, Problem 20RD fost ‘The objective of supplier certification cto aold the hassles of inspection and the costs associated with the Inspection cf incoming supplies: The process fr establishing a supplier certification program may proceed sequentially as. fellows step 2/3 a “+ Estabish standards fr quality, quantity, delvery and serie expected from suppbrs + A potential suppliers frst alte by a team fom the buying organization as to whether he has adequate equipment, siled personne. processes and managerial abit to deliver as per the standards. “Give the potential supper a tial order and see how he performs. Ate carrying out 100% inspection ofthe delivered ‘mateils/services of the tal order, required, help the supplier terms af suggestions and processes fr Improvement. + ive the potential supper a larger order and seit he improves. n case, there sno improvement, he may be Groped asa potental supaler. + In case, the supper improves his performance, then a lager order can be given. The inspection proces and cost Can be reduced by taking a statistical elevant sample rather than 100% inspection +f the supplier continues to improve his performance, the sample size for inspection can be progressively reduced + Final the supplier can be ashe to sf cert the devered materals/services. step 3/3 a ‘The suppliers unit may periodically be required to be audited, not ont to ensure thatthe suppliers meet the standards cof qualty, quantity, delivery and service but also they flow the laws including sustainable practices. required the ‘uppllers may be asked to comply with standards such a SO 000 and ISO 14000, The supplies may also be asked to get ther processes periodical assessed and aucited by accreited thie party organizations. ‘Supplier certicaion a continuous program and even certled suppliers’ credentials would need to be revaldated periodically.= | Chapter 7, Problem 30RD fez ‘Step-by-step solution @ show at stops step 3/3 a fa wansaction between a buyer and sole has @ mx of tangible things and intangibles such a fod servic in 8 restaurant, quality aetessment proces forthe food is eatvely easy 9 develop, wnereas for the intangibles such as Courtesy, cleanliness, wart, faerliness and so on, of the staff wh delver the food becomes ficult to assess. ‘Mest buyer ~sallerelaonshins have 2 mix of angles and intangbles. The share of itangibes could be 100% when a customer attends a musle concert and negligible when he buys cement to buld is house step 2/3 5 Since service cannot be stored, the actual assessment has tobe instantaneous, when the servic delivery happens. This snot always easy ast may csrup the service delivery. Assessment after the event through surveys or customer feedback may no lays eect the tue experience and wil be imprecise, step 3/3 A ‘Therefor, the degree of tangibity ofa service wil infuence the quality assessment. Higher the share of intangibles, ‘more imprecise would be the qualty assessment ‘Ws this solution helpful? @e) chapter 7, Chapter 7, Problem 20RD Problem 4QRD= | Chapter 7, Problem 4@RD fost stepa/3 a Unies the qualty philosophy also applies to the supply department and the purchasers own organization it becomes meaningless for purchasers to insist hat suppers meet stringent quality requirements. The suppers can vory well se thatthe purchase organization and Is supply department show no similar commitment to qualty. step 2/3 5 ‘Therefore, the supoly department has to ensure tha the quay philosophy is applicable tots own olin the rine tops ofthe supply management process as deserved below. |The first and crucial step in the processis proper and timely recognition of the need 2.The next sep isto describe the need in a correct and detailed vay so tha there sno ambiguity in understanding the need. 43. The subsequent step isthe identification and analysis of possible sources of supply ofthe product or sevice identified 4. Supptor selection and determination of terms isthe nest step. Detaled analysis of technical capabilities of tho Supater, quay, pricing, terms, cred, warrants, after sles suppert besides past tack record and soon go into the Selection ofthe right suppl. Thi may also Involve negotatons 5. The subsequent step isthe preparation and placement of order. 6. After order preparation and placement, the next step is the follow up and expediting ofthe order. 7. The next step in the supply management proces is eggintand insnection This sto ensure thatthe quantity and ‘aly ordered have been delvered in good condition as per the stipulate terms ofthe puchase order, £8. The subsequent step in the supply management proces invoice clearing and payment 9-The as and one ofthe most impertant steps inthe supply management process isthe tslationshins The supplier performance records ae a good database for future decisions an choice of suppliers.