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Chapter 09 - Management of Quality

CHAPTER 9
MANAGEMENT OF QUALITY

Teaching Notes
This chapter is devoted to quality management. It presents a definition of quality, discusses the
importance of quality and the determinations of quality, highlights the views of leading experts on
modern quality management, and describes the total quality management approach. A later chapter is
devoted to quality control procedures and quality improvement.
Total Quality Management (TQM) is a popular approach that:
1. Promotes understanding and fulfilling the needs of customers.
2. Defines quality in terms of customer requirements.
3. Views quality improvement as a never ending quest to improve the process.
4. Uses statistical reasoning with data to solve problems and to improve the process.
5. Emphasizes the role of leadership systems in improving quality.
6. Utilizes appropriate education and training to everyone in the organization in a
continuous fashion.
7. Views quality not only as a technical operational issue but also views it from a
strategic orientation that leads to enhanced long term planning.
8. Encourages empowerment of the employees in the work place in order to improve job
design, job performance and continuous improvement in all aspects of the organization.
TQM is an approach that views quality improvement as a never-ending quest to improve the
conversion process so that the level of customer satisfaction continually rises. Since the Japanese have
been so successful in continuously improving the quality of their products and services, Kaizen, or
continuous improvement, has become an extremely popular and widely accepted managerial approach
to improve quality on a daily basis. The old adage, “if it ain’t broke, don’t fix it,” has a rather hollow
ring to it these days. A more appropriate transformation today would be “just because it ain’t broke
doesn’t mean it can’t be improved.”

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The material in this chapter is divided into the following major topics
1. Overview of TQM
2. Problem Solving
3. Continuous Process Improvement
a. Process Mapping
b. Process Analysis
c. Process Redesign
4. Seven Quality Tools
a. Check Sheets
b. Flowcharts
c. Scatter Diagrams
d. Histograms
e. Pareto Charts
f. Control Charts
g. Cause and Effect Diagrams
5. Strategic Issues in implementing TQM
6. Plan-Do-Study-Act Cycle
7. Methods for Generating Ideas
a. Run Charts
b. Brainstorming
c. Quality Circles
d. Benchmarking

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Reading: Benchmarking Corp. Web sites of Fortune 500 Companies

Reason for the importance of each factor.


Factor Importance

1 Use of meta tags Conveys information to web crawlers about the site.
2 Home page title Communicates the content of the site.
3 A unique domain name Lessens the chance that many other domains will
show up in a search.
4 Search engine site registration Increases visibility on the web.
5 Server reliability Affects the percentage of time a site is “up.”
6 Speed of loading Some potential viewers will not be willing to wait if
loading is slow.
7 Bad links Frustrates visitors, and doesn’t give impression of a
site that is “current.”
8 Spelling errors Doesn’t make a good impression.
9 Visibility of contact information Eases ability to contact.
10 Indication of last update date Reveals how current the site information is.
11 A privacy policy A privacy policy is one of the most important
documents on any web site. It details how
information collected from visitors will be treated.
12 Presence of a search engine Allows visitors to easily find what they are looking
for on the site.
13 Translation to multiple languages Broadens the potential audience.

Answers to Discussion and Review Questions


1. a. Convenience: the availability and accessibility of the service.
Reliability: the ability to perform a service dependably, consistently, and accurately.
Responsiveness: the willingness of service providers to help customers in unusual
situations and to deal with problems.
Time: the speed with which service is delivered.
Assurance: the knowledge exhibited by personnel who come into contact with a customer
and their ability to convey trust and confidence.
Courtesy: the way customers are treated by employees who come into contact with them.
Tangibles: the physical appearance of equipment, facilities, personnel, and communication
materials.
b. The primary determinants of quality are design, conformance to design (materials and
workmanship), ease of use (partly related to design, but also a function of user
instructions and sometimes training), and service after delivery.
2. Design quality refers to the degree to which a product or service would ideally be fit for
use. Quality of conformance refers to how well a product or service matches design
specifications.
3. a. The reputation and image of an organization will suffer from poor quality products or
services.

