Republic of the Philippines

STI COLLEGE
San Fernando, Pampanga

A Project Presented to

the Faculty of STI College San Fernando – Tertiary

Department

In Partial Fulfillment

of the Requirements for the Subject

Productivity and Quality Tools

Submitted by:

Cayanan, Joy
Dungca, Rose Anne R.Elveña, Adrian
Guintu, Brent
Salazar, Richelldee
Uraga, Jean Nicole

Submitted to:

Mr. Gilbert C. Romero Jr.

 STATISTICAL PROCESS AND CONTROL

Process Control, commonly referred to as (SPC), is a method for monitory, controlling and ideally improving Statistical
a process through statistical analysis. In the mid-1920s, Dr. Walter A. Shewhart developed the ideas of Statistical
Process Control (though it wasn't called that at the time) and the Control Chart as a tool. His approach and thinking
were sensible, rational, and upbeat. He avoided additional mathematical detail to do this. Later, Shewhart's ideas were
given significant mathematical aspects, and as a result, this work became more well-known than the innovative
application he had created.

CONTROL CHART FOR VARIABLES

The X-bar chart is a type of graph that is used to track sample averages. Individual measurement values are
called x values, and the average of these values is called x-bar, which is represented by the symbol x. The
averages of the individual values in each sample group are represented by the points on the graph. The overall,
or grand, average is represented by the x double bar or x bar-bar, which is represented as x. The upper control
limit and lower control limit are the upper and lower horizontal lines, respectively.

This chart is called a R chart (if a range is used) or a s chart (if a single value is used). For the purposes of this
discussion, we shall concentrate on the sample range (maximum value in the sample minus the minimum value).
The ranges of individual values in each sample group are represented by the points on the chart. The R chart's
midline, like the X-bar charts, is the overall average of all sample ranges, denoted by R. There are also upper and
lower control limits on the R chart.

The Central Limit Theorem

The central limit theorem states that if you have a population with mean μ and standard deviation σ and take
sufficiently large random samples from the population with replacement, then the distribution of the sample
means will be approximately normally distributed.

Setting Mean Chart Limits (x-Charts)

Now we’re going to do is we’re just going to take the average of all these samples sets that we’ve got, and we’ll just
go here we’ll average all those and that’s going to give us a mean of 16.

=AVERAGE (16.1,16.8,15.5,16.5,16.5,16.4,15.2,16.4,16.3,14.8,14.2,17.3) (MEAN: 16)

And now we can get our Upper and Lower Control Limit, our upper control limit is just going to be that mean and
this is plus or minus the upper is going to be plus and then is where going to go to our z value which is 3 and then
we’re going to multiply that by our process standard deviation and then divide that by square root of the sample
size and the lower is the minus.

UCL=16+1x3/SQRT9 = 17

LCL=16-1x3/SQRT9= 15

Lastly, we’re going to make a chart

x-Chart of Oat Flakes

17.5

17

16.5

16

15.5

15

14.5

14
1 2 3 4 5 6 7 8 9 10 11 12
average of 9 boxes x UCL LCL

Because process standard deviations are often not available calculate control limits based on the average range
values rather than on standard deviation.

The way that we calculate the upper and lower control limit this case is going to be the mean plus or minus the
average range is nothing more that the heaviest sample minus the lightest sample and when you get all the range
we will need the average of the range this is going to be the average of all of our range and that’s 0.25

=AVERAGE(0.22,0.03,0.50,0.20.0.05,0.20,0.25,0.25,0.40,0.40)
So, we just do the mean value and then we plus or minus and the a2 time the average range now the mean value
we already had from the problem they told us that the overall process range is 12 ounces, so we know that already
we don’t have to calculate anything, and we have our range there. And now where going to solve the upper and
lower control limit.

When you solve the UCL this is going to be the mean which is 12, and then we will add to that a2 (0.577) and then
we’ll multiply that by the average range (0.25) and so that gives us an upper control of 12.14425.

UCLx = x+a2R= 12+0.577(0.25) = 12+0.144 = 12.144 ounces

And our lower control limit will to the same thing mean except these times minus a2 times our average range and
so we have a lower control limit of 11.856 ounces

LCLx = x+a2R= 12 - 0.577(0.25) = 12 – 0.144 = 11.856 ounces

Lastly, we’re going to make a chart

Setting Mean Chart Limits (R-Charts)

 To solve the (R-Chart), First we need to calculate the sample range to get that all you need is to get the
highest and lowest value of the given, and when you get it all you need is to add them for you to get the total
sample range which is 40. And then this is the formula.

