Statistics for Business and

Economics

Chapter 12
Methods for Quality Improvement
 Learning Objectives

1. Define Quality
2. Describe Types of Variation
3. Explain Control Charts
xChart
RChart
pChart
 What is Quality?

1. Performance
Primary operating characteristics of the product

2. Features
"bells and whistles"

3. Reliability
Probability product will function for a specified
amount of time
 What is Quality?

4. Conformance
Extent to which product meets
preestablished standards
5. Durability
The life of the product
6. Serviceability
Ease and speed of repair
 What is Quality?

7. Aesthetics
Way product looks, feels, etc.
8. Other Perceptions
e.g. Company reputation
 Process

Inputs Process
Information Outputs
Methods Finished
Energy Operations Products
Materials
Machines
People

Variability is present in the output of all

processes
 System

System

Supplier Processes Customer

Feedback
 Sources of Variation

1. People
2. Machines
3. Materials
4. Methods
5. Measurement
6. Environment
 Types of Variation
Common causes
Methods, materials, people, environment
Special causes
Single worker, bad batch of material
Only detectable when process is incontrol (stable)
 Time Series Plot (Run Chart)
Graphically shows trends and changes in the
data over time
Time recorded on the horizontal axis
Measurements recorded on the vertical axis
Points connected by straight lines
 Time Series Pattern:
Random Behavior
centerline
Measurement

Order of production
 Time Series Pattern:
Shift
centerline
Measurement

Order of production
 Time Series Pattern:
Increased Variance
centerline
Measurement

Order of production
 Control Chart Uses
Monitor process variation
Differentiate between variation due to
common causes v. special causes
Evaluate past performance
Monitor current performance
 Sample Control Chart
Upper control limit

m + 3s
centerline
Measurement

m - 3s

Lower control limit

Order of production
 Control Limits
3sigma limits
Upper control limit: + 3
Lower control limit: 3
.00135

m + 3s

m
.00135

m - 3s

Order of production
 4 Possible Outcomes
H0: Process is in control
Ha: Process is out of control

Conclude process Reality

is in control H0 True Ha True
Conclusion

Correct Type II
H0 True
decision Error
Type I Correct
Ha True
Error decision
Conclude process
is out of control
 Types of Control Charts

Type of
Data

Quantitative Qualitative
Data Data

xchart Rchart pchart

The xChart
 Types of Control Charts

Type of
Data

Quantitative Qualitative
Data Data

xchart Rchart pchart

 xChart
Monitors changes in the mean of samples
Horizontal axis: Sample number
Vertical axis: Mean of sample
Control limits based on sampling distribution
of x
s
Standard deviation of x: s x =
n
 Sample xChart
Upper control limit
s
m +3
centerline n

m
x

s
m -3
n
Lower control limit

Sample Number
 Determining the Centerline
x1 + x2 + ... + xk
x=
k
k = number of samples of size n (usually between 2
and 10)

xi = sample mean of the ith sample

 Estimating
1. Determine the Range of each sample
Range = Maximum Minimum
2. Determine the Average Range of the k
samples
R1 + R2 + ... + Rk
R=
k
3. Divide R by the constant d2 (based on sample
size) R
s =
d2
Determining the Control Limits
R
3
d2
UCL = x + = x + A2 R
n where
3
A2 =
R d2 n
3
d2
LCL = x - = x - A2 R
n
 xChart Summary
1. Collect at least 20 samples of size 2 to 10
2. Calculate mean and range of each sample
3. Determine the centerline and control limits
Centerline = x
UCL = x + A2 R LCL = x - A2 R
where
x1 + x2 + ... + xk R1 + R2 + ... + Rk A2 =
3
x= R=
k k d2 n
 xChart Example
Samples from a machine filling 12oz soda cans
xChart Centerline Solution

x1 + x2 + ... + xk
x=
k
12.5 + 11.814 + 11.706 + ... + 11.632
=
20
= 11.9967
xChart Control Limits Solution

R1 + R2 + ... + Rk
R=
k
1.38 + 1.74 + .68 + ... + 1.11
=
20
= 1.071
xChart Control Limits Solution
UCL = x + A2 R
= 11.9967 + .577(1.071)
= 12.61

LCL = x - A2 R
= 11.9967 - .577(1.071)
= 11.38
xChart Solution

UCL = 12.61

x = 11.9967

LCL = 11.38
 Interpreting Control Charts
Six zones
Each zone is one standard deviation wide

Upper AB
boundary UCL
Zone A
Upper BC Zone B
boundary Zone C centerline
Lower BC Zone C
boundary Zone B
Lower AB Zone A LCL
boundary
Order of production
 Zone Boundaries
3sigma control limit zone boundaries:
2
Upper AB Boundary: x + ( A2 R )
3
2
Lower AB Boundary: x - ( A2 R )
3
1
Upper BC Boundary: x + ( A2 R )
3
1
Lower BC Boundary: x - ( A2 R )
3
 Zone Boundaries Example
Samples from a machine filling 12oz soda cans
 Zone AB Boundaries
Solution
Recall x = 11.9967 A2 = .577 R = 1.071
2
Upper AB: x + ( A2 R )
3
2
= 11.9967 + (.577)(1.071) = 12.4
3
2
Lower AB: x - ( A2 R )
3
2
= 11.9967 - (.577)(1.071) = 11.6
3
 Zone BC Boundaries
Solution
Recall x = 11.9967 A2 = .577 R = 1.071
1
Upper BC: x + ( A2 R )
3
1
= 11.9967 + (.577)(1.071) = 12.2
3
1
Lower BC: x - ( A2 R )
3
1
= 11.9967 - (.577)(1.071) = 11.8
3
xChart Solution

UCL = 12.61
A
12.4
B
12.2
C
x = 11.9967
C
11.8
B
11.6
A
LCL = 11.38
 Pattern Analysis Rules
Rule 1: One point beyond Zone A
Either lower or upper half of control chart

UCL
A
B
C
centerline
C
B
A LCL
 Pattern Analysis Rules
Rule 2: Nine points in a row in Zone C or
beyond
Either lower or upper half of control chart

UCL
A
B
C centerline
C
B
A
LCL
 Pattern Analysis Rules
Rule 3: Six points in a row steadily increasing
or decreasing

UCL
A
B
C centerline
C
B
A
LCL
 Pattern Analysis Rules
Rule 4: Fourteen points in a row alternating up
and down

UCL
A
B
C centerline
C
B
A
LCL
 Pattern Analysis Rules
Rule 5: Two out of three points in Zone A or
beyond
Either lower or upper half of control chart

UCL
A
B
C
centerline
C
B
A
LCL
 Pattern Analysis Rules
Rule 6: Four out of five points in Zone B or
beyond
Either lower or upper half of control chart

UCL
A
B
C centerline
C
B
A
LCL
 Interpreting an xChart
Process is considered out of control if any of
the pattern analysis rules are detected

Process is considered in control if none of the

pattern analysis rules are detected
 Interpreting xChart Example
What does the chart suggest about the stability of the
process?

UCL = 12.61
A
12.4
B
12.2
C
x = 11.9967
C
11.8
B
11.6
A
LCL = 11.38
Interpreting xChart Solution
Since none of the six pattern analysis rules are
observed, the process is considered in control
 Interpreting xChart Thinking
Challenge
Ten additional samples of size 5 are taken. What does
the chart suggest about the stability of the process?

UCL = 12.61
A
12.4
B
12.2
C x = 11.9967
C
B
11.8
11.6
A
LCL = 11.38
 Interpreting xChart Solution*
Rule 5 and Rule 6 are violated. Process is out of control

UCL = 12.61
A 12.4
B 12.2
C x = 11.9967
C
11.8
B
11.6
A
LCL = 11.38
RChart
 Types of Control Charts

Type of
Data

Quantitative Qualitative
Data Data

xchart Rchart pchart

 RChart
Monitors changes in process variation
Horizontal axis: Sample number
Vertical axis: Sample ranges
Control limits based on sampling distribution
of R
Mean of sampling distribution of R: R
Standard deviation of sampling distribution of R:
R
 Estimating R and R
R1 + R2 + ... + Rk
Estimate of R: R =
k
k = number of samples of size n 2
Ri = sample range of the ith sample

R
Estimate of R: d3
d 2
 Determining the Control Limits

R 3d3
UCL = R + 3d 3 = RD4 where D4 =
1+
d 2 d2

R 3d3
LCL = R - 3d 3 = RD3 where D3 =
1-
d 2 d2

Note: If n 6, the LCL will be negative. Since the

range cant be negative the LCL is meaningless.
 RChart Summary
1. Collect at least 20 samples of size n 2
2. Calculate the range of each sample
3. Determine the centerline and control limits
Centerline = R
UCL = RD4 LCL = RD3
where
R1 + R2 + ... + Rk
R=
k
 Zone Boundaries
R
Upper AB Boundary: R + 2d 3
d 2
R
Lower AB Boundary: R - 2d 3
d 2
R
Upper BC Boundary: R + d3
d 2
R
Lower BC Boundary: R - d3
d 2
 Interpreting an RChart
Process is considered out of control if any of
the pattern analysis rules 1 4 are detected:
One point beyond Zone A
Nine points in a row in Zone C or beyond
Six points in a row steadily increasing or decreasing
Fourteen points in a row alternating up and down
Process is considered in control if none of the
pattern analysis rules are detected
 RChart Example
Samples from a machine filling 12oz soda cans
 RChart Solution
Calculate the mean of the ranges:

R1 + R2 + ... + Rk
R=
k
1.38 + 1.74 + .68 + ... + 1.11
=
20
= 1.071
 RChart Solution
Calculate the control limits.
n=5 D4 = 2.114 D3 = 0 (LCL will be zero)

UCL = RD4
= 1.071(2.114)
= 2.3
 RChart Solution
Determine the AB zone boundaries

Upper AB Boundary:
R 1.071
R + 2d3 = 1.071 + 2(.864) = 1.9
d 2 2.326

Lower AB Boundary:
R 1.071
R - 2d3 = 1.071 - 2(.864) = .3
d 2 2.326
 RChart Solution
Determine the BC zone boundaries

Upper BC Boundary:
R 1.071
R + d3 = 1.071 + (.864) = 1.5
d 2 2.326

Lower BC Boundary:
R 1.071
R - d3 = 1.071 - (.864) = .7
d 2 2.326
 RChart Solution

UCL = 2.3
A
1.9
B
1.5
C
R = 1.071
C
.7
B
.3
A LCL = 0

The variation of the process is in control

pChart
 Types of Control Charts

Type of
Data

Quantitative Qualitative
Data Data

xchart Rchart pchart

 pChart
Used for qualitative data
Monitors variation in the process proportion
Horizontal axis: Sample number
Vertical axis: Sample proportion
Control limits based on sampling distribution
of p^
^ p^
Mean of sampling distribution of p:
^ p
Standard deviation of sampling distribution of p:
^
 Estimating p^ and p^

Estimate of p^:

p = Total number of defective units in all k samples

Total number of units sampled

Estimate of p^: p (1 - p )
n
 Determining the Control Limits

p (1 - p )
UCL = p + 3
n

p (1 - p )
LCL = p - 3
n

Note: If the LCL is negative do not plot it on the control

chart.
 pChart Summary
1. Collect at least 20 samples of size
9(1 - p0 )
n> p0 is an estimate of p
p0
2. Calculate the proportion of defective units in
each sample
p^ = Number of defective units in the sample
Number of units in the sample

3. Determine the centerline and control limits

 Zone Boundaries
p (1 - p )
Upper AB Boundary: p+2
n
p (1 - p )
Lower AB Boundary: p-2
n

p (1 - p )
Upper BC Boundary: p+
n
p (1 - p )
Lower BC Boundary: p-
n
 Interpreting a pChart
Process is considered out of control if any of
the pattern analysis rules 1 4 are detected:
One point beyond Zone A
Nine points in a row in Zone C or beyond
Six points in a row steadily increasing or decreasing
Fourteen points in a row alternating up and down
Process is considered in control if none of the
pattern analysis rules are detected
 pChart Example
A manufacturer of pencils knows about 4% of pencils
produced fail to meet specifications. How many pencils
should be sampled for monitoring the process
proportion?

Solution:

9(1 - p0 ) 9(1 - .04)
n> = = 216
p0 .04
Samples of size 216 or more should be selected.
 pChart Example
The pencil manufacturer
has decided to select
samples of size n = 225.
The table shows the
results for the past 20
samples. Construct a p
chart.

 pChart Solution
Calculate the centerline:

Total # defective 173

p= = = .03844
Total # sampled 4500
 pChart Solution
Calculate the control limits:

p (1 - p )
p 3
n
.03844(1 - .03844)
= .03844 3
225
UCL = .07689
LCL = -.00001*
*Since LCL is negative, do not plot it on the
control chart
 pChart Solution
Determine the AB zone boundaries
p (1 - p )
p 2
n
.03844(1 - .03844)
= .03844 2
225

Upper AB Boundary: .06407

Lower AB Boundary: .01281

 pChart Solution
Determine the BC zone boundaries
p (1 - p )
p
n
.03844(1 - .03844)
= .03844
225

Upper BC Boundary: .05126

Lower BC Boundary: .02562

 pChart Solution

UCL = .07689
A
.06407
B
.05126
C
p = .03844
C
.02562
B
.01281
A

The process is in control

 Conclusion

1. Defined Quality
2. Described Types of Variation
3. Explained Control Charts
xChart
RChart
pChart