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b. Organizations must pay special attention to their potential liability due to damages or
injuries resulting from either faulty design or poor workmanship.
c. Poor quality can adversely affect productivity if rework is necessary or if the process
slowed down to accommodate an assembler trying to find a part that fits properly or by
having defects and scrap that reduce output.
d. Poor quality increases costs because of rework, scrap, repair and replacement, warranty
claims, discounts, customer field work such as travel and inspection, lost time, and legal
expenses.
4. Dimension Television Set
Performance On, off, sound, color, picture
Special features Remote control, inset picture, stereo sound
Reliability Infrequency of breakdowns and repair work
Durability Useful life in terms of time and use
Service after sale Handling of complaints, requests for information, repair
work (cost, time, reliability, courtesy and trust)
Conformance Meets or exceeds our expectations
Safety UL approved
Aesthetics Shiny black cabinet

Dimension Restaurant Meal (Product)


Performance Taste, smell, color, arrangement of food, cleanliness,
tableware
Special features Specialties of the house, wines, cocktails, desserts,
atmosphere, music
Reliability Consistently excellent day after day
Conformance Meets or exceeds our expectations
Service after sale Friendly, courteous, appreciative
Safety Sanitary handling
Aesthetics Looks appetizing

Dimension Restaurant Meal (Service)


Performance Friendly, courteous, appreciative, timely, manners, poise,
nimbleness, knowledge of food and wines
Special features Extra service, special favors, knowledge of customer—likes,
dislikes, special dates, makes customer feel special
Reliability Consistently excellent day after day in every way
Conformance Meets or exceeds our expectations
Service after sale Friendly, courteous, appreciative
Safety Careful with hot beverages, carrying loads of dishes
Aesthetics Clean uniforms

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Dimension Painting a House


Performance Neatness, cleanliness, appearance, thoroughness, reasonable
speed
Special features Knowledge of colors, minor repairs, suggestions, knowledge
of paint
Reliability Consistently excellent job after job
Durability Length of time it lasts and looks good
Conformance Meets or exceeds our expectations
Service after sale Cleans up mess, friendly, courteous, appreciative
Safety Careful with ladders, tools and paint not in walkways
Aesthetics Appearance of completed work

Dimension Surgery and after-surgery care


Performance Surgery successful and after care appropriate .
Special features An attentive and caring staff.
Reliability Consistent, meets or exceeds medical standards, experienced
staff.
Durability How well the surgery holds up.
Conformance Meets or exceeds medical standards and expectations.
Service after sale Addresses any concerns after leaving surgical center.
Safety Cleanliness, patient safety and well being.
Aesthetics Setting is calming, restful.

5. a. (Various responses.)
b. Among the possible reasons: Often these are the extremes - A customer is either very
satisfied or very dissatisfied, a customer receives something in return for a review, such as
discount coupons or a small monetary reward.
c. Student answers will vary.

6. A major component of the quality-ethics interface involves firms knowingly allowing


substandard products to be manufactured and sold or organizations knowingly providing
substandard service to customers.
The substandard production can take place as a result of poor workmanship, improper or
inadequate training of employees, poor product or process design, low quality parts, raw
materials or components, poor maintenance policies and systems, equipment or machinery
problems. Each of these reasons for substandard quality may involve possible unethical
behavior.
The consequences of delivering substandard or poor quality products range from increased
warranty and liability costs for companies to inconvenience or injuries to customers.

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When the firm learns about the quality problem, the way in which it deals with it may be
considered unethical if the response to the problem is unreasonably slow, and/or if the
remedies are either nonexistent or considered to be inadequate.
7. Quality Gurus:
W. Edwards Deming: Deming is known as the senior quality guru. He was a statistics
professor at New York University. He went to Japan to assist the Japanese in improving
quality and productivity. As a result of his successful accomplishments in Japan, the Japanese
established the prestigious Deming prize, which is awarded annually to firms that distinguish
themselves with successful quality management programs. His work in quality was not
recognized in the U.S. until the 1980s. Finally, U.S. companies embraced his work. He
assisted many American companies in designing quality programs until his death in 1993.
Deming compiled a famous list of 14 points that he believed was the prescription needed to
achieve quality in an organization. He strongly believed the cause of inefficiency and poor
quality was due to the system and not to the employees. He also believed it was
management’s responsibility to correct the system in order to achieve the desired
improvements in quality and productivity.
The key elements of Deming’s 14 points are: constancy of purpose, continual improvement,
and profound knowledge. Profound knowledge has four key components:
a. An appreciation for a system.
b. A theory of variation (develop a system to reduce the variation in output and distinguish
between special and common causes of variation).
c. A theory of knowledge (knowledge is derived from theory and learning cannot take place
without theory of knowledge).
d. Psychology (management must find a way to motivate workers).

8. a. ISO 9000 is a set of international standards on quality management. The International


Organization for Standardization (ISO) promotes worldwide standards that will improve
efficiency and productivity. The ISO 9000 standards are important for doing business
internationally, especially in Europe. Over 40,000 companies are certified by ISO. In
order to get certified, companies must go through a process documenting procedures
involving process control, inspection, purchasing, and training. After the documentation
is complete, there is an on-site visit to verify the procedures documented. After
certification, registered companies go through a series of audits. They must be recertified
every three years.
b. One is an award, the other certifies a level of competence. The Baldrige Award is designed
to stimulate quality improvement efforts and recognize achievements in U.S. companies.
ISO certification implies a certain level of quality competence in products or services that
is recognized internationally. If a U.S. company wanted to pursue both, the logical first
choice would be the Baldrige Award, because it would help the company focus on its
processes, which is a key step for ISO certification.

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9. Quality management emphasizes preventing mistakes or correcting them after they occur.
There is a direct trade-off between investment in quality programs and investment in failure
costs. If the quality is poor, the failure costs will be high. The productivity can be
significantly reduced, by reworking defective parts. Injuries can also occur because of
neglected machinery and defective output (internal failure costs). Increase in warranty costs,
service costs, repair costs, discount costs and payments to customers to offset the inferior
quality are examples of external failure costs. The emphasis on quality can lead to a
significant reduction of both internal and external failure costs, thereby reducing production
costs for the company.
10. TQM is a quest for quality that involves everyone in the organization. The key
elements of the TQM approach are continuous improvement and an emphasis on customer
satisfaction.

11. Seven Quality tools are:


a. Check sheet: A tool for organizing and collecting data. It is a tally of problems and other
events by category.
b. Flowchart: A diagram of steps in a process.
c. Scatter diagram: A graph that shows the degree of relationship (correlation) between two
variables.
d. Histogram: A chart that shows the empirical frequency distribution. Histogram expresses
the shape of the data set.
e. Pareto chart: A chart that arranges categories from highest frequency of occurrence to
lowest frequency of occurrence. Pareto chart distinguishes the few critical factors from the
many trivial factors.
f. Control chart: A statistical chart of time ordered values of a sample statistic. It involves
setting upper and lower limits to determine potential causes of problems in a given
process.
g. Cause and effect diagram: A representation of the relationship between some measured
effect and the set of possible causes that produce the effect. It may be used to correct the
problems or understand the process itself.
12. a. Brainstorming is a technique in which a group of people share ideas and thoughts in a
relaxed atmosphere on various problems in order to stimulate unrestrained collective
thinking.
b. Benchmarking is a technique that measures a company’s performance against the best in
industry. This technique can help in determining how the best companies achieve high
performance and quality levels.
c. Run chart is a plot of series of values in the order of their occurrence. It is used to
track the values of a variable over time to identify trends or patterns in the data set.
13. There are four basic steps in the plan-do-study-act cycle:
Plan. Begin by studying the current process. Standardize that process. Then collect data in
order to identify problems. Next, analyze data and develop a plan for improvement.
Specify measures to be used for evaluating the plan.

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Do. Implement the plan, on a small scale if possible. Document any changes that are made
during this phase. Collect data systematically for evaluation.
Study. Evaluate the data collection during the do phase. Check to see how closely the
results match the original goals of the plan phase.
Act. If the results are successful, standardize the new methods and communicate the new
method to all people associated with the process. Implement training for the new method.
Consider opportunities for replicating the same changes in other similar processes. If the
results are not successful, either revise the plan and repeat the process, or cease this
project.
14. Steps of Problem Solving:
a. Define the problem and establish an improvement goal
b. Collect data
c. Analyze the problem
d. Generate potential solutions
e. Choose a solution
f. Implement the solution
g. Monitor the solution to see if it accomplishes the goal.

15. a. Pareto Analysis: Assume that a company has just been bought by another
company. Based on an initial study, it has been established that the organization is
suffering from numerous quality problems. A committee is formed to study the quality
related problems. One of the first tasks of the committee is to enumerate the various
problems experienced by this company and identify the more important problems so
that we can take corrective action. In this context, the company is considering to use
Pareto analysis to differentiate the few important problems from many trivial
problems.
b. Histogram: A company is having problems controlling the quality of the
average diameter of the radial tires. The quality control manager of a tire manufacturing
company wants to determine the shape of the tire diameter distribution so that he can
determine whether excessively large diameters or excessively small diameters are
problematic. A histogram is drawn to shed light on this problem.
c. Flow chart: The company has moved one of its plants to a new location. In the
process of moving, the layout of the plant was altered. As a result of the alteration the
company is having difficulty locating material and controlling its operations. The plant
manager thinks there is a more effective way to determine the organization of the plant.
He proceeds by assigning the Production and Inventory Control manager to determine
where in the process problems occur. The Production and Inventory Control manager
utilizes a flow chart to diagram the steps of the manufacturing process through the plant.
After analyzing the results from the flow chart, the company will consider other options
for the plant layout.

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d. Scatter diagram: A drug manufacturer wants to determine if there is a


significant relationship between the dosage of its new drug and a patient’s body
temperature. It collects information from 12 patients that were administered several
different drug dosages. Plotting the scatter diagram will show the degree and the direction
of the relationship between the two variables.
16. Steps of process improvement:
a. Process Mapping.
b. Process Analysis
c. Process Redesign
17. See textbook for the answer to problem 14.

Taking Stock
1. The more a company spends on quality improvement, the higher the potential quality of the
product. In some cases, while improving quality, we can simultaneously reduce our cost
because of elimination of waste and duplicate effort. However, spending more money on
quality does not always translate into significant improvement of quality. If a company spends
too much money in trying to improve its quality without results, the cost of quality may
become unusually high. We also need to remember that the customer ultimately defines
quality. If we spend money to improve quality beyond the customers’ need, then it will not be
noticed and the money spent to achieve this level of quality could have been used for other
purposes.
2. Setting priorities for quality improvement need to vertically transcend the entire organization.
Therefore, at the macro level, upper management needs to be heavily involved in determining
the desired level of quality. Obviously, marketing department, due to its close contact with the
customers, can provide invaluable information when defining quality. Someone or some
people involved in strategic planning, due to his/her/their knowledge of competition should be
involved. Of course engineering, production, quality control departments/areas will not only
be able to answer technical questions about quality improvement but also will be in a position
to evaluate whether quality goal setting done at the macro level was reasonable. Finally,
accounting and financial personnel can provide valuable information about the cost of quality.
3. The technology had a profound impact on quality. Improvement in measurement systems
drastically improved the measurement of quality. Computer technology has enabled many
companies to perform on-line, real-time statistical process control, which enabled companies
to respond to quality problems faster. Due to technological improvements in computerized
design, the products are designed better, thus have significantly fewer quality problems. The
artificial intelligence systems forewarn potential problems before they occur.

Critical Thinking Exercise


1. Possibly, the cost of the wages of the additional repair personnel was being observed by the
average cost of the repair. The manager may be able to provide the repair department with
additional funding provided that department is able to reduce the average cost per repair.

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2. Customer retention is important because it typically costs a lot less to retain current customers
than it does to attract new customers. One possible reason that “satisfied customers” leave is
that “customer satisfaction” is not enough. Retention may require exceeding customer
expectations. Another possibility is that no matter what you do, you won’t be able to retain
some customers.
In some businesses, developing a breakdown of profits generated by each type of customer
(e.g., loyal versus tendency to leave) can be a good starting point. It may turn out that it is not
worthwhile to try to retain those customers. If it is worthwhile, try to find out why you can’t
retain them (i.e., what it would take to retain them), and respond accordingly.

3. Compared to decentralized processing, a single processing facility would entail more


transportation to and from, so more chances for contamination as well as higher transportation
costs, any contamination at the processing facility would affect a large amount of produce, and
any quality problems that caused delays or shutdowns would affect all output. Conversely,
any quality problems at a decentralized location would affect a much small amount of
produce.

4. Student answers will vary.

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Chapter 09 - Management of Quality

Memo Writing Exercises


1. Benefits of doing a task correctly the first time will prevent duplication of effort later
when we discover it was not done correctly. More importantly, it will prevent other
stakeholders (suppliers, internal customers, external customers, managers, co-workers, etc.)
from being adversely affected by the incorrect execution of the task.
2. Entering the Baldrige Award competition will increase the quality consciousness of
our company. It will motivate the company and its workers to improve quality, productivity,
and overall competitiveness as demonstrated by some of the previous participating companies.
However, the Baldrige Award process requires a lot of time and effort for employees and top
management. Winning is difficult because the number of awards are few (six per year), but
even if we win, it does not necessarily mean that our product is top quality. There may also be
a tendency to relax our work in quality after the completion, especially if we win.
3. TQM is a never ending pursuit of quality that involves everyone in the organization. It
emphasizes the customer, customer defined quality, employee empowerment, and continuous
improvement of the processes. If implemented correctly, it will lead to significant
improvements in quality of products or services and productivity of the firm’s operations.
However, the senior management may view TQM as a solution to all problems facing the
company. TQM requires commitment at all levels of the company. Detailed implementation
of methods and techniques is crucial to the success of a TQM program. Talking about TQM
and using slogans only at the senior management level is not sufficient.
TQM needs to be implemented at each level of the company. The employees need to become
educated and trained about various relevant aspects of TQM. Specific goals need to be set and
specific measurable outcomes need to be identified so that the success of the program can be
assessed.
4. There is always fear of change and people often react negatively to it. Try to get as
many of the participants involved as possible. Make sure they know how it will benefit them.
There is always fear that authority will not equate responsibility. Be sure to educate and train
your people so that they can make the change with the least loss to them. In other words, in
order to understand the potential impact on the participants, try to look at the change from
their point of view.
5. Let’s discuss grocery shopping. If grocery shopping is not done correctly the first
time, we may have to make an extra trip to the grocery store for an item that was forgotten.
Dinner may not turn out as we expected because one of the ingredients may be missing or
incorrect. The family members may become disgruntled because they did not get the items
they were expecting. In addition, we may have purchased grocery items that we did not need,
etc.

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Solutions
1. Checksheet
Work Type Frequency
Lube and Oil 12
Brakes 7
Tires 6
Battery 4
Transmission 1
Total 30
Pareto
12

7
6

Lube & Oil Brakes Tires Battery Trans.

2. Checksheet
Problem
Customer Type Noisy Failed Odor Warm Totals
Residential 10 7 5 3 25
Commercial 3 2 7 4 16
Totals 13 9 12 7 41

Residential customers Commercial customers


10

7 7

5
4
3 3
2

Noisy Failed Odor Warm Odor Warm Noisy Failed

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Chapter 09 - Management of Quality

3. 3    

2   

1          

0            

break lunch break

The run charts seems to show a pattern of errors possibly linked to break times or the end of the shift.
Perhaps workers are becoming fatigued. If so, perhaps two 10 minute breaks in the morning and again
in the afternoon instead of one 20 minute break could reduce some errors. Also, errors are occurring
during the last few minutes before noon and the end of the shift, and those periods should also be
given management’s attention.

4. Time Count Time Count


1:00–1:04 1 1:40–1:44 3
1:05–1:09 2 1:45–1:49 2
1:10–1:14 2 1:50–1:54 3
1:15–1:19 1 1:55–1:59 2
1:20–1:24 1 2:00–2:04 7
1:25–1:29 3 2:05–2:09 4
1:30–1:34 1 2:10–2:14 6
1:35–1:39 2 2:15–2:20 2

7
6
5
4
3
2
1
0
Time

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5.
Person Lamp

Missing
Didn’t turn
completely on
Bulb
Burned Loose
out
Lamp fails
to light
Power off Not
plugged in
Outlet
defective Defective

Other Cord

6. Supplier

Insufficient
capacity
Inadequate
record keeping
Poor
scheduling
Late
deliveries
Weather
Traffic Wrong
information
Breakdown Missing
information
Scheduling Late to
Capacity supplier

Delivery Orders
system

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7.
Methods Materials
Procedures Handling
Controls Suppliers

Tolerances Specifications

Sequences Tolerances
Chapter 09 - Management of Quality

Timing Controls
Consistency Environment

Poka-Yoke Quality
Consistency
Defective

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Machine
Quality at Adjustment Parts
Organization
the Source
Culture Operation

Working Expertise Specifications


Conditions Controls
Motivation Operator Error
Qualifications Maintenance
Selection Wear
Training Set-up
Morale

Personnel Machine
Chapter 09 - Management of Quality

8.

a. Days absent

7 
6


5
4



3

2
 
1 
0
0 20 40 60
Age

b.
5 
Error rate

3  
2  
1  
0  
0 60 70 80 90

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Chapter 09 - Management of Quality

Start
9.
Gather and pack
the materials in
the book bag

Are
all items No
packed?

Yes

Travel to
the library

Find an adequate
place to study

Is
the
Yes
location too
crowded?

No

Study

Gather and pack


all items in the
book bag

Are
all items No
packed?

Yes

Leave the library


and travel home

Stop

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Cause and Effect Diagram

Instructor Course 10.


Classroom

Reputation of Subject matter


Number of seats the instructor
Number of available in the
seats available closed section
in other Reputation (difficulty)
sections Reputation of instructors
of the course
teaching other sections
Chapter 09 - Management of Quality

of the same course


Type of Course format
Reputation of
classroom (discussion/lecture/online)
Location of instructors
classroom teaching other
courses at the Closed
same time

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Section
of a College
Number and type Course
of other courses
# of sections offered at the Time and days
Total capacity scheduled of the week for
same time
other sections of
the course
Estimated # of
eligible students
Estimated # of that need the course Time of
students taking as a requirement the day
it as an elective Days of the week
Estimated # of
students taking it as
a required course
Enrollment Forecasting Time of Offering
Cause and Effect Diagram 11.

Weather Vision Vehicle Characteristics

Night Type of
Ice vehicles
Sun light
Rain
Oncoming head lights Age of vehicle
Chapter 09 - Management of Quality

Slippery roads
Hills or curves
Condition of
Wind vehicle

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Accidents

Intersections Age of driver


Speed limit involved in
accidents
Distractions Condition of
the driver
Road signs

Curvature of Profile of drivers


the road

Road Characteristics Driver Characteristics


Chapter 09 - Management of Quality

12.
Dimensions Examples
1. Tangibles Appearance of the pharmacy and the staff
2. Convenience Location of the pharmacy and the hours of operation
3. Reliability Is the prescription correctly filled?
4. Responsiveness Willingness to answers questions about the medication
5. Time How long did you have to wait?
6. Assurance Knowledge of the pharmacist in answering your questions
7. Courtesy Friendliness of the server

Case: Chick-N-Gravy Dinner Line


This case provides the opportunity for students to acquire some insight into analyzing quality
problems. You may prefer to give them some initial guidance, or you may want to let them grapple
with it on their own.
On their own, they may attempt to set up control charts. However, the essence of the case is to
examine the data and draw conclusions about where problems may be.
Data can be organized in a number of ways. One useful way is the following:
Defect
Underfilled Missing Item Spilled/Mixed Unacc. taste Improper seal
#1 #2 #1 #2 #1 #2 #1 #2 #1 #2
Morning 0 1 1 11 0 11 2 2 4 14 7 21 0 5 5
Afternoon 3 1 4 0 7 7 4 6 10 0 1 1 1 5 6
3 2 5 11 7 18 6 8 14 14 8 22 1 10 11
This gives a breakdown by morning/afternoon as well as Line #1/Line #2. Histograms (totals,
morning/afternoon, and Line #1/Line #2) could be constructed to highlight problem areas.
Overall, 70 defects were found, 22 of which were classified as unacceptable taste, making this the
most frequent problem. The next most frequent was missing item with 18 occurrences, and then
spill/mixed, with 14 occurrences.
Looking more closely at these three categories, we can see that 14 of the 22 unacceptable taste were
accounted for by Line #1 in the morning, and the remainder were Line #2, also in the morning. Line
#1 exhibited a similar morning problem: all 11 occurrences were in the morning. Line #2 had all 7 of
its occurrences in the afternoon. 10 of 14 occurrences of spill/mixed defects occurred in the afternoon.
In the improper seal category, 10 out of 11 occurrences were for Line #2.
In terms of recommendations, Ann should focus on investigating what might be causing taste
problems in the morning on both lines, morning problems on Line #1 for missing items and afternoon
problems for Line #2 for missing items. Spill/mixed has afternoon problems on both lines, and there
are seal problems on Line #2 throughout the day.

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Case: Tip Top Markets


Based on the analysis of the check sheet given on the following page, the number of quality problems
associated with the quality of the product has substantially decreased over time, while the quality
problems regarding shortages has considerably increased. Analyzing the Pareto chart, we see that there
are consistent complaints about store and parking lot conditions as well as complaints associated with
service, speed and charging mistakes of the checkout lines. Pareto chart demonstrates that the long
waiting lines and pricing mistakes do not appear to be as serious as the other problems mentioned
above. Since the stockouts appear to be the major complaint and moreover, the consequences of
shortages are more severe than the consequences of most other problems, Tip Top grocery store needs
to concentrate on solving the shortage problem. Based on the cause-and-effect diagram given on page
254, we identified four possible major reasons for shortages:
1. Forecasting
2. Supplier Deliveries
3. Spoilage
4. Inventory Inaccuracies.
Further analysis of these four areas is necessary before taking any corrective action.
Analysis of the check sheet shows no significant improvements in the areas
of pricing, store maintenance, checkout lines and shortages after
implementing the changes on July 15. In addition to the main goal of
reducing shortages, Tip Top needs to investigate the store conditions,
checkout line and waiting line problems as well. However, these problems
do not occur nearly as often and the consequences of these complaints are
not as serious as the stockout problem.

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Chapter 09 - Management of Quality

Case: Tip Top Markets


Checklist
Type of Problems
Checkout line
service/ Store/
speed charging Long waiting parking lot Out of stock Quality of
Date Pricing mistakes lines conditions (shortage) products Other
June 1      

June 8    

June 15       

June 22     

June 29      

July 6      


 
July 13      

July 20      

July 27    


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Chapter 09 - Management of Quality

Tip Top Markets


Runs Chart—Store-Parking Problems
12
11
10

Number of Store/Parking
9

Lot Problems per day


8
7
6
5
4
3
2
1
6/1 6/8 6/15 6/22 6/29 7/6 7/13 7/20 7/27 Time

Runs Chart—Pricing Problems


Number of Pricing
Problems per day

12
11
10
9
8
7
6
5
4
3
2
1
0
6/1 6/8 6/15 6/22 6/29 7/6 7/13 7/20 7/27 Time

Runs Chart—Quality Problems


Number of Quality
Problems per day

12
11
10
9
8
7
6
5
4
3
2
1
6/1 6/8 6/15 6/22 6/29 7/6 7/13 7/20 7/27 Time

Downward trend

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Chapter 09 - Management of Quality

Runs Chart—Shortage Problems

Number of Shortage
Problems per day
12
11
10
9
8
7
6
5
4
3
2
1
6/1 6/8 6/15 6/22 6/29 7/6 7/13 7/20 7/27 Time

Upward trend
Runs Chart—Checkout Problems
Number of Checkout
Problems per day

12
11
10
9
8
7
6
5
4
3
2
1
6/1 6/8 6/15 6/22 6/29 7/6 7/13 7/20 7/27 Time

Runs Chart—Waiting Line Problems

12
11
10
Number of Waiting Line

9
8
Problems per day

7
6
5
4
3
2
1
6/1 6/8 6/15 6/22 6/29 7/6 7/13 7/20 7/27 Time

9-24
Case: Tip Top Markets
Chapter

Cause and Effect Diagram


Case: Tip

12
24
36
48
60
Frequency

Forecasting Supplier Deliveries


09 -Top

Advertisements
coupons
Management

stock
Out of

Weather Lateness
Weather
Marketsof Quality

Supplier capacity
Demand
variability
Store and

conditions
parking lot

Business
cycle Backorders

9-25
speed,
charging
mistakes
Checkout
Pareto Chart

Shortages
(out of stock)
with

products
line service, Problems

quality of

Machine errors Poor


(bar code) refrigeration
Human error
Contamination
lines
Long
waiting

Theft Poor quality


Lost products
merchandise
Pricing

Inventory Inaccuracies Spoilage


Problem
Chapter 09 - Management of Quality

Enrichment Module: TQM Exercise


Suppose that you have just been hired by the Bloor Company as a consultant to assist it in its quality
improvement efforts.
Bloor is a supplier to a wide range of companies, including several in the auto industry. The
company’s desire to institute a total quality approach has come from a number of directions. Senior
management has become aware of successes in other companies’ quality efforts, including those of
several competitors. Apart from that, the company is also being pressured by many of its customers to
adopt a more formal approach to quality. For these and other reasons, Bloor senior management has
decided to develop a TQM approach.
Towards that end, in a series of brainstorming sessions, senior management has put together a list of
possible strategies and tactics that would form the foundation of the company’s effort to achieve a
TQM operation. Your immediate task is to review the list, and identify those items that are reflective
of a TQM approach.
The list of questions is below. Indicate by placing either a ‘Yes’ or a ‘No’ beside each question whether
or not you feel that the item reflects a TQM approach.
TQM (?) Strategy or Tactic
[YES or NO]
Agree?
______1. Emphasize a company-wide program for finding defectives before they are sent out.
______2. Use a systematic process analysis effort to improve processes throughout the company.
______3. Strive to maintain high-quality ethical standards by not engaging in practices like obtaining
information about competitors’ quality efforts.
______4. Have senior management carefully design the TQM process, but then turn it over to the
employees with the authority they need to operate it.
______5. Set up a method for achieving customer satisfaction of both internal and external
customers.
______6. Put every member of the organization through the same quality training program to prepare
them to operate in a TQM environment.
______7. Benchmark other companies’ operations, even those that are not in the same industry.
______8. Set a reasonable time limit for the completion of the TQM effort so that it doesn’t become a
never-ending program.
______9. Make sure all decisions are approved by senior management to keep them actively
involved.
______10. Train employees to work effectively in teams, and give the teams some degree of
autonomy.

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Chapter 09 - Management of Quality

Answers TQM—Strategy or Tactic


1. No. Prevention of defects should be the emphasis—not detection of errors.
2. Yes.
3. No. It is not unethical to obtain information about the competitor’s quality practices as long as
it is done in a legal and ethical fashion.
4. No. The senior management should work with the rest of the company to design the TQM
process.
5. Yes. Many companies forget about the internal customers and only consider the external
customers.
6. No. Different employees have different quality training needs.
7. Yes. Since certain industries have excelled in certain areas, a company may learn a great deal
about a specific function by benchmarking that function from a company outside the
industry.
8. No. Quality improvement programs should be a never-ending, continuous improvement effort.
9. No. Senior management need not be actively involved in decision-making at the lower levels
of management and the shop floor. (Too much detail for senior management.)
10. Yes. Teamwork and training are very important in successfully implementing a TQM system.

9-27