So, our upper limit is just going to be d4 time the average range and so that will give us an upper limit of 18

UCLr = D4R = 2.282(8) = 18.256

Then the lower limit is just going to be d3 (0) times average range. Why 0 because sample size of 4 is 0. and so that
means our control limits on the range go between 0 and 18.256

Control Chart for Attributes (p-Charts and c-Charts)

Let’s figure it out how many from all our sample set are defective by the percentage. First, we’re going to have just
figure it out what our pure number of errors are 80 how did I get it we’re just going to sum up all the errors from 20
sample sets.

Next we’re going to have the fraction is going to be the number of errors (80) and then we’re going to divided by
the sample size which is (100) and we’re going to multiply by number of samples (20). And our mean is 0.04 or .04

So next we want to calculate the standard deviation when we get it we’re going to calculate our upper and lower
control limit.

How do we solve the upper and the lower control limit. It’s going to be that mean fraction plus or minus the z value
times the standard deviation.

And the Lower control limit will be the minus.

Lastly, we’re going to make a chart

Control Charts for Variables

The Control charts is a monitor on how a process changes over time to reveal the stability or variability in a process to
distinguish in random and assignable variation.

Example:
Mobile charger supplier drawn randomly constant sample size of 500 chargers every day for quality
control test. Defects in each charger are recorded during testing. Based on the given data, draw the
appropriate control chart and comment on the state of control. Mobile charger supplier drawn randomly
constant sample size of 500 chargers every day for quality control test. Defects in each charger are recorded
during testing. Based on the given data, draw the appropriate control chart and comment on the state of
control.
Compute c̅ = total number of defects / total number of lots =Σc/k =326/20= 16.3

Then calculate upper control limit (UCL) and low control limit (LCL)

Plot the graph with number of defects on the y-axis, lots on the x-axis and also draw center line (c̅ ), UCL and
LCL.

Managerial Issues and Control Chart

All process control is vulnerable to these two types of errors. The reason that 3-sigma control limits balance the risk of
error is that, for normally distributed data, data points will fall inside 3-sigma limits 99.7% of the time when a process
is in control. This makes the witch hunts infrequent but still makes it likely that unusual causes of variation will be
detected.

Process Capability

Process capability is a ability of a process to meet customer specifications CTQs without additional efforts.

Cp – This is how it is represented. It denotes the capability of the process that can be achieved when perfectly
centered between the lower and the upper limit.

Cpk – This is also used for calculating the ability of the process; it determines how close you are to the given
target and how consistent you are around your average performance.
Example:

The ice cream that must be served in an ice cream parlor has to be between -15 degrees Celsius and -35
degrees Celsius. The process of refrigeration that keeps the temperature has a standard deviation (SD) of 2
degrees Celsius. And the mean value of this temperature is -25 degrees Celsius. Using these inputs obtain the
process capability index (PCI) for this process?

USL = -15

LSL = -35

SD = 2,

Mean = -25

Formula:

Cpu = Mean – LSL / 3 X SD

Cpl = USL – Mean / (3 X SD)

Cpk = Min (Cpu, Cpl)

Substitute the values in the formula

Cpu = (-15-(-25))/ (3*2) = -10/6 = -1.667

Cpl = (-25+35)/ (3*2) = 10/6 = 1.667

We know that Cpk is a minimum of [Cpu, Cpl] and hence a minimum of [-1.667, 1.667] is -1.667. Therefore,
process capability is thus, defined as the ratio of the voice of the customer and voice of the process:

Example:

The training room temperature during the training must be kept between 18 degrees Celsius and 26 degrees
Celsius. The process of maintaining this temperature has a standard deviation of 2 degrees Celsius. If the mean
temperature is 21 degrees Celsius, find the PCI.

Answer:
Here USL is 26 and LSL is 18 and the Standard deviation is 2, and the mean is 21.

Cpu= (26 - 21)/ (3 * 2) = 5/6 = 0.8334

Cpl = (21 - 18)/ (3 * 2) = 3/6 = 0.5

Cpk = Minimum of [ Cpu, Cpl]

That is Cpk = minimum of [0.8334, 0.5]

The process capability index Cpk is 0.5

Control Chart Constant

Control chart constants are the engine behind charts such as XmR, XbarR, and XbarS. And, if you've made a
control chart by hand or sat in a class, you'll likely have memories of bizarre constants like d2, A2, etc.

Bias Correction Control Chart Constants

Bias correction constants are the fundamental quantities that allow you to calculate other higher
level control constants such as A2, D3, D4, etc.

