Ops Final

A pure level strategy for aggregate production planning:

Maintains a stable workforce working at a constant output rate.

Total Cost (TC)

(Q/2)iC+ (D/Q)S+ DC

Measures of Inventory

-Number of Units: an absolute measure/ PHYSICAL COUNT -something that should always be known, not very useful from an evaluate standpoint -aka cycling counting: expensive, time consuming -Dollar value of units: a cost measure -units held in inventory X value per unit -choice of value (cost of product or sales value) depends on the context in which the measure is to be used -Weeks of supply: a relative volume measure -units of inventory/ weekly demand rate -this is the inventory equivalent of ROI Inventory turns: another relative measure -annual sales volume/ units of inventory -this is the inverse of the "years of supply" measure

Total Annual Purchasing Cost (TAPC)

-actual cost/value of a years demand -cost of item* annual demand for item C*D C=cost of item D= annual demand for item

Total Annual Holding Cost (TAHC)

-aka storage costs; CARRYING costs -cost of insurance, capital, warehousing, shrinkage (theft or damage), and others -if increased inventory increase cost, its holding TAHC= Average Inv Level * per unit annual cost -(Q/2)iC Q/2 is the average inventory (lmax-lmin)/2 i= % value of cost to hold for one year C= value of item more you order, storage costs go up smaller Q will lead to lower holding costs TAHC says order small (order small so it is less carrying costs of inventory)

Crosby's research says that "Quality is free!"

-he means that the expenditures to improve quality (additional prevention) typically are less than the savings returned in the form of fewer failures -When you increase PREVENTION, it lowers overall costs

Statistical Process Control

-helps define variation; aka control charts! -the application of these sampling distribution principles to production processes is the basis for statistical process control (SPC) in control ( leave it alone if in control) - a process is "in control" when the process variation is random and within the limits of the normal curve; or variation is due to chance or sampling error -cannot be traced back to a single cause out of control (trigger for investigation) -a process is deemed "out of control" when the process variation is non-random or outside of the limits of the normal curve; this variation is due to some assignable or special cause -the process needs some type of attention or adjustment

ISO 9000

-not an award, but s a certification program that does not limit the number of firms that can be recognized -less broad in focus than the Baldrige, focusing mainly upon the extent to which procedures are documented, consistently performed, and suited to the task at hand -internally focused on processes -biggest driver pushing firms to apply for ISO 9000 is the fact that it is rapidly becoming the standard that is required to do business in the European Community (internationally) -one criticism of ISO 9000 certification is that no central certification body exists; instead, certification is often achieved thru one of several independent certification "agents" -this criticism is also one of the strengths of ISO 9000; bc certification process is flexible due to the vague guidelines, the audit can be tailored to fit each firm

What is optimal Q?

-our difficulty in determining the optimal value of Q arises from the conflicting nature of TASC and TAHC -we need to minimize all 3 costs! Q= square root of (2DS)/iC -finds Q -known is Economic Order Quantity (EOQ) and is very famous formula i and D must be for the same time frame D and C must be for the same size product sometimes given H instead of iC TAHC=TASC at optimal Q Time between orders= Q/D

Why is inventory an important issue??

-proper inventory management ensures that materials will be available when needed --failure to meet demand, whether to the "end-consumer" or to the next stage in the production process, can be very costly --ensures customer orders are met -INVENTORY COSTS MONEY -objective is to determine an appropriate inventory policy that will both achieve a high service level and to reduce costs; find a solution that insures customer demand is met while minimizing costs --WE USE FOQ MODELS! -inventory is an investment and idea is to quickly turn over investment to make money

Interpreting Control Charts

-purpose of control chart is to give us an objective, statistically based tool to judge if a process is "in control" or "out of control" In Control: functioning as it has historically, exhibiting only common or non-attributable causes of variation (sampling error) Out of control: process not functioning as it has in the past, exhibiting evidence that a special or attributable cause of variation has entered the process consider it a hypothesis test: H0= the system is in control H1: The system is out of control

ISO 9000 vs. Baldrige

-pursue ISO 9000 first because harder than Baldrige Baldrige: external, award, 1 time ISO 9000: internal, certification, ongoing you DO NOT have to be ISO 9000 certified before going for the Baldrige award

FOQ with Uncertain Demand

-removed assumption of non-variable constant demand and reintroduce the idea of a non-zero lead time and INSTANTANEOUS REPLENISHMENT -demand is assumed to be normally distributed -Service Level: percentage chance no stockout aka not running out during a given inventory cycle -usually in the 90%s -is ROP= Demand during Lead Time (DLT), service level= 50% -Lead time= time to order to receipt or delivery ROP= demand during lead time (DLT) + Z*st.dev -- Z*st.dev= Safety stock

Basic FOQ Assumptions

-the demand for an item is CONSTANT -the item is produced and purchased in lots -decisions for one item are not affected by decisions for another (independence) -there is no uncertainty for demand or supply or sales forecast -replenishment is instantaneous (means receive all of order at once) -holding, setup, and purchasing costs are the only relevant costs -LEAD TIME NEVER EQUALS ZERO given these assumptions for Basic FOQ, a graph of the inventory level over time would be the SAWTOOTH DIAGRAM (pg 117 in packet) sawtooth diagram: buying all at once gives the highest holding cost -total annual holding cost has a positive relationship with Q

Characteristics of APP

1. Aggregate: to combine -classes of products -labour or other inputs -geographic location of production -often fictitious (abstract) --APP- for each vehicle, want to find what forecasted demand will be for the next year* by the number of person-hours needed to complete that vehicle --End: total person hour requirement for forecasted demand-when you aggregate at that level, it is a pretty abstract level --Not fictitious in the way we think, but in the way that it is an abstract idea- we are turning everything into person hours 2. Time Horizon: MEDIUM TERM -APP is the plan with the longest time horizon -whole time frame you are making your forecast around-can be divided into buckets 3. Time Buckets: divisions of horizons -the actual length of the horizon and the size of the time buckets it is divided into will vary depending on the NATURE OF YOUR BUSINESS -industry with rapid new product development/high variability will have SHORT HORIZON with SHORT TIME BUCKETS -industry with long lead times and stable products will have LONGER HORIZONS and/or LARGER TIME BUCKETS -typically one year with one month buckets 4. Executed on Rolling Horizon basis along with all other levels of plans -working into the future; means that we do not wait for the entire plan to have been executed to develop a new one

Three Pure "General" Aggregate Plans (use Labour, Production Rate, Inventory)

1. Chase -Inventory constant; others fluctuate -aka production and labour fluctuate to perfectly match demand and thus maintain NO inventory -OPPOSITE OF LEVEL -aka amount produced in any given period is equal to the minimum amount required to satisfy demand for that period (EI in any given period is 0) -hiring and firing workers -use chase: when highly seasonal, when holding costs are high, unskilled labour, short product life cycle, perishable goods, services 2. Level -inventory fluctuates; others constant -constant workforce/production level, allowing changes in inventory to buffer you from the changes in demand level -can identify a level approach by looking at the line that says production- if its the same across the planning horizon, it is a level approach -while it is easy, it will produce inventory and stockout-back order -12 month plan-find how much production over year, divide by 12, and that is the person hours needed for each month LEVEL WITH BACKORDER Level plan without backorders: level plan with minimum inventory and no backorders KEY POINT: in one of the 6 months, inventory will be 0 Solution: solve 6 level plans -each plan has zero ending inventory in one of the 6 months. Highest production level is solution 2nd Approach: -backorder is so costly and problematic, so we are not allowing for it to happen -level without backorder, we are raising the amount that we are producing- the level without backorder is the most confusing -know there is level without backorder when production lines are all the same and there are no negative numbers for the ending balance (negative number means a backorder), and at least one ending balance is zero- no stockout and at least one is zero -stockout is too expensive, so moved to chase 3. Stable Workforce- variable hours -size of workforce is constant, but number of hours worked fluctuates -allows variable working hours to buffer against variation -allows production to vary from period to period, with the intent of keeping inventory as low as possible (aka EI is 0); however, don't hire and fire workers, just alter the number of hours they need to work -40 hours during a work week, overtime pay 1.5plan

What two questions does inventory policy answer?

1. How much should I order? 2. When should I order it? -examines a number of different FOQ models -in a FOQ system, the amount of inventory ordered is a fixed predetermined level, Q. -this quantity Q is ordered when the inventory position falls to a predetermined reorder level, R. -we examine 3 types of models: Basic FOQ Model: demand is constant and the order quantity arrives all at once FOQ model with usage: demand is constant and order quantity is supplied gradually over time FOQ model with uncertain demand: demand is steady, but uncertain and order quantity arrives all at once

The Bloomington Bicycle Bearing company wishes to use a level output plan to plan for the rest of the year. Here is the forecasted demand for all bearing types: Month Demand May 800 Jun 650 July 720 August 690 Sept 530 Oct 610 Nov 630 Dec 610 If the beginning inventory is 300 units and the desired ending inventory at the end of December is 500 units, how many units will be in inventory at the end of August? Assume that backorders are allowed.

160

The degree to which the product or service design specifications are met during the transformation process is known as:

Conformance quality

What is the service level if Reorder Point equals demand during lead time?

50% Reorder point= demand during lead time, 50% of the time you will be covered Reorder point= not a time, but a level of inventory when you order goods demand during lead time- space between when you place order and get it, sometimes will use all of inventory and sometimes you will Stockout= 1-Service Level Service level: if you will have your goods in stock

Aggregate Production Planning

A managerial statement of time-phased production rates, work-force levels, and inventory investment, which takes into account customer requirements and capacity limitations helps us attain our goals in the best way possible tactical planning forecasted demand helps us attain our goals -prove that we have the person hours to meet the forecasted demand -APP is driven by forecasted demand -forecasted demand will always be wrong, it is usually useful though -take the forecast and answer the questions- do I have enough person hours to meet the forecasted demand? Aggregation: sum/bring things together, so turn everything into person hours Must know a bit about Time-phased production rates: -going to work with a planning Horizon (most likely a rolling) -"Time buckets" -12 month Rolling Horizon- 12 months in front of it, keep that planning horizon as you move forward

Converting quarterly and annual business plans into broad output and labor requirements for the intermediate term is known as:

Aggregate Planning

Which of the following are the characteristics of a Baldridge Award winner or a company that emphasizes on customer satisfaction and business results?

All of the above The company formulates a vision of what quality is and how to achieve it Senior management is actively involved The company carefully plans and organizes its quality effort The company vigorously controls the overall process

The Baldrige Award (Malcom Baldrige was Sec of Commerce 1981-1987)

America's highest award for quality established by President Reagan in 1987; National Quality Award similar to the Deming award of Japan because basic purpose of both awards is to promote the quality achievements and to raise awareness of the importance and techniques of quality improvement -the Baldrige Award however focuses more on results and service; relies upon the involvement of many different professional and trade groups; provides special credits for innovative approaches to quality; includes a strong customer and HR focus, stresses the importance of sharing info rated on 7 core values a firm applies to one of six categories 1. manufacturing companies or subsidiaries that --produce and sell manufactured products or manufacturing processes --produce agricultural, mining, or construction products 2. Service companies or subsidiaries that sell service 3. Small business 4. Health care organizations 5. Educational institutions 6. Not-for-profits (new in 2006) -this award was created to enhance US competitiveness -externally focused on customer satisfaction and strategic positioning

Comparing an organization's performance on critical business processes against the best performance on the same or similar processes in other organizations is known as:

Benchmarking

Which of the following is NOT a method used in aggregate planning to cope with fluctuations in demand?

Construction of a new plant and/or finished goods warehouse

Control limits

Control limits should be within tolerance limits

Six-Sigma Methodology (systemic project-oriented methodology that uses the DMAIC cycle)

Define (D) -ID customers and their priorities -ID a project suitable for six-sigma efforts based on business objectives as well as customer needs and feedback -ID CTQ's (critical-to-quality characteristics) that the customer considers to have the most impact on quality Measure (M) -determine how to measure the process and how it is performing -ID the key internal processes that influence CTQs and measure the defects currently generated relative to those processes Analyze (A): -determine the most likely causes of defects -confirm the key variables and quantify their effects on the CTQs -ID the maximum acceptance ranges of the key variables and a system for measuring deviations of the variables -modify the process to stay within an acceptable range Control (C): -determine how maintain the improvements -put tools in place to ensure that the key variables remain within the maximum acceptance ranges under the modified process

Deming's 14 Points: Highlights

Deming is quality guru; basic principles to drive their quality improvement efforts 3. Cease dependence on inspection to achieve quality (do sampling) 4. End the practice of awarding business to the lowest bidder. Instead, reduce cost by reducing variation 6. Institute training on the job 8. Drive out fear 10. eliminate slogans, exhortations, and targets. Wrong emphasis as to who is most responsible 12. Remove barriers to pride of workmanship

Which of the following costs are NOT considered in developing an aggregate production plan?

Depreciation costs.

Which aggregate planning strategy typically results in greater inventory carrying costs?

Level Strategy

The Inventory Balance Equation

Ending Inventory= Beginning Inventory +Production - Demand -in real life, companies tend to employ a mixed strategy, one that has elements of each of the pure strategies or plans

Suppose a company is using pure chase strategy for its aggregate production planning. Which of the following policies would a manager use to deal with (or hedge against) the fluctuation in demand?

Hire additional workers when demand increases and outplace them when demand decreases

Which of the following are characteristic of the companies who have won the Malcolm Baldrige National Quality Award?I. A strategic vision for the organization was developed.II. Senior management was actively involved in improvement efforts.III. They produced highly profitable, high technology products.IV. Quality control and improvement efforts were carefully planned and implemented.

I, II, and IV

Which of the following statements best describe one a basic difference between the Malcolm Baldrige Award and ISO 9000 certification?

ISO 9000 is more important in international commerce

Instantaneous and Gradual

Instantaneous ---> Gradual: Q goes up Instantenous ---> Gradual: TAHC goes down Instantaneous---> Gradual: TASC goes down TAHC= TASC are the same at Q

The Shingo system relies on which of the following approaches?

Introduction of quality controls within the process so feedback can occur immediately.

Which of the following statements is not true about the continuous improvement process?

It requires creative thinkers to come up with break-through innovations.

Which of the following is not a cost associated with cost of quality ?

None, of the above

What is one of the fundamental differences between the Malcom Baldridge Award and ISO9000 certification?

One applies to U.S. firms, while the other applies to companies anywhere in the world.

What is one of the fundamental differences between the Malcom Baldridge Award (baldrige) and ISO9000 Certification?

One applies to US firms, while the other applies to companies anywhere in the world.

Another Deming Contribution: PDCA

PLAN: Identifying and analyzing the problem DO: developing and testing a potential solution CHECK: measuring how effective the test solution was, and analyzing whether it could be improved in any way ACT: implementing the improved solution fully

Dimensions of Quality

Performance: the product's primary operating characteristics Features: supplements to a product's basic function- the "bells and whistles" Reliability: the time until a product malfunctions and needs repair Durability: the time until a product needs replacement Conformance: the degree to which a product conforms to established standards Serviceability: the ease of maintaining and repairing a product Aesthetics: overall appearance/ appeal- how it looks, feels, sounds, tastes, or smells Perceived Quality: customer's perceptions of a product, based on inferences from reputation, brand image, advertising, marketing approach, packaging, etc.

Which one of the following lists best describes the four steps of the Deming Wheel?

Plan, Do, Check, Act.

Costs of Quality (goes from LOW to HIGH; developed by Crosby)

Prevention: costs associated with improving the quality of the product -worker training, design for quality/manufacturability, supplier certification Appraisal: costs of evaluating the level of quality -inspecting incoming materials, testing finished products, quality audits Internal Failure: cost incurred when the product or process fails before it reaches the customer -defective material scrap, rework, machine repair External Failure: cost of product failure after it has reached the customer -warranty costs, field maintenance and repair, loss of customer goodwill and reputation, product liabilities The closer a failure occurs to the customer, the more expensive it is -inspection cost The farther removed from its source that a quality problem is discovered, the more expensive it is

In a saw tooth diagram, the peak of each inventory cycle represents?

Q

Changes in the process VARIANCE

R chart (uses CONTINUOUS data) Center line (average)= average of the sample ranges (R-bar) UCL= D4*(R-bar) LCL= D3*(R-bar) R chart measures variation "within" samples (see what happens during the "shift" or right now) x bar and R generated from the same data; only applicable to CONTINUOUS RANDOM VARIABLES (height, weight, length)

Types of Inventory

Raw Material: inventory which has not yet undergone any transformation by the company -can be highly processed parts, just so long as all processing was performed outside of the operational unit in question -procurement agent: purchases raw materials, is the stakeholder Work-in-process (WIP): inventory which has already undergone some transformation by the operational unit, but is not yet completed -scheduling people run this and are the stakeholders Finished good: inventory which has undergone all transformations to be performed at the operational unit, and which if therefore ready to be passed onto the customer -marketing is the stakeholder -the most expensive

reasons for holding inventory

Safety stock: inventory which is being held to buffer against some form of uncertainty -typical uncertainties are the amount of demand or the supply of the product -buffer against uncertainty in demand during lead time -what is lead time?- how long it takes from the time I order to the time I receive it -uncertainty: using z scores and standard normal distributions to calculate probability -will lead time ever be 0? NEVER! THERE IS ALWAYS LEAD TIME Cycle stock: inventory that is held because the supply/source of product is not continuous -one common reason is b/c the process involved requires batching or because some resource required must be shared with more than one product; another reason is that it simply may not be economically efficient to produce the product continuously -have more than one on shelf b/c takes time to replace it -energy has no cycle stock (electricity) -if you want to buy asphalt, there is a certain time of the year when you cannot buy it. You can not buy it bc of the way It is produced -won't be able to get it all throughout the year Pipeline stock: inventory that is located somewhere in the production or delivery process (in the pipeline) -need to account for travel time -have it because of how you move the product -oil in pipe is stock from the oil you have it in -buying manufactured goods from China, those goods will come in a container and take about 6 weeks- will need to order more inventory while waiting for the delay Seasonal stock: inventory that is held to buffer against seasonality in demand -stock you have for a particular calendar season/holiday- it is for a particular date

Major Operations Planning Activities

Selling and manufacturing is together- do not want them to make more than sales can sell, do not want to sell more than what is made --should not just be close to each other, but should be combined --sales inventory operations planning, integrated operations planning APP is not about long range- more middle range (6 months- 24 months) What drives APP? FORECASTED DEMAND

Total Annual Setup Cost (TASC)

Setup= Ordering aka ORDERING cost; acquisition cost -administrative charges, delivery charges, labour costs, defects, testing, and other costs --if costs rise with increased frequency of ordering, it's a setup cost -Administrative charges, delivery charges, labour costs, defects, testing and other costs -- if costs rise with increased frequency of ordering, its a setup cost TASC= # of setups per year * cost of a setup (D/Q)S -D= annual demand rate -Size of lot/batch/order -S= cost per setup/order (fixed) costs decrease as Q increases TASC says order large

Proceess

Shift to the left= B is bigger than A Shift to the right= A is bigger than B

Fail-safe Design: the Shingo System

Shingo's argument: -Statistical Quality Control methods do not prevent defects -defects arise when people make errors -defects can be prevented by providing workers with feedback on errors -Shingo is saying we need to give feedback! Poka-Yoke (mistakes proof system) -checklists -special tooling that prevents workers from making errors

Changes in ATTRIBUTES

The P-chart (uses NON-CONTINUOUS data) -use this data that is NOT on continuous scale; aka Discrete or Categorical or Attribute data (good vs. bad; go vs. no-go; acceptable vs. unacceptable) -typically defective vs. non-defective center line= p-bar (average of the sample percentages) UCL= p-bar + z*Sp LCL= p-bar - z*Sp z= usually is 3 ( 3 st.devs) Sp= square root of (p-bar(1-pbar))/n (n= sample size) Changing the width of the control limits: -determine control limit desired -divide the control limit in half, this is your look-up value -go to Z-table and find the closest value to it and find the z-score -plug in z-score to figure out limits Cpk -defintion and calculation

Which of the following circumstances would provide an incentive for employing a level (vs. chase) plan?

The production process requires highly trained labor.

Quality Management and Six Sigma (quality control)

Total Quality Management: managing the entire organization so that it excels on all dimensions of products and services that are important to the customer (TQM in 1980s) -latest approach is called Six sigma (new term for TQM)

Type 1 and Type II Errors

Type I Error: a false positive; adjusting when you don't need to -aka Producer's Risk (introduce variation unnecessarily) -the wider the control limits, the less the probability of committing Type I error Type II error: a false negative, fail to adjust when you need to -aka Consumer's Risk (lets the customer find the problem); more expensive than type I error -as you increase the limits, it increases the chance of a Type II error -if you try to reduce Type I errors, Type II errors will increase -since it is difficult or impossible to assess Type II error directly, we usually focus on Type I errors, and set out control limit widths accordingly

The Two Great Enemies of Good Process

Waste and Variability Waste-muda- Toyota TPS= focused on waste 7 things we need to remove: T: Transportation I: Inventory M: Motion (movement of workers is waste, waiting for approval) W: Waiting O: Overprocessing O: Overproduction (making too much) D: Defects 8th waste: Underutilization of human capital Variability: -SPC -TWM

A Note on Inspection

We cannot depend on inspection because... -you cannot inspect quality into a product; quality must be built into the product -if you depend on inspection to achieve quality, you fail to look at the process to improve it; difference between weeding out defects and preventing them from ever occurring -relying on inspection flat out doesn't work; many mistakes and defects are never found -inspection does nothing to improve the process so that defects occur less often Acceptance sampling is a special type of process that inspects a random sample or subset from a batch of goods to determine if the quality level of the entire lot is acceptable standards -the reason for testing a subset (less than 100% inspection) instead of testing the entire batch (100% inspection) is simply related to cost

Control Charts

a managerial tool used to analyze whether a process is "in control" or "out of control" Characteristics: -center line: average (central tendency) -upper control limit (UCL): +3 st. dev -lower control limit (LCL): -3 st. dev -data is collected thru SAMPLIING -vertical axis calibrated in units of Y -horizontal axis is calibrated in units of time or sample sequence

Unlikely data patterns that might lead us to conclude the system is "out of control"

a single sample statistic that is outside of the control limits two consecutive sample stats near the control limits (majority should lie near the central line) -five consecutive points above or below the central line -a trend of five consecutive points -very erratic behavior

For each of the following business conditions, indicate what type of plan(s) it favors.

a. Inventory storage is inexpensive and easily achieved - favors level b.Employees are highly skilled and in much demand -disfavors chase c. Employees require a large amount of on-the-job training, and, upon hire, are typically less productive than experienced employees -disfavors chase d. Temporary workers are paid on a different (lower) scale than full-time workers -favors chase e. Raw material deliveries must be determined well in advance of delivery -favors level

Lower Levels of Planning

after Agg Production Planning, get more specific as goes down 1. Master Production Scheduling (MPS)- after APP -1st level of disaggregation of the aggregate plan -here we begin to "break down" the "products" into more real end product items -horizon and buckets are NO LARGER than APP (OFTEN SHORTER) -typically implemented on rolling horizon -typically formulated and evaluated at a lower organizational level than the APP 2. Material Requirements Planning (MRP)- after MPS -extreme detail, down to each nut and bolt -no "fictitious, aggregated" products are used 3. Shop Floor Scheduling- after MRP -detailed, actual production schedule

Stableworkforce

change the hours people work

FOQ with Usage Assumptions

eliminate assumption of instantaneous replenishment and bring in Gradual Replenishment -In-house manufacturing (partial delivery) vs. Delivery --when item is being produced in-house, it is not unusual to imagine the order to arrive gradaully over time -Sawtooth diagram now altered: gradually rises during production, then drops -slope of line is P-D Because of Gradual Replenishment, Imax is no longer Q, but rather Q(P-D)/P TAHC= (Q(iC)/2)(P-D/P) (P-D)/P will always be <1 (less than 1) Q= squart root of (2DS/iC)(P/P-D) P/(P-D) will always be >1 Q always increases to offset among being used

Lean Six Sigma

fights waste and variability

Instanteous vs. Gradual

in house manufacturing means replenishment will be gradual

Continuous improvement

is a managerial philosophy that treats no process as one that is complete and perfected; instead process is considered to be at all times a work in progress, with constant effort to analyze and improve -small changes to existing processes to improve quality in the long run -primary tool of analysis is called the 7 tools of quality of the "magnificent seven" 1. Process flow chart: picture which describes the main steps, branches, and eventual outputs of a process; help improve the understanding of the overall process; facilitate communication among the different stages 2. Cause and Effect diagram: aka Ishikawa or Fishbone diagram; a tool that uses a graphical description of the process elements to analyze potential sources of process variation -identifies the lowest level issues on which to work and helps to foster teamwork; frequent subjects of brainstorming sessions 3. Control Charts: a time sequence chart showing plotted values of a statistic, including a central line and one or more statistically derived control limits -used to distinguish between common and special causes of variability; help the user to understand and measure quality progress 4. Histograms: a distribution showing the frequency of occurrences between high and low range of data -demonstrates the variation in the data, facilitates the recognition of patterns, and helps to form "theories" about problem causes 5. Check Sheet: a simple data collection form that allows direct interpretation of the data; an organized method for recording data -easy to interpret and encourage the invovlement of process operations 6. Pareto Chart: a coordinated approach for identifying, ranking, and working to permanently eliminate defects; focuses on important error sources; an ordered frequency chart -aka 80/20 rule: 80% of the problems may be attributed to 20% of the causes -this tool makes clear what are the greatest payback opportunities for your efforts; the categories may be weighted -prioritization tool 7. Scatter Diagram: aka correlation chart; a graph of the value of one characteristic vs. another characteristic -can indicate relationships, but not causes and effects

What is true of APP?

it is driven by forecast demand it is abstract it turns everything into labour hours

Q/D

optimal time between ordersx

D/Q

orders per year

What is Quality?

part of quality is getting orders right and getting them done on time quality is not just about the attitude, it is about the follow through and being able to fix it Where does quality come from? -inspection has little to do with quality -inspection catches errors after they have already happened, but it does not prevent them Process: quality comes from process -consistent inputs, the steps that we go through, intermediate steps, etc.

Changes in the process MEAN

the X-bar chart (uses CONTINUOUS data) X-bar chart used to determine changes in the process average Range= high-low Center line (average)= average of the sample averages (X double bar) UCL= X double bar + A2(Rbar) LCL= X double bar- A2(Rbar) A2 found on page 176 x-bar finds sample between variation (what has happened since the last time we looked) LCL NEVER NEGATIVE

Quality is free

true saves you money in recalls