= | Chapter 7, Problem 4@RD ost Step 2/3 a ‘Therefore, the supply department has to ensure that the quay philosophy is applicable tots own oe in the rine steps ofthe supply management process as described below |The frst and crucial step in the process is proper and timely recognition of the need 2-The nest step isto describe the need in a correct and detailed way so that there sno ambiguity in understanding the need. 43. The subsequent stp isthe identifeation and analysis of posible sources of supply ofthe product or servi identi 4. Supplier selection and determination of terms the nest step. Detaled analysis of technical capabilities of the ‘Spat, quay, pricing, tems, cred, warrants, after sles support besides past tack record and soon go into the selection ofthe right supplier. This may als involve negotatons '5.The subsequent stop isthe preparation and placement of order 6. After xder preparation and placement, the next step is the followup and expediting ofthe order. 7. The nex step in the supply management process ecgintand inspection This ito ensure thatthe quantty and ‘ualty ordered have been delveredin good condition as pe the stipulated terms of the purchase order. £8. The subsequent step inthe supply management process invic clearing and payment 9. The last and one ofthe most important steps inthe supply management proces isthe maintenance of records and tslationshins. The supplier performance records ae a goa database fr future decisions on choie of Suppliers. step 3/3 a ‘The staff members in the supply department ae to be aware that athe above stops reque commitment and thoroughness from the concerned stat. Any sp ups wil nt enly negatively affect the performance ofthe supply ‘unetion, but ao the quay ofthe productslservew ofthe purchasing organization.Chapter 7, Problem SQRD fast step a ‘The various cost associated with quality are described below pointing ut the ones which would be dificult to determine the magnitude step 2/7 a + Prevention costs ‘These cover all the costs incurred that will prevent the occurrence of defective quali in the future, including non conformance to commited requirements in terms of quanttes, delivery times, service and soon. Such costs include +The various quality assurance programs inated from the buyers supply department, + Assessment, cerfiaton and aut costs ofthe supplies’ processes. ‘+ Machine tools, oolings, and other materia required to meet the quality commitments ‘+ Labortaing and creation of awareness programs. + Preventive maintenance of operating equipment ‘Travel and space costs ofthe personnel overseeing the above activites. step 3/7 a + Aporaisal costs ‘The costs include al costs which ae incurred to very and check whether the producto service conforms to committed quality standards and performance requirements. These costs may be incurred both at the sol’ side as Wwellas at the buyers department The costs would incude ‘The sampling cots at bath seer and buyer departments [Fo gt po erste oe yet rr nar= | Chapter 7, Problem S@RD fast Step 3/7 A ‘Appraisal costs ‘Te costs include all cots which ae incurred to very and check whether the product or service conforms to committed quality standards and performance requitements. These costs may be Incurred both at the sels side as wel as atthe buyer's department The costs woud incude +The sampling costs at both seller and buyer departments +The cos of administering the inspection and testing proceses + Additonal materiat handing costs for movement ofthe sample, ‘Inventory carrying costs ofthe sample and the products/serics to be appraise, ‘+ Rudi of processes and systems. step 4/7 A Internal fallre costs ‘This category includes al costs incured within the buyer ta commitments, The various costs may be as follows: ler system as a result of poor quality oF non-conformance 1 The costs of returning to suppliers. +The cost of scrapping and reworking, ‘The cos of re-inspection and e-testing +The lost labor costs, the delay costs, penaties and soon + Aeional materia and inventory costs ‘step 5/7, a= | Chapter 7, Problem S@RD fast step 47 a {Internal fallure costs This category includes al costs incured within the buer-seler system as a result af poor quality or non-conformance te commitments, The various costs may be a8 flows ‘The costs of returning to supplies ‘The cost of scrapping and reworking ‘The cost of re-inspection and e-testing +The lost labor costs, the delay costs, penatles and soon + Adaivonal materia and inventory costs step 5/7 a External allure costs ‘These costs ar incurred when poor quality goods or services reach the customer ornon-conformance to agreed ‘commitments with the end customer happens. The various costs may be as flows ‘The transport and handling cst of retumed products ‘The cos of replacement. ‘The cost of rework ‘The warranty administration costs. «The senior management time of handling customer complaints. + When por quality parts and components ae part of assembled equipment, then the addtional costs of disassembly fang reassembyChapter 7, Problem S@RD Dest step 5/7 a + External fallre costs ‘These costs are incurred when poor qualty goods or services reach the customer ornen-conformance to agreed ‘commitments with the end customer happens. The various costs may be as follows ‘+The transport and handling cost of returned products. ‘The cos of replacement «The cost of rework ‘The waranty administration costs. “The senior management time of handling customer complaint. + When poor qualty parts and components are part of assembled equipment. hen the ackitional costs of leassembly fang renscemby ‘+ Heath and safety issues of poor quality products besides the consequent tigation and damages costs. ‘In the case of service, the addtional costs of providing the ight qualty service, ‘The oss of customer good, future sales and profits. step 6/7 a ‘+ Themorale costs ‘Tae employees ofan organization which s known to produce poor qualty products or service feel demoralized or clsnearenes, Many of them may leave the organization They may no longer have pide in thei work orhave the general lethargy may set in and vould ultimately esd to flue of the organization,Chapter 7, Problem S@RD Dest ‘The transport and handling cost of returned products. 1+ The cos of replacement “The cost of rework ‘The warranty administration costs. “The senior management time ofhandling customer complaint. + When poer quality parts and components are part of assembled equipment. then the addtional costs of disassembly fn reassembly ‘+ Heath and safety issues of poor quality products besides the consequent tigation and damages cost. ‘In the case of service, the adetional costs of providing the right quality service, ‘The loss of customer good future sales and profits. step 6/7 a + Themorale costs ‘The employees ofan organization which s known to produce poor qualty products or service feel demoralized or cisheartened, Many of them may leave the organization. They may no longer have pide thei work or have the [Ageneral lethargy may set in and vould ultimately lod ofall ofthe organization, step 7/7 a ‘The morale costs are ficult to quantify because many such costs are intangible and dificult to measure The loss ‘of pride m your organizaton and your work wallbeciffeut to make up. would be cifcut fo retain talented employees. twilbe imposible to attract fresh alent int the organization, Many supplies, vendors, dealers ‘strvtors woud also avord doing any Business with an organization which has a poor qualty image,= | Chapter 7, Problem 6@RD Nest step a/s a ‘Deming suggested 14 points fr implementing the Total Guaty Management concept which helps companies increase their quality and productivity. Ameng the 14 points, one ofthe key points was that ‘End the practice of warding business on price alone Instead, minimize total cost by working with a single supplier” step 2/5 A ‘The logic of Deming’s concept was thatthe objective Ito reduce the “total cos” of acqustion af theitem, which ‘would include the folowing cots Step 3/5 A + Costs of interactions with supplies. + Costs of appraising the process contol systems of the vendors. + Inspection costs of materia received from various vendors. “+ Rejections, return tothe vendors, srap an ework costs +The payment approval process foreach vendor. ‘The cos of production ofa particular supplier willalso depend on scale economies. The vendor, fe isa single supoler where there san assurance o age volume orders, wil also have the motivation to invest i equipment and Skis to improve the overall quality. ‘Theretor,consiering the “total costs Deming was insistent on single sourcing step 4/5 a “The various risks associated with single sourcing areas followsChapter 7, Problem 6@RD Nest “+ Rejections, return tothe vendors, grap and rework costs. ‘The payment approval process foreach vendor ‘Te cos of production ofa particular supplier wil also depend on scale economies. The vendor, fhe sa single supaler where there is an assurance o lage volume orders, wil also have the motvatn to Invest in equipment and Skis te improve te overall quality. ‘Therefore, considering the “total cost Deming was insistent on single sourcing step 4/s A ‘Te various risks associated wit single sourcing are as follows ‘The supplier may without warming, raise the prices “The supplier may have a labor strike and production may be disrupted. ‘The supplier may be unwilng to invest and grow with the business ofthe compary. + Loss of goods or damages in transit from the supplier to the compar. step 5/5 a ‘Te best way to mitigate the ssi for the company to be in close touch withthe supplier and get early waning of possible supply disruptions. The other ways of mitigating risks areas follows: “Build up an inventory of the parts + Develop some atemate vendors + Ceate in-house capacty tl problems with the single supplier ae resolved ‘Legal recourse, as a lat resort.Chapter 7, Problem 7QRD stepa/4 a ‘The ternational Organization for Standardization, which is based in Geneva, Switzerland, makes avallable common standards across the word In North America, both the US. based American National Standards Instituto (ANSI) and ‘the Canadian Standards Association (CSA) ae members ofthe ISO. These standards were fist established in 1987 and are perodiealy updates step 2/4 A ‘Te 150 9000 family, specially covers various aspects of qualty management. These standards provide guidance and tole for companies and organaatons whose goal iso provide products and services consistently as per Customer expectations and to improve ther quality processes. These standards provide an international consensus on ‘9006 quality management practices. Further, these standards aso ly out appropiate guidelines fr internal and ‘external audits ofthe quality management system. fa supalir is ISO 2000 certified, tmeans that the suppliorhas ‘900d quality management processs.and systems, which will enable him to consistently produce products and. sarvices tothe satisfaction of customers step 3/4 RB “Te 150 14000 is a series of standard for companies for environmental management, which have been provided by the Intemational Organization for Standardzation They do not replace the local government, the state government and the federal rules and regulations. These standards aso lay down guidelines for periodic reporting of the ‘organization of ther complance withthe stipulated objectives such as greenhouse emissions, carbon footprint, ‘Savings inthe use of natural resources and £0.05, Stop 4/4 a ‘An organization whichis 1S0 14000 certified means that an accredited agtncy/as found that the organization s following sound environmental management systems in thei operations Qeae= | Chapter 7, Problem 8GRD Qe st Step-by-step solution @ show alt stops stepa/2 a ‘There ae wo types of testing asto whether the output meets the quality standards. One is @ 100 % inspection and the other's sampling, Obvious, 100%insesction will be time consuming and csty compared te samaling, whereas there is. high probability of identiying a defective component when 100% inspection is carried out Inthe case of sampling for nspecton. depending on the sample size, the costs would be lower than that for 100% inspection. Inthe ‘ate of sampling, there ea higher probably of accepting a defective component, step 2/2 5 ‘Depending on how etal is the quality, andthe costs associated with unacceptable quality a decision regarding 200% inspection or sampingfornspection can be taken, Therefore, he trade-offs between 100% inspection and sampling isthe balance between cost of 100% inspection and the cost of poor quality being accepted due to samalig. wasutonsenr (350 )( 0) chapter7, Problem 70RD.= | Chapter 7, Problem 9QRD Qe st ‘Step-by-step solution @ show at stops stepa2 a "best buy isa compromise evolved out of balancing the follwing Stop 2/2 RB + Performance in terms ofthe expected function ‘Features in tems of addtional functions the product can perform apart from the core function, ‘+ Reliability in terms of probaly offing to perform during its usage + Durabity in terms of expected ife duration ofthe product + Conformance in terms of mesting the entire specications of the acquisition. + Servceabily in terms of earying out maintenance and repairs, besides ease of ng the faut ‘Aesthetics in terms of style, loks, ee, sel ase, sound and soon + Perceptions ofthe customer regarding the quality ofthe product ‘Total costs ofthe acquition. + Ease of disposal ater use — + Procurabilty in terms of ease of acquisition Foreach context, depending on the weightage assigned to various parameters sted above, the “best buy" decsion may ary= | Chapter 7, Problem 10@RD Nese stepa/2 a Ifa transaction between a buyer and solr has a mix of tangible things and intangibles such as fod servic in a restaurant, quay assessment process for the food is elativly easy to develo, wereas forthe intangibles such as ‘courtesy, cleanliness, warmth, frendliness and so on, ofthe staff who delver the food becomes ifcult to assess. ‘Most buyer-tolloreationship have a mix of angibes ang intangible, The share of ntangiles could be 100% wen a customer attends a mutie concert and negligible when he buys coment to Bud his house ‘Since service cannot be store, the actu assessment hasta be Instantaneous, when the service delvery happens. ‘This snot always easy ast may disrupt the service delvery Assessment afer the event through surveys of customer feedback may not always reflec the true experience and wil be impreci, step 2/2 a ‘Therefore, the degree of tangibity ofa service wilinfuence the quality assessment Higher the shave of intangibles, ‘more imprecze would be the qualty azessment Despite the above mentioned limitations of quality assessment regarding service, some ofthe aspects of quality assurance that have tobe kept in view when buying services areas follows. ‘+ Reliability in terms ofthe ably to cary out the promised service, dependably and accurately. ‘+ Responsiveness of the frm interme of wilingnes to halp the customers and provide prompt service, + Capabliyin terms of inowiedge of employees and their ability to inspire trust and confidence among customers ‘+ Empathy in terms of the care andthe individual attention the frm provides tits customers ‘The ambience of the tangles in terms ofthe premises where the services provided, the equipment used the appearance of personnel and so on. Le