Bias Correction Constants

n d2 c4 d3 d4

2 1.1284 0.7979 0.8525 0.9539

3 1.6926 0.8862 0.8884 1.5878

4 2.0588 0.9213 0.8798 1.9783

 n d2 c4 d3 d4

5 2.3259 0.9400 0.8641 2.2569

6 2.5344 0.9515 0.8480 2.4717

XmR Control Chart Constants

XmR charts aControl chart constants are the engine behind charts such as XmR, XbarR, and XbarS. and, if
you've made a control chart

Example:

• You have a very precise process for making cupcakes that uses a pan that can make 12 at a time. After
cooking, you measure the weight of each cupcake to make sure the batter was evenly distributed. Here,
the sub-group size = 12

• You have a measurement process where you are making 5 measurements of a reference standard daily.
Here, the sub-group size = 5

XbarR Constants

n d2 d3 A2 D3 D4

2 1.1284 0.8525 1.8800 0.0000 3.2665

3 1.6926 0.8884 1.0233 0.0000 2.5746

4 2.0588 0.8798 0.7286 0.0000 2.2821

5 2.3259 0.8641 0.5768 0.0000 2.1145

6 2.5344 0.8480 0.4832 0.0000 2.0038

 PROCESS STRATEGY

Flowchart

A flowchart is a graphical symbol process. Each step in the process is represented by a different symbol
and contains a short description of the process step. The flow chart symbols are linked together with arrows
showing the process flow direction. It is a systematic flow of data or process that they are following. So
basically, it is a step on what the process of a company to do or it is the guide in which the employee and the
customer will follow.

Example:

Ordering in a Fast-food restaurant.

Take order

Cashier will punch it to their KDS

Cahier will ask if you

have additional order

You will say the additional order The customer will pay
 The Cashier will call your order to the
kitchen

Cashier will assemble your

order

Dining will serve it to you

You may eat your

order

Time-Function Mapping

Time-Function Mapping is a process in a flow diagram with time added on the horizontal axis. This tool is
also called process mapping. The nodes indicate the activities, and the arrows indicate the flow direction,
with time on the horizontal axis. Unlike The Flowchart, the Time-Function mapping has a time and nodes that
will indicate the activities of your business, or it can be use in your daily life.

Example:

Ordering in an online shop.

 Customer Order Product Receive
Product

Online shop Process Order

Reseller Give Product

Courier Obtain Parcel

Transport Move

1 day. 2 Day 3 day

Service Blueprint/Blueprinting

It is an equipment or a tool fundamentally used to expand the knowledge and understanding of the group or
team in accomplishing a specific service. This also dissects the e processes and procedures that the work
shall be needing.

Pivotal Elements of Service Blueprint

• Evidence - these are the entities or objects Which can be tangible and intangible during the process.

Example: A menu in a milk tea shop.

• Customer Journey - this is the specified action or situation where there is an evident interaction between
the client/guest/customer and service provider/seller.

Example: The customer pinpoints his/her desired flavor in the milk tea shop's counter.

• Front stage Actions - face to face interaction or an approach that is conveyed through physical intervention.

Example: The customer pays his/her order to the cashier and even asked for add-ons.

• Backstage Actions- Non-physical and non-face-to-face process within the given context
Example: Preparation of the order, or ordering via online shop (food panda/grab delivery)

• Support Processes - actions that may escalate or support the given situation.

Example: Providing promotions and coupons during the procedure.

Example of Service Blueprint:

Process Charts/Flow Charts

These are various graphical images usually utilized in research and studies, these charts primarily exhibit the
connection and relationship of different concepts and ideas for a specific endeavor or endeavors. These
diagrams also show a systematic way on how will the procedures and steps of a certain activity shall be
accomplished, also these provide points of escalation towards the action.

Types of Process Charts

• Communication Flow Chart - explains and shows how a specific process was planned and executed.

• Workflow Diagram - this game vest comprehension on how pieces of data and documents fall in to a specific
one's organization.

• Swimlane Flow Chart - a metaphorical diagram which puts clearness or clarity of processes per horizontal
or vertical lane.
Example:
• Flow Chart - a visual diagram exhibiting processes of a certain project or a workflow.
 CAPACITY PLANNING

Capacity

Capacity is the limit or the quantity of units an office can hold, get, store, or produce in a given time. Limit choices
frequently decide capital prerequisites and this way an enormous piece of fixed cost. Limit additionally decides if
request will be fulfilled or whether offices will be inactive. In the event that an office is excessively huge, bits of it will
sit unused and add cost to existing creation. In the event that an office is excessively little, clients — and maybe the
whole market — will be lost.

Design Capacity

It is the maximum capacity of output of a system in a given period under ideal conditions. it is expressed by
rate and what is produced per week, per month, or per year. It should be in specific time so that the company
would know the maximum units that they capable to produce.

Example: Metrochicken café has tables set with two (2) or four (4) chairs seating a total of 270 guests, but the
tables are never filled that way. Some tables will have one (1) or three (3) guests; tables can be pulled together
for parties of six (6) or eight (8). There are always unused chairs.

Effective capacity

It is the capacity of the business that expects to accomplish given the ongoing working imperatives. Powerful limit is
many times lower than plan limit in light of the fact that the office might have been intended for a prior variant of the
item or an alternate item blend that is as of now being created.

