Module 2

Learning Objectives:
At the end of the session, the students must have:
 Defined quality in both the consumer and producer’s perspectives.
 Provided the dimensions of quality in both products and services
 Illustrated the role of Total Quality Management in building employee morale and productivity.
 Used quality tools to solve problems and identify its causes within an operational system.

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What is Quality?

The American Society for Quality (ASQ) defines quality as “a subjective term for which each person
has his or her own definition. In technical usage, quality can have two meanings: (1) The characteristics of a
product or service that bear on its ability to
satisfy stated or implied needs and (2) A
product or service free of deficiencies.”

Therefore, when we look at it, quality

varies depending on the person/people
defining it. Here, we will be delving into the
meaning of quality based on both the
customers’ perspective and the producer’s
perspective. A summary of how quality is
defined is as shown on the figure on the side.

Quality from the Customers’ Perspective

According to W. Edwards Deming, a

quality guru, “The consumer is the most
important part of the production line. Quality should be aimed at the needs of the consumer, present and
future.” Thus, it is of utmost importance to view quality from the perspective of the consumers. Quality is
then determined by what the consumers want and what they are willing to pay for.

Since customers have different product needs, they will have different quality expectations. This
results in a commonly used definition of quality as a service’ or product’s fitness for its intended use, or fitness
for use. This is how well the product or service does what it is supposed to. For instance, a Toyota Hilux and
a Ford Ranger are equally “fit for use,” in the sense that they both provide automobile transportation, and each
may meet the quality standards of the purchasers. Because of the different companies producing both however,
the two products have obviously been designed differently for different types of consumers. This is commonly
referred to as the quality of design—the degree to which quality characteristics are designed into the product.
Although both are designed for the same use, the Toyota Hilux and Ford Ranger differ in terms of
performance, features, size and other quality characteristics.

Below are some of the dimensions of quality for manufactured products a customer looks for:

1. Performance: The basic operating characteristics of a product; for example, how well a car handles or
its gas mileage.
2. Features: The “extra” items added to the basic features, such as a stereo CD or a leather interior in a
car.
3. Reliability: The probability that a product will operate properly within an expected time frame; that is,
a TV will work without repair for about seven years.
4. Conformance: The degree to which a product meets pre-established standards.
5. Durability: How long the product lasts; its life span before replacement. A pair of L.L. Bean boots,
with care, might be expected to last a lifetime.
6. Serviceability: The ease of getting repairs, the speed of repairs, and the courtesy and competence of
the repair person.
7. Aesthetics: How a product looks, feels, sounds, smells, or tastes.
8. Safety: Assurance that the customer will not suffer injury or harm from a product; an especially
important consideration for automobiles.
9. Other perceptions: Subjective perceptions based on brand name, advertising, and the like.

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 These quality characteristics are weighed by the customer relative to the cost of the product. In general,
customers will pay for the level of quality they can afford. If they feel they are getting what they paid for (or
more), then they tend to be satisfied with the quality of the product.

In terms of the dimensions of quality for a service, it differs from that of a manufactured product.
Service quality is more directly related to time, and the interaction between employees and the customer.
According to authors Evans and Lindsay, the following dimensions of service quality:
1. Time and timeliness: How long must a customer wait for service, and is it completed on time? For
example, is an overnight package delivered overnight?
2. Completeness: Is everything the customer asked for provided? For example, is a mail order from a
catalogue company complete when delivered?
3. Courtesy: How are customers treated by employees? For example, are catalogue phone nice and are
their voices pleasant?
4. Consistency: Is the same level of service provided to each customer each time? Is your newspaper
delivered on time every morning?
5. Accessibility and convenience: How easy is it to obtain the service? For example, when you call a
company, does the service representative answer quickly?
6. Accuracy: Is the service performed right every time? Is your bank or credit card statement correct
every month?
7. Responsiveness: How well does the company react to unusual situations, which can happen frequently
in a service company? For example, how well is a telephone operator able to respond to a customer’s
questions about a catalogue item not fully described in the catalogue?

Quality from the Producers’ Perspective

Quality in the perspective of the producer is different from that of the consumer. Here, producers view
quality on how value is created. Remember, product designs are determined based on customers’ wants, needs,
and willingness to pay (fitness for use)—the basis for quality in the customers’ perspective. Once this has
been set, the producer perceives quality to be how effectively the production process is able to conform to the
specifications required by the design, referred to as the quality of conformance. What this means is quality
during production focuses on making sure that the product meets the specifications required by the design.

For example, if new tires do not conform to specifications, they wobble. If a hotel room is not clean
when a guest checks in, the hotel is not functioning according to the specifications of its design; it is a faulty
service. From this producer’s perspective, good quality products conform to specifications—they are well
made; poor-quality products are not made well—they do not conform to specifications.

Achieving quality of conformance, however, depends on a number of factors. This includes the design
of the production process (distinct from product design), the performance level of machinery, equipment and
technology, the materials used, the training and supervision of employees, and the degree to which statistical
quality-control techniques are used. When equipment fails or is maladjusted, when employees make mistakes,
when material and parts are defective, and when supervision is lax, design specifications are generally not
met.

Total Quality Management

A primary role of management is to lead an organization in its daily operation and to maintain it as a
viable entity into the future. In both of these objectives, quality has become an important factor. Thus,
importance is also being emphasized in Total Quality Management.

The term total quality management (TQM) refers to a quest for quality in an organization. In this
approach, there are three key philosophies. One is a never-ending push to improve, which is referred to as
continuous improvement. The second is the involvement of everyone in the organization. Lastly is a goal of

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customer satisfaction, which means meeting or exceeding customer expectations. TQM expands the traditional
view of quality—looking only at the quality of the final product or services—to looking at the quality of every
aspect of the process that produces the product or service. These TQM systems are intended to prevent poor
quality from occurring. The illustration below shows how TQM has evolved over time.

Quality Improvement and Role of Employees

Job training and employee development are major features of a successful quality management
program. Increased training in job skills results in improved processes that improve product quality. Training
in quality tools and skills such as statistical process control enable employees to diagnose and correct day-to-
day problems related to their job. This provides employees with greater responsibility for product quality and
greater satisfaction for doing their part to achieve quality. When achievement is reinforced through rewards
and recognition, it further increases employee satisfaction.

When employees are directly involved in the quality management process, it is referred to as
participative problem solving. Employee participation in identifying and solving quality problems has been
shown to be effective in improving quality, increasing employee satisfaction and morale, improving job skills,
reducing job turnover and absenteeism, and increasing productivity.

Obstacles to Implementing TQM

Companies have had varying success in implementing TQM. Some have been quite successful, but
others have struggled. Part of the difficulty may be with the process by which it is implemented rather than
with the principles of TQM. Among the factors cited in the literature are the following:

1. Lack of a companywide definition of quality: Efforts aren’t coordinated; people are working at cross
purposes, addressing different issues, and using different measures of success.
2. Lack of a strategic plan for change: Without such a plan the chance of success is lessened and the need
to address strategic implications of change is ignored.
3. Lack of a customer focus: Without a customer focus, there is a risk of customer dissatisfaction.
4. Poor intraorganizational communication: The left hand doesn’t know what the right hand is doing;
frustration, waste, and confusion ensue.
5. Lack of employee empowerment: Not empowering employees gives the impression of not trusting
employees to fix problems, adds red tape, and delays solutions.
6. View of quality as a “quick fix”: Quality needs to be a long-term, continuing effort.
7. Emphasis on short-term financial results: “Duct-tape” solutions often treat symptoms; spend a little
now—a lot more later.
8. Inordinate presence of internal politics and “turf” issues: These can sap the energy of an organization
and derail the best of ideas.
9. Lack of strong motivation: Managers need to make sure employees are motivated.

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 10. Lack of time to devote to quality initiatives: Don’t add more work without adding additional resources.
11. Lack of leadership: Managers need to be leaders.

Cost of Quality

According to legendary quality guru Armand Feigenbaum, “quality costs are the foundation for quality
systems economics.” Quality costs have traditionally served as the basis for evaluating investments in quality
programs. The costs of quality are those incurred to achieve good quality and to satisfy the customer, as well
as costs incurred when quality fails to satisfy the customer. Thus, quality costs fall into two categories: the
cost of achieving good quality, also known as the cost of quality assurance, and the cost associated with poor-
quality products, also referred to as the cost of not conforming to specifications.

The Cost of Achieving Good Quality

The costs of a quality management program are prevention costs and appraisal costs.

1. Prevention costs are the costs of trying to prevent poor-quality products from reaching the customer.
Prevention reflects the quality philosophy of “do it right the first time,” the goal of a quality
management program.

Examples:

 Quality planning costs: The costs of developing and implementing the quality management
program.
 Product-design costs: The costs of designing products with quality characteristics.
 Process costs: The costs expended to make sure the productive process conforms to quality
specifications.
 Training costs: The costs of developing and putting on quality training programs for employees
and management.
 Information costs: The costs of acquiring and maintaining (typically on computers) data related
to quality, and the development and analysis of reports on quality performance.

2. Appraisal costs are the costs of measuring, testing, and analyzing materials, parts, products, and the
productive process to ensure that product-quality specifications are being met.

Examples:

 Inspection and testing: The costs of testing and inspecting materials, parts, and the product at
various stages and at the end of the process.
 Test equipment costs: The costs of maintaining equipment used in testing the quality
characteristics of products.
 Operator costs: The costs of the time spent by operators to gather data for testing product
quality, to make equipment adjustments to maintain quality, and to stop work to assess quality.

The Cost of Poor Quality

The cost of poor quality (COPQ) is the difference between what it actually costs to produce a product
or deliver a service and what it would cost if there were no defects. Most companies find that defects, rework
and other unnecessary activities related to quality problems significantly inflate costs; estimates range as high
as 20 to 30% of total revenues. The cost of poor quality can be categorized as internal failure costs or external
failure costs.

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 1. Internal failure costs are incurred when poor-quality products are discovered before they are delivered
to the customer.

Examples:

 Scrap costs: The costs of poor-quality products that must be discarded, including labor,
material, and indirect costs.
 Rework costs: The costs of fixing defective products to conform to quality specifications.
 Process failure costs: The costs of determining why the production process is producing poor
quality products.
 Process downtime costs: The costs of shutting down the productive process to fix the problem.
 Price-downgrading costs: The costs of discounting poor-quality products—that is, selling
products as “seconds.”

2. External failure costs are incurred after the customer has received a poor-quality product and are
primarily related to customer service.

Examples:

 Customer complaint costs: The costs of investigating and satisfactorily responding to a

customer complaint resulting from a poor-quality product.
 Product return costs: The costs of handling and replacing poor-quality products returned by the
customer.
 Warranty claims costs: The costs of complying with product warranties.
 Product liability costs: The litigation costs resulting from product liability and customer injury.
 Lost sales costs: The costs incurred because customers are dissatisfied with poor-quality
products and do not make additional purchases.

Quality Management and Productivity

As learned in the previous module, Productivity is a measure of a company’s effectiveness in

converting inputs into outputs. It is broadly defined as the ratio of output to input.

An output is the final product from a service or production process, such as an automobile, a
hamburger, a sale, or a catalogue order. Inputs are the parts, material, labor, capital, and so on that go into the
productive process. Productivity measures, depending on the outputs and inputs used, are labor productivity
(output per labor-hour) and machine productivity (output per machine-hour).

Improving quality by reducing defects will increase good output and reduce inputs. In fact, virtually
all aspects of quality improvement have a favorable impact on different measures of productivity. Improving
product design and production processes, improving the quality of materials and parts, and improving job
designs and work activity will all increase productivity

Quality Tools

A major cornerstone of the commitment to quality improvement prescribed by Deming and the other
early quality gurus is the need to identify and prevent the causes of quality problems, or defects. These
individuals prescribed a number of “tools” to identify the causes of quality problems that are still widely used
today, including Pareto charts, process flowcharts, check sheets, histograms, scatter diagrams, statistical
process control charts and cause-and-effect diagrams.

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Process Flowcharts

A process flowchart is a diagram of the steps in a job, operation, or process. It enables everyone
involved in identifying and solving quality problems to have a clear picture of how a specific operation works
and a common frame of reference. It also enables a process improvement team to understand the
interrelationship of the departments and functions that constitute a process. This helps focus on where
problems might occur and if the process itself needs fixing. Development of the flowchart can help identify
quality problems by helping the problem solvers better understand the process.

Below are some of the basic symbols used in flowcharts. An example for a process flowchart of a bank
transaction is also provided.

Cause-and-Effect Diagrams

A cause-and-effect diagram, also called a fishbone or Ishikawa diagram, is a graphical description of

the elements of a specific quality problem and the relationship between those elements. It is used to identify
the causes of a quality problem so it can be corrected. Cause-and-effect diagrams are usually developed as
part of brainstorming to
help a quality team of
employees and managers
identify causes of quality
problems.

On the side is an
example of a cause-and-
effect diagram of a hospital
to reduce delays in patient
bed turnaround time, which
creates a patient flow
problem throughout the
hospital.
The “effect” box at
the end of the diagram is
the quality problem that

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needs correction. A center line connects the effect box to the major categories of possible problem causes,
displayed as branches off of the center line. The box at the end of each branch (or fishbone) describes the
cause category. The diagram starts out in this form with only the major categories at the end of each branch.
Individual causes associated with each category are attached as separate lines along the length of the branch
during the brainstorming process. Sometimes the causes are rank-ordered along the branches in order to
identify those that are most likely to affect the problem. The cause-and-effect diagram is a means for thinking
through a problem and recording the possible causes in an organized and easily interpretable manner.

Check Sheet/ Check List

Check sheets are frequently used in conjunction with

histograms, as well as with Pareto diagrams. A check sheet is
a fact-finding tool used to collect data about quality problems.
A typical check sheet for quality defects tallies the number of
defects for a variety of previously identified problem causes.
When the check sheet is completed, the total tally of defects for
each cause can be used to create a histogram or a Pareto chart.

Histogram

A histogram is the most commonly used graph to show frequency distributions. It looks very much
like a bar chart.

When Do We Use Histograms?

• When the data are numerical.
• When you want to see the shape of the
data’s distribution, especially when
determining whether the output of a process
is distributed approximately normally.
• When analyzing whether a process can meet
the customer’s requirements.
• When analyzing what the output from a
supplier’s process looks like.
• When seeing whether a process change has
occurred from one time period to another.
• When determining whether the outputs of
two or more processes are different.
• When you wish to communicate the
distribution of data quickly and easily to
others.

How To Create a Histogram

1. Collect at least 50 consecutive data points from a process.

2. Use a histogram worksheet (as seen on the next page) to set up the histogram. It will help you
determine the number of bars, the range of numbers that go into each bar, and the labels for the bar
edges. After calculating W in Step 2 of the worksheet, use your judgment to adjust it to a convenient
number. For example, you might decide to round 0.9 to an even 1.0. The value for W must not
have more decimal places than the numbers you will be graphing.

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 3. Draw x- and y-axes on graph paper. Mark
and label the y-axis for counting data values
(frequency). Mark and label the x-axis with
the L values from the worksheet. The spaces
between these numbers will be the bars of the
histogram. Do not allow for spaces between
bars.

To easily organize data to be placed on the x-

and y-axis, the table below may be used.
L Number Scores Frequency
Values before the Included in (number of
next L between the scores
value values of the included in
1st & 2nd between the
Column values of the
1st & 2nd
Column)

Note: Depending on the highest number of frequency, different intervals can be used for y-axis.
You could use multiples of 2, 5, 10, 20…

4. For each data point, mark off one count above the appropriate bar with an X or by shading that
portion of the bar.

Pareto Analysis

Pareto analysis is a method of identifying the causes of poor quality. It was devised in the early 1950s
by the quality expert Joseph Juran. Pareto analysis is based on Juran’s finding that most quality problems and
costs result from only a few causes.

Pareto Analysis is a simple technique for prioritizing possible changes by identifying the problems that
will be resolved by making these changes. By using this approach, you can prioritize the individual changes
that will most improve the situation.

Pareto Analysis uses the Pareto Principle – also known as the "80/20 Rule" – which is the idea that 20
percent of causes generate 80 percent of results. With this tool, we're trying to find the 20 percent of work that
will generate 80 percent of the results that doing all of the work would deliver.

Note that the figures 80 and 20 are illustrative – the Pareto Principle illustrates the lack of symmetry
that often appears between work put in and results achieved. For example, 13 percent of work could generate
87 percent of returns. Or 70 percent of problems could be resolved by dealing with 30 percent of the causes.

 How to Use the Tool

Step 1: Identify and List Problems

Firstly, write a list of all of the problems that you need to resolve. Where possible, talk to clients and
team members to get their input, and draw on surveys, helpdesk logs and suchlike, where these are
available.
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 Step 2: Identify the Root Cause of Each Problem
For each problem, identify its fundamental cause. (Techniques such as Brainstorming and Cause-and-
Effect Analysis)

Step 3: Score Problems

Now you need to score each problem. The scoring method you use depends on the sort of problem
you're trying to solve.

For example, if you're trying to improve profits, you might score problems on the basis of how much
they are costing you. Alternatively, if you're trying to improve customer satisfaction, you might score
them on the basis of the number of complaints eliminated by solving the problem.

Step 4: Group Problems Together By Root Cause

Next, group problems together by cause. For example, if three of your problems are caused by lack of
staff, put these in the same group.

Step 5: Add up the Scores for Each Group

You can now add up the scores for each cause group. The group with the top score is your highest
priority, and the group with the lowest score is your lowest priority.

Step 6: Take Action

Now you need to deal with the causes of your problems, dealing with your top-priority problem, or
group of problems, first.
Keep in mind that low scoring problems may not even be worth bothering with - solving these
problems may cost you more than the solutions are worth.

 Pareto Analysis Example

Jack has taken over a failing service center, with a host of problems that need resolving. His objective
is to increase overall customer satisfaction. He decides to score each problem by the number of
complaints that the center has received for each one.

Jack then groups problems together (steps 4 and 5). He scores each group by the number of complaints,
and orders the list as follows:
• Lack of training (items 5 and 6) – 51 complaints.
• Too few service center staff (items 1 and 2) – 21 complaints.
• Poor organization and preparation (items 3 and 4) – 6 complaints.

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 As you can see from the figure, Jack will get the biggest benefits by providing staff
with more training. Once this is done, it may be worth looking at increasing
the number of staff in the call center. It's possible, however, that this won't be
necessary: the number of complaints may decline, and training should help
people to be more productive.

By carrying out a Pareto Analysis, Jack is able to focus

on training as an issue, rather than spreading his effort over
training, taking on new staff members, and possibly installing a
new computer system to help engineers be more
prepared.

Scatter Diagram

Scatter diagrams graphically show the relationship between two variables. It is also called as a scatter
plot or X-Y graph. The scatter diagram graphs pairs of numerical data, with one variable on each axis, to look
for a relationship between them. If the variables are correlated, the points will fall along a line or curve. The
better the correlation, the tighter the points will hug the line.

When to Use a Scatter Diagram

 When you have paired numerical data.

 When your dependent variable may have multiple values for each value of your independent
variable.
 When trying to determine whether the two variables are related, such as…
o When trying to identify potential root causes of problems.
o After brainstorming causes and effects using a fishbone diagram, to determine objectively
whether a particular cause and effect are related.
o When determining whether two effects that appear to be related both occur with the same
cause.
o When testing for autocorrelation before constructing a control chart.

Scatter Diagram Procedure

1. Collect pairs of data where a relationship is suspected.

2. Draw a graph with the independent variable on the horizontal axis and the dependent variable on
the vertical axis. For each pair of data, put a dot or a symbol where the x-axis value intersects the
y-axis value. (If two dots fall together, put them side by side, touching, so that you can see both.)
3. Look at the pattern of points to see if a relationship is obvious. If the data clearly form a line or a
curve, you may stop. The variables are correlated. You may wish to use regression or correlation
analysis now. Otherwise, complete steps 4 through 7.
4. Divide points on the graph into four quadrants. If there are X points on the graph,
• Count X/2 points from top to bottom and draw a horizontal line.
• Count X/2 points from left to right and draw a vertical line.
• If number of points is odd, draw the line through the middle point.
5. Count the points in each quadrant. Do not count points on a line.
6. Add the diagonally opposite quadrants. Find the smaller sum and the total of points in all
quadrants.
A = points in upper left + points in lower right

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 B = points in upper right + points in lower left
Q = the smaller of A and B
N=A+B
7. Look up the limit for N on the trend test table (see
figure on the side).
• If Q is less than the limit, the two variables
are related.
• If Q is greater than or equal to the limit, the
pattern could have occurred from random
chance.

Scatter Diagram Example

The ZZ-400 manufacturing team suspects a

relationship between product purity (percent purity)
and the amount of iron (measured in parts per million
or ppm). Purity and iron are plotted against each other
as a scatter diagram, as shown in the figure on the side.

There are 24 data points. Median lines

are drawn so that 12 points fall on each side
for both percent purity and ppm iron.

To test for a relationship, they calculate:

A = points in upper left + points in lower
right = 9 + 9 = 18
B = points in upper right + points in lower
left = 3 + 3 = 6
Q = the smaller of A and B = the smaller of
18 and 6 = 6
N = A + B = 18 + 6 = 24

Then they look up the limit for N on the

trend test table. For N = 24, the limit is 6. Q
is equal to the limit. Therefore, the pattern
could have occurred from random chance,
and no relationship is demonstrated.

Scatter Diagram Considerations

• Even if the scatter diagram shows a relationship, do not assume that one variable caused the other.
Both may be influenced by a third variable.
• When the data are plotted, the more the diagram resembles a straight line, the stronger the
relationship.
• If a line is not clear, statistics (N and Q) determine whether there is reasonable certainty that a
relationship exists. If the statistics say that no relationship exists, the pattern could have occurred by
random chance.
• If the scatter diagram shows no relationship between the variables, consider whether the data might
be stratified.

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 • If the diagram shows no relationship, consider whether the independent (x-axis) variable has been
varied widely. Sometimes a relationship is not apparent because the data don’t cover a wide enough
range.
• Think creatively about how to use scatter diagrams to discover a root cause.
• Drawing a scatter diagram is the first step in looking for a relationship between variables.

Statistical Process Control Charts

Processes are variable may it be in manufacturing or service industry. The reason for this is the
sources of variation in all processes, which is said to have two major sources:
• Common cause variation – is the inherent variation in the process due to the way it was designed
and is managed; can be reduced only by fundamentally changing the process
• Special cause variation – caused by things that don't normally happen in the process; employees
closest to the process have the responsibility for finding and removing (if possible) special causes
of variation

A process is in statistical control if only common cause variation is present. How do we know if only
common cause variation is present or if there are also special causes of variation present? The only way to
determine this is through the use of a CONTROL CHART.

A control chart represents a picture of a process over time. To effectively use control charts, one
must be able to interpret the picture. What is this control chart telling me about my process? Is this picture
telling me that everything is all right and I can relax? Is this picture telling me that something is wrong and I
should get up and find out what has happened? A control chart tells you if your process is in statistical
control.

 “IN CONTROL” Control Charts

The graph shows a stable (in statistical control) process. This pattern is typical of processes that are
stable.

Three characteristics of a process that is in control are:

o Most points are near the average
o A few points are near the control limits
o No points are beyond the control limits

If a control chart does not look similar to the one

beside, there is probably a special cause present. To determine
whether there is a special cause present, the following tests
may be done:

1. Points Beyond the Control Limit

A special cause is present in the process if any

points fall above the upper control limit or below the
lower control limit. Action should be taken to find the
special cause and permanently remove it from the
process.

If there is a point beyond the control limits,

there is no need to apply the other tests for out of
control situations.

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 2. Zone Tests

The zone tests are valuable tests for enhancing

the ability of control charts to detect small shifts
quickly. The first step in using these tests is to divide
the control chart into zones. This is done by dividing
the area between the average and the upper control limit
into three equally spaced areas. This is then repeated
for the area between the average and the lower control
limit.

The zones are called zones A, B, and C. There is

a zone A for the top half of the chart and a zone A for the bottom half of the chart. The same is true
for zones B and C.

o Zone “A” Test

A special cause exists if two out of three consecutive points fall in zone A or beyond.
The test is applied for the zone A above the average and then for the zone A below the
average.

This test, just like the succeeding tests,

is applied to both halves of the chart.
However, only one half is considered
at a time. For example, if one point
falls in the zone A above the average
and the next point falls in zone A
below the average, this is not two out
of three consecutive points in zone A
or beyond. The two points in zone A
must be on the same side of the average.

o Zone “B” and Zone “C” Test

A special cause exists if four

consecutive points fall in zone B or
beyond. This test is applied for zone B
above the average and then for zone B
below the average.

A special cause exists if seven

consecutive points fall in zone C or
beyond. The test should be applied
for the zone C above the average and
then for the zone C below the
average.

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 3. Test for Stratification

Stratification occurs if two or more processes (distributions) are being sampled

systematically. For example, stratification can occur if samples are taken once a shift and a subgroup
size of 3 is formed based on the results from three
shifts. It is possible that the shifts are operating at a
different average or variability. The test for
stratification involves the use of the zones but is
applied to the entire chart and not one-half of the
chart at a time.

Stratification (a special cause) exists if fifteen

or more consecutive points fall in zone C either
above or below the average. Note that the points tend
to hug the center line.

4. Test for Mixtures

A mixture exists when there is more than

one process present but sampling is done for each
process separately. For example, suppose you take
three samples per shift and form a subgroup based
on these three samples. If different shifts are
operating at different averages, a mixture can occur.

A mixture (a special cause) is present if eight or more consecutive points lie on both sides of
the average with none of the points in zone C.

5. Rule of Seven Tests

These tests are often taught

initially to employees as the method for
interpreting control charts (along with
points beyond the limits).

The tests state that an out of

control situation is present if one of the
following conditions is true:
• Seven points in a row above
the average
• Seven points in a row below
the average
• Seven points in a row trending up, or
• Seven points in a row trending down

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Exercises and Evaluation
Module 2: Worksheet 1
Making Flow Charts

Name: Course, Year, & Section

Instruction: Below is a situation requiring you to make one of the seven tools for quality control which is the Flow
Chart. Read the situation carefully and provide for the required on the space provided. Recall and make use of the
symbols in doing flow charts. Use separate sheet if necessary. Submit your outputs via the eClassroom.

Andrea, a newcomer at Corporation B, was tasked to identify in what part of the processing of complaints of
customers via phone will there be potential problems. Andrea is working for Corporation B which is part of the
BPO industry. Newcomer as she is, she do not have any idea how the processing of complaints via phone works.
Help Andrea find the potential problems by FIRST making her understand the process (given below) through
the use of one of the seven tools for quality control.

Processes (not in order):

 Agent thanks the customer for calling
 Agent answers the call
 Agent forwards the call to appropriate department
 Agent asks the customer of the complaints

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Exercises and Evaluation
Module 2: Worksheet 2
Doing Fishbone Diagrams

Name: Course, Year, & Section

Instruction: Another tool used in quality control is the Cause-and-Effect Diagram. Below is a situation requiring you
to make one. Read the situation carefully and provide for the required on the space provided. Make use of the figure or
you may draw your own diagram. Use separate sheet if necessary. Submit your outputs via the eClassroom.

In relation to the previous activity, Andrea now was able to identify that there really is a problem on the process
at Corporation B. She has identified that there is DELAY IN THE ANSWERING of the concerns/ complaints
of the customers. Andrea hopes that you would be able to give insights to her by making use of another tool in
identifying problem root causes. In helping Andrea, you have to rely on your basic understanding of what
possible factors may cause the problem.

Note: You may add more lines, if necessary. Also, you are not required to fill in all the lines. It will depend on
the analysis that you have made.

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Exercises and Evaluation
Module 2: Worksheet 3
Doing Histograms

Name: Course, Year, & Section

ABC Corporation wanted to improve the services that they offer to their clientele. The top management wants
to give the task to you to determine the extent of errors made by your subordinates in the Finance Department. Upon
checking, you were able to identify that most of the errors are on the forwarding of documents to a different office/
department, thus delaying the process.

As the head of the department, you wanted now to present the following data as a histogram to the top
management for their easy reference/ interpretation:

ERRORS MADE BY THE EMPLOYEES OF THE FINANCE DEPARTMENT IN THE LAST SIX
MONTHS
7 12 10 5 7 6 18 25 10 32
25 2 6 31 26 15 16 8 7 11
3 11 9 23 27 27 30 2 16 18
12 3 9 15 24 34 1 5 29 11
8 17 25 30 3 4 16 21 33 1

Requirements:
 Histogram showing proper labelling
 Identification of L values, frequency, and scores included within L values

Note: Make use of the data sheet and table on the next page to plot for the Histogram below.

HISTOGRAM OF ERRORS ON FORWARDED DOCUMENTS

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L Values Number Scores Included in between the Frequency (number of
before the values of the 1st & 2nd Column scores included in
next L value between the values of
the 1st & 2nd Column)

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Exercises and Evaluation
Module 2: Worksheet 4
Pareto Analysis

Name: Course, Year, & Section

Below are data gathered during the initial conduct of Pareto Analysis of ABC Company. Try to make an
assessment as to what particular problem should ABC Company tackle first.

TAKE NOTE of the Requirements:

- Steps 4-5 of the Pareto Analysis (NO GRAPHS REQUIRED)
- Analysis as to what problem should be addressed first and exact percentage of that particular problem

Score (Step
# Problem (Step 1) Cause (Step 2)
3)
Phones aren't answered quickly enough. Too few service center 15
1
staff.
Staff seem distracted and under pressure. Too few service center 12
2
staff.
Engineers don't appear to be well organized. They need second Poor organization and 5
3
visits to bring extra parts. preparation.
Engineers don't know what time they'll arrive. This means that No policy in place. 14
4
customers may have to be in all day for an engineer to visit.
Service center staff don't always seem to know what they're Lack of training. 22
5
doing.
When engineers visit, the customer finds that the problem Lack of training. 13
6
could have been solved over the phone.

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Exercises and Evaluation
Module 2: Worksheet 5
Plotting and Interpreting a Scatter Diagram

Name: Course, Year, & Section

University X, a private institution, wanted to maintain quality of service they are offering the students. Using a
fishbone diagram, they have identified that one of the possible causes for their problem on the inefficiency of the faculty
members is the increased number of workload.

Help University X determine whether there is a relationship on the increased number of workload and the
inefficiency of the faculty members. Increased number of workload is measured in terms of the current number of
subjects the faculty handles while inefficiency is translated as the number of times the faculty is tardy.

Below is the data gathered from various faculty members. Please find below the trend test table that you will be
needing in your analysis. Use a separate sheet for your output..

Faculty Faculty Faculty Faculty Faculty Faculty Faculty Faculty Faculty

A B C D E F G H I
No. of Subjects 7 9 6 4 9 7 7 8 5
No. of times tardy 5 2 2 4 7 1 4 3 8

TAKE NOTE of the Requirements:

 Scatter Diagram showing proper labelling
 Analysis on the relationship of slow processing and the number of employees
 Computations

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Exercises and Evaluation
Module 2: Worksheet 6
Testing and Interpreting Control Charts

Name: Course, Year, & Section

Instruction: Below are various control charts for LMC Company. Test the following charts to determine whether the
processes in LMC Company is within or beyond statistical control.

Requirements:
1. Testing of control charts (mark points, if necessary)
2. Interpretation of control charts (whether it is within or beyond statistical control)
3. Recommendation (whether to continue with the process or not)

UCL UCL

AVG AVG

LCL LCL

Test made use: Test made use:

Interpretation: Interpretation:
Recommendation: Recommendation:

UCL UCL

AVG AVG

LCL LCL

Test made use: Test made use:

Interpretation: Interpretation:
Recommendation: Recommendation:

22
Additional Readings and References

Additional Readings:
https://asq.org/quality-resources/histogram
https://asq.org/quality-resources/scatter-diagram

References:
ASQ. (2021). WHAT IS A HISTOGRAM? Retrieved from ASQ: https://asq.org/quality-resources/histogram
ASQ. (2021). What is Scatter Diagram? Retrieved from ASQ: https://asq.org/quality-resources/scatter-diagram
MindTools. (2021). Pareto Analysis. Retrieved from MindTools:
https://www.mindtools.com/pages/article/newTED_01.htm#:~:text=The%20Pareto%20Principle%20states%2
0that,to%2020%20percent%20of%20causes.&text=Identifying%20and%20prioritizing%20problems%20and,
organize%20their%20workloads%20more%20effectively.
Russel, R. S., & III, B. W. (2011). Operations Management Creating Value Along the Supply Chain 7th Edition. New
Jersey, USA: John Wiley & Sons, Inc.
Stevenson, W. J. (2015). Operations Management 12th Edition. New York, USA: McGraw Hill Education.

Image Sources:
https://www.nice.com/engage/blog/qm-3-considerations-for-showcasing-the-impact-of-quality-management-2456/
https://www.pinterest.ph/pin/565131453215037064/
https://creately.com/blog/diagrams/top-10-flowchart-ideas-for-your-small-business/
https://www.zitemplate.com/blank-fishbone-diagram-template/

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