There are two useful measures of system performance, it is the utilization and efficiency. Utilization is simply
the percent of the achieved design capacity while efficiency is the percent of the achieved effective capacity. To
get the utilization, you must divide the design capacity to actual output then multiply it to 100. In efficiency,
the formula to get it is that, you must divide the actual outputs to effective capacity then multiply it to 100.

Example:

Rose Anne’s Baking house has a plant for processing Cinnamon rolls and wants to better understand its
capability. Last week, the facility produced 148,000 rolls. The effective capacity is 175,000 rolls. The
production line operates seven (7) days per week, with three (3) eight-hour shifts per day. The line was
designed to process the nut-filled, cinnamon-flavored roll at a rate of 1,200 per hour. Determine the design
capacity, utilization, and efficiency for this plant when producing this roll.

Solution:
Break-even Analysis

Break- even analysis or in abbreviation as B/E is use for financial cost of new established business so to shows how
many sales will it takes to pay of the cost while doing in business it is neither on profit nor loss.
Break even analysis is useful to determine the level of target desires on sales since it is a level of production, it Is mainly
use to company management, since it is not metric use and calculate by outer parties such as financial institutions,
investors, and regulators.
Since this type of analytic case involves a calculation of the break-even point (BEP), is use for dividing the total fixed
costs of production and by price per individual unit and less the variable costs of production. Fixed costs are known for
costs that will stay the same regardless of how many units are being sold.

Cost-Volume-Profit Analysis

How the cost of production and quantity that relate to profit, to where the special case where no profit nor loss
is made which we refer to Break-even analysis

Break-Even: Profit= 0
Total Revenue = Total Cost

Since Total cost is mainly divided into two analysis ‘Fixed cost’ remain the same irrespective of the volume of
production over period the example is rent, property tax and insurance no matter what the quantity is fixed
cost will remain the same. However, ‘Variable cost’ is the vice versa of fixed cost it changes as the volume of
output changes which is the more units of the output, the higher the total variable cost the example of variable
cost are materials, credit card fees and shipping costs.

Total cost Total Revenue Contribution Margin

TC = FC + TVC TR = SP (Selling price per unit) SP - VC

xX

TR = P(S) x Q (Quantity)

Break-even point, TR (Total revenue) = TC (Total cost)

Contribution ratio

Contribution rate which expresses the contribution margin as a ratio or the (Percentage) of the selling price.

CM
100% Break- even dollars = FC/Contribution Ratio
SP

Example: Gallahan has a toy manufacturer in Pampanga area. Now he is introducing a new product, called
‘Kiddz’ he expects to sell 50 units. He wants to know what the impact of his new product that 20-variable cost
per unit and the fixed cost has is coming P6,000, to costumers will be instead of him being a personal tailor. So,
he decides to calculate the break-even point, so that his management team can determine will be a hit or will
be worth to invest.

Expected Monetary Value (EMV)

It is a metric utilized in risk examination for deciding the general possibility hold expected for an undertaking
plan. At the point when you make an arrangement, it can go preferable or more regrettable over you
anticipated. This statistical concept considers all possible future outcomes to calculate the likely average
outcome.
Net Present Value

Net Present Value (NVP) is used for determining the current value of time series of cash flows the value of money
depends on when you get it. Example getting P100,000 today is better than getting P50,000 in years. Not only
because of inflation but because if you want to spend P100,000 now you'd have to take a loan and pay interest for
30 years. The earlier you get money the better, the later you pay something the better.

Here is the mathematical formula for calculating the present value of an individual cash flow.

NPV = F / [ (1 + i)^n ]

Where:

PV = Present Value

F = Future payment (cash flow)

i = Discount rate (or interest rate)

n = the number of periods in the future the cash flow is

Example: Assumes that whatever discount you apply in one year, you'll repeat that discount twice for a
two-year timeframe, five times for a five-year timeframe, and so on.

So, if you choose a discount rate of 10%, that means you'd pay P4,000 to get P5,000 in a year, but you'd
only pay P3,000 to get P5.000 in two years.

Mathematically, applying a 10% discount rate is multiplying by 100% - 10%, or 90%. Applying a 10%
discount rate N times is multiplying by 90% to the power N. So, a discount rate of 10% applied to money
you'll get in five years is 0.9 x 0.9 x 0.9 x 0.9 x 0.9. Which works out to paying about P3,100 for P5,000 in 5
years.

Net Present Value just means you evaluate an investment by thinking about all the payments you'll get in
the future and adding up each payment's discounted value.

So, if you have 10% discount rate, and a four-year investment that pays you P1,000 for years 1-3, then
P2,000 at the end in year 4, you do the following calculation: