managing quality

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MGMT 3620 Managing Quality Why Study Quality? Customers "buy" quality with higher price Customers "buy" quality with higher price and loyalty and loyalty Total quality leads to substantial cost Total quality leads to substantial cost reduction in rework, repair, scrap, warranty reduction in rework, repair, scrap, warranty costs, etc. costs, etc. Total quality "pays" with the higher Total quality "pays" with the higher productivity, profits and market share productivity, profits and market share Quality is built-in into all products and Quality is built-in into all products and services services Quality is everybody’s responsibility Quality is everybody’s responsibility including design, operations, marketing, including design, operations, marketing, purchasing, etc. purchasing, etc. Quality improvement requires effective tools Quality improvement requires effective tools and good training and good training

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Page 1: Managing Quality

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anaging Quality

Why Study Quality?

Customers "buy" quality with higher price and Customers "buy" quality with higher price and loyaltyloyalty

Total quality leads to substantial cost reduction in Total quality leads to substantial cost reduction in rework, repair, scrap, warranty costs, etc.rework, repair, scrap, warranty costs, etc.

Total quality "pays" with the higher productivity, Total quality "pays" with the higher productivity, profits and market shareprofits and market share

Quality is built-in into all products and servicesQuality is built-in into all products and services Quality is everybody’s responsibility including Quality is everybody’s responsibility including

design, operations, marketing, purchasing, etc.design, operations, marketing, purchasing, etc. Quality improvement requires effective tools and Quality improvement requires effective tools and

good training good training

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Defining Quality

The American National Standards Institute (ANSI) The American National Standards Institute (ANSI) and the American Society for Quality (ASQ) and the American Society for Quality (ASQ) definition:definition:

Quality is the totality of features and Quality is the totality of features and characteristics of a product or service that bears characteristics of a product or service that bears on its ability to satisfy given needs.on its ability to satisfy given needs.

Purchaser-based definitions (user-based):Purchaser-based definitions (user-based): Quality of the product deliveredQuality of the product delivered Quality of supplier’s service and Quality of supplier’s service and

capability during the transactionscapability during the transactions

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Purchasing Qualified Tires for UPS Delivery Vehicles What are UPS’s needs for tiresWhat are UPS’s needs for tires What are UPS’s quality/value concerns of What are UPS’s quality/value concerns of

the tires deliveredthe tires delivered What are UPS’s concerns of the supplier’s What are UPS’s concerns of the supplier’s

performance during the product/service performance during the product/service delivery and transactiondelivery and transaction

What’s UPS’s “best buy”?What’s UPS’s “best buy”?

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Dimensions of Product Quality

Performance

Product's primary operating characteristics Features

"Bells and whistles" of a product Reliability

Probability of a product's surviving over a specified period of time

Conformance

Degree to which physical and performance characteristics of a product match pre-established standards

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Dimensions of Product Quality

Durability

Amount of use one gets from a product before it physically Amount of use one gets from a product before it physically deteriorates or until replacement is preferabledeteriorates or until replacement is preferable

AestheticsAesthetics

How a product looks, feels, sounds, tastes, or smellsHow a product looks, feels, sounds, tastes, or smells Perceived quality (reputations)Perceived quality (reputations)

Subjective assessment resulting from image, advertising, or Subjective assessment resulting from image, advertising, or brand namesbrand names

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Dimensions of Service Quality

Competence, Access and CommunicationCompetence, Access and Communication

Possession of the skills and knowledge required to perform Possession of the skills and knowledge required to perform the transactions; ease of contact; educating and informing the transactions; ease of contact; educating and informing buyersbuyers

Serviceability and responsivenessServiceability and responsiveness

Speed and willingness of providing service/repairingSpeed and willingness of providing service/repairing SecuritySecurity

Freedom from danger, risk, or doubtFreedom from danger, risk, or doubt CommitmentCommitment

Making an effort to meet the customer's needsMaking an effort to meet the customer's needs

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Importance of Quality

Identify cost Identify cost saving & value saving & value creationcreation

Profits including Profits including company’s company’s reputation or reputation or lower product lower product liabilityliability

International International implicationsimplications

IncreasedProfits

Lower CostsProductivityRework/ScrapWarranty

Market GainsReputationVolumePrice

ImprovedQuality

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Description by Specification

Establish clear standards for measuringEstablish clear standards for measuring Serve as instructions of handlingServe as instructions of handling Advantages and limits of using specsAdvantages and limits of using specs Three types of specsThree types of specs

Physical or Chemical CharacteristicsPhysical or Chemical Characteristics Defining functions or performance in both Defining functions or performance in both

products and delivery processproducts and delivery process Description by engineering drawingDescription by engineering drawing

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Alternatives to Specification

Description by sampleDescription by sample Use market gradeUse market grade

Common for commodities such as Common for commodities such as agriculture or raw materialsagriculture or raw materials

Use standard specificationUse standard specification For example RS232 interface, IEEE1394 For example RS232 interface, IEEE1394

standardstandard

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ISO 9000 Quality Standards

Formed by International Organization for Formed by International Organization for Standardization (ISO) in Geneva, SwitzerlandStandardization (ISO) in Geneva, Switzerland

U.S. counterpart: American National Standards U.S. counterpart: American National Standards Institute (ANSI)Institute (ANSI)

Internal benefitsInternal benefits Better documentationBetter documentation Greater quality awareness by employeeGreater quality awareness by employee

External benefitsExternal benefits Higher perceived qualityHigher perceived quality Reduced customer quality auditsReduced customer quality audits

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Total Quality Management (TQM) Principles Customer focusCustomer focus Continuous improvementContinuous improvement BenchmarkingBenchmarking Consistency in the goalConsistency in the goal Suppliers are partners in TQM processSuppliers are partners in TQM process Use statistical tools of TQMUse statistical tools of TQM

Yields: How to do what is important and to be Yields: How to do what is important and to be accomplishedaccomplished

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To Make the Quality Focus Work

Motorola:Motorola: Aggressively began a worldwide Aggressively began a worldwide

education program to be sure that education program to be sure that employees understood quality and employees understood quality and statistical process controlstatistical process control

Established goalsEstablished goals Established extensive employee Established extensive employee

participation and employee teamsparticipation and employee teams

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Flow of Activities Necessary to Achieve Total Quality Management

Organizational PracticesOrganizational Practices

Quality PrinciplesQuality Principles

Employee FulfillmentEmployee Fulfillment

Customer SatisfactionCustomer Satisfaction

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Organizational Practices

LeadershipLeadership Mission statementMission statement Effective operating procedureEffective operating procedure Staff supportStaff support TrainingTraining

Yields: What is important and what is to be Yields: What is important and what is to be accomplishedaccomplished

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Benchmarking the quality of Potential Suppliers

Selecting best practices to use Selecting best practices to use as a standard for performanceas a standard for performance

Determine what to benchmarkDetermine what to benchmark Form a benchmark teamForm a benchmark team Identify benchmarking partnersIdentify benchmarking partners Collect and analyze benchmarking informationCollect and analyze benchmarking information Take action to match or exceed the benchmarkTake action to match or exceed the benchmark

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Employee and Supplier Fulfillment Incentive sharing and empowermentIncentive sharing and empowerment Mutual commitments between Motorola and Mutual commitments between Motorola and

shipping agentsshipping agents EmpowermentEmpowerment Organizational commitmentOrganizational commitment

Yields: Suppliers’ attitudes that they are Yields: Suppliers’ attitudes that they are willing to accomplish what is important for willing to accomplish what is important for buyersbuyers

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Quality Circle and Six-Sigma Team Group of 6-12 employees from same work areaGroup of 6-12 employees from same work area Meet regularly to solve work-related problemsMeet regularly to solve work-related problems

4 hours/month4 hours/month Six-Sigma team: Internal consulting group of Six-Sigma team: Internal consulting group of

outstanding employees from different work areasoutstanding employees from different work areas Meet regularly to solve quality-related problemsMeet regularly to solve quality-related problems Facilitates, trains, Facilitates, trains,

and helps with and helps with quality circle quality circle

meetingsmeetings© 1995 Corel Corp.

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The Baldrige National Quality Award and Deming Prize Malcolm Baldrige Award is to recognize US Malcolm Baldrige Award is to recognize US

organizations’ quality achievement on organizations’ quality achievement on diffusion of Total Quality Management diffusion of Total Quality Management (TQM) practices(TQM) practices

Deming Prize granted by Japanese Empire Deming Prize granted by Japanese Empire annually to Japanese companiesannually to Japanese companies Since 1950’s, Deming’s quality crusade Since 1950’s, Deming’s quality crusade

in Japan changed the world’s concepts of in Japan changed the world’s concepts of quality managementquality management

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Deming’s Points for Implementing Quality Improvement

Create consistent and continuous Create consistent and continuous improvement on product and service qualityimprovement on product and service quality

Build quality into the product; stop Build quality into the product; stop depending on inspections to catch problemsdepending on inspections to catch problems

Build long-term relationships in supplier Build long-term relationships in supplier based on performance instead of pricebased on performance instead of price

Emphasize top manager’s responsibilityEmphasize top manager’s responsibility

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Deming’s Points for Implementing Quality Improvement

Break down barrier between departmentsBreak down barrier between departments Support, help, and improveSupport, help, and improve Remove barriers of pride in workRemove barriers of pride in work Institute a vigorous program of education Institute a vigorous program of education

and self-improvementand self-improvement Put everybody in the company to work on Put everybody in the company to work on

the transformationthe transformation

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Shewhart’s PDCA Model

4.Act 1.Plan

3.Check 2.Do

Identify the improvement and make a plan

Test the planIs the plan working

Implement the plan

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Exam Information

A sample quiz will be discussedA sample quiz will be discussed Midterm exam will cover Chapter 1, 2, 4, 5, Midterm exam will cover Chapter 1, 2, 4, 5,

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Cost of Quality

INTERNAL FAILURE COSTSINTERNAL FAILURE COSTS Incurred directly--prior to shipment or service--as Incurred directly--prior to shipment or service--as

a result of defective output:a result of defective output: scrap scrap rework rework repairrepair salvagesalvage downtime downtime dispositiondisposition

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Cost of Quality

EXTERNAL FAILURE COSTSEXTERNAL FAILURE COSTS Incurred to the provider when defects are Incurred to the provider when defects are

discovered after shipment to customers:discovered after shipment to customers: warranty expenseswarranty expenses returned materialsreturned materials complaint processingcomplaint processing liability settlementsliability settlements legal feeslegal fees

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Cost of Quality

PREVENTION COSTSPREVENTION COSTS Incurred in an effort to improve quality system and Incurred in an effort to improve quality system and

avoid nonconformance in products and services:avoid nonconformance in products and services: process analysis and process controlprocess analysis and process control quality planningquality planning quality trainingquality training system development and managementsystem development and management reportingreporting

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Cost of Quality

APPRAISAL COSTSAPPRAISAL COSTS Incurred for determining the degree of quality:Incurred for determining the degree of quality:

inspection and testing inspection and testing materials and toolsmaterials and tools maintenance of test equipmentmaintenance of test equipment field testingfield testing

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Traditional View of Quality-Cost Trade offs

Low correction cost

High detection cost

High prevention cost

High correction cost

Low detection cost

Low prevention cost

Optimum Quality % of defects

Cost

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Taguchi Techniques and Quality Loss Function

Experimental design methodsExperimental design methods Identify key component & process variables Identify key component & process variables

affecting product variationaffecting product variation improve product & process designimprove product & process design

Taguchi Taguchi ConceptsConcepts Quality robustnessQuality robustness Quality loss functionQuality loss function Target-oriented qualityTarget-oriented quality

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Freq.

XTarget USLLSL

A study found U.S. consumers preferred Sony TV’s made in Japan to those made in the U.S. Both factories used the same designs & specifications. The difference in quality goals made the difference in consumer preferences.

Japanese factory (Target-oriented)

U.S. factory (Conformance-oriented)

Target-Oriented Quality

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Quality Loss Function; Distribution of Products Produced

Low loss

High loss

Frequency

Lower Target UpperSpecification

Loss (to producing organization, customer, and society)

Quality Loss Function (a)Unacceptable

Poor

Fair

Good

Best

Target-oriented quality yields more product in the “best” category

Target-oriented quality brings products toward the target valueConformance-oriented quality keeps product within three standard deviations

Distribution of specifications for product produced (b)

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Assignment and Case Discussion for Managing Quality

Assignment 3: LuckWay SupermarketAssignment 3: LuckWay SupermarketChristy Allen, the manager of the LuckWay Christy Allen, the manager of the LuckWay supermarket, was very concerned with the supermarket, was very concerned with the large number of complaints from customers, large number of complaints from customers, particularly on Sundays, so over the last particularly on Sundays, so over the last eight weeks she obtained Sunday's eight weeks she obtained Sunday's complaint records from the store's service complaint records from the store's service desk… desk…

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Tools of TQM and Continuous Improvement

Flow charts or process diagramsFlow charts or process diagrams Check sheetCheck sheet Pareto chartsPareto charts Cause and effect diagramCause and effect diagram (Scatter diagram)(Scatter diagram) (Histograms)(Histograms) Statistical process control chartsStatistical process control charts

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Shows sequence of events in processShows sequence of events in process Depicts activity relationshipsDepicts activity relationships Has many usesHas many uses

Identify data collection pointsIdentify data collection points Find problem sourcesFind problem sources Identify places for improvementIdentify places for improvement Identify where travel distances can be Identify where travel distances can be

reducedreduced

Flow Chart (Process Diagram)

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Flow Charts (Chicken Processing Plant)

Packing station

Weighting & labeling

Quick freeze

(60 min)

Storage (4 to 6 hrs)

Shipping dock

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Check Sheets

Check sheet is designed for recording dataCheck sheet is designed for recording data Help identify patterns or facts during the Help identify patterns or facts during the

recording period and lead to subsequent recording period and lead to subsequent analysisanalysis

For example, recording customer complains For example, recording customer complains or inspection results as time goes byor inspection results as time goes by

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Check SheetTypes of Error

-------------------------------------------------------------------Month Broken Wrong Mixed Contamination

package label items---------------------------------------------------------------------------------------------Jan 7 5 3 0

Feb 5 7 4 0

Mar 9 3 2 0

Apr 4 5 3 3

May 5 7 2 7

Jun 2 5 4 6----------------------------------------------------------------------------------------------TotalPercentage

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Pareto Charts

Organize errors, problems, or defectsOrganize errors, problems, or defects Help focus on problem-solving effortsHelp focus on problem-solving efforts Based on the work of Vilfredo Pareto, a 19-Based on the work of Vilfredo Pareto, a 19-

century economistcentury economist 80% of a firm’s problem are a result of only 80% of a firm’s problem are a result of only

20% of the causes.20% of the causes.

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Pareto Analysis of Production Process (Total Defects = 44)

PARETO CHART

0

5

10

15

20

25

Del

iver

y

Raw

Mat

eria

ls

Fab

ricat

ion

Fin

alA

ssem

bly

Sub

asse

mbl

y

Nu

mb

er o

f E

rro

rs

0

10

20

30

40

50

60

70

80

90

100

Cu

mu

lati

ve P

erce

nta

ge,

%

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Used to find problem sources/solutionsUsed to find problem sources/solutions Other namesOther names

Fish-bone diagram, Ishikawa diagramFish-bone diagram, Ishikawa diagram StepsSteps

Identify problem to correctIdentify problem to correct Draw main causes for problem as ‘bones’Draw main causes for problem as ‘bones’ Ask ‘What could have caused problems in Ask ‘What could have caused problems in

these areas?’ Repeat for each sub-area.these areas?’ Repeat for each sub-area.

Cause and Effect Diagram

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Too many defects

Too many defects

Problem

Cause and Effect Diagram Example

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Method Manpower

Material Machinery

Too many defects

Too many defects

Main Cause

Main Cause

Cause and Effect Diagram Example

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Method Manpower

Material Machinery

DrillDrillDrillDrillOverOverOverOverTimeTimeTimeTime

SteelSteelSteelSteelWoodWoodWoodWood

LatheLatheLatheLathe

Too many defects

Too many defects

Sub-Cause

Cause and Effect Diagram Example

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Method Manpower

Material Machinery

DrillDrillDrillDrillOverOverOverOverTimeTimeTimeTime

SteelSteelSteelSteelWoodWoodWoodWood

LatheLatheLatheLathe

Too many defects

Too many defects

TiredTiredTiredTired

OldOldOldOld

SlowSlowSlowSlow

Cause and Effect Diagram Example

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Uses statistics & control charts to tell when to Uses statistics & control charts to tell when to adjust processadjust process

Developed by Shewhart in 1920’sDeveloped by Shewhart in 1920’s InvolvesInvolves

Creating standards (upper & lower limits)Creating standards (upper & lower limits) Measuring sample output (e.g. mean wgt.)Measuring sample output (e.g. mean wgt.) Taking corrective action (if necessary)Taking corrective action (if necessary)

Done while product is being producedDone while product is being produced

Statistical Process Control (SPC)

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Process Control Chart

Plot of Sample Data Over Time

010203040506070

1 5 9 13 17 21

Time

Sam

ple

Valu

e

SampleValueUCL

Average

LCL

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Involves examining items to see if an item is Involves examining items to see if an item is good or defectivegood or defective

Detect a defective productDetect a defective product Does not correct deficiencies in process or Does not correct deficiencies in process or

productproduct IssuesIssues

When to inspectWhen to inspect Where in process to inspectWhere in process to inspect

Use TQM tools to help analyze, organize, and Use TQM tools to help analyze, organize, and interoperate result from inspection interoperate result from inspection

Inspection

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When and Where to Inspect (Aided by Flow Chart) Before costly or irreversible processesBefore costly or irreversible processes

At the supplier’s plant while the supplier is At the supplier’s plant while the supplier is producingproducing

At your facility upon receipt of goods from the At your facility upon receipt of goods from the suppliersupplier

Before delivery from your facilityBefore delivery from your facility During the step-by-step production processesDuring the step-by-step production processes When production or service is completeWhen production or service is complete

Conducting survey or interviewConducting survey or interview

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Routine Inspection vs. Probing Inspection Probing inspection is to identify the source Probing inspection is to identify the source

of emerging quality problemof emerging quality problem Routine inspection is for tracking and Routine inspection is for tracking and

monitoring those existing quality issuesmonitoring those existing quality issues Flow chart or process diagram is useful for Flow chart or process diagram is useful for

designing and studying both types of designing and studying both types of inspectioninspection

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Luckway Supermarket

Only use open-ended comments but include timelineOnly use open-ended comments but include timeline Analyze the issues with insightful flow chartAnalyze the issues with insightful flow chart RequirementsRequirements

Check sheetCheck sheet Pareto chartPareto chart Control chart (record the frequency without Control chart (record the frequency without

consider UCL and LCL)consider UCL and LCL) Cause-and-effect diagramCause-and-effect diagram

Make recommendation (for example, tie to TQM Make recommendation (for example, tie to TQM principles)principles)

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Southwestern University (B)

Why we need quantitative tools for managing Why we need quantitative tools for managing quality?quality?

How to identify quality problemsHow to identify quality problems Collect dataCollect data Organize data Organize data Interoperate dataInteroperate data

Plan for improving qualityPlan for improving quality BenchmarkingBenchmarking EmpowermentEmpowerment Continuous improvementContinuous improvement

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Southwestern University (B)

Two types of data in this caseTwo types of data in this case Survey dataSurvey data Open-ended commentsOpen-ended comments

Start from considering the tools of TQMStart from considering the tools of TQM Flow chartFlow chart Pareto chartPareto chart Cause and effect diagramCause and effect diagram

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Survey Data vs. Open-Ended Comments All types of data collection is costlyAll types of data collection is costly When should we use survey?When should we use survey? When should open-ended comments be When should open-ended comments be

elicited?elicited? How to encode open-ended comments?How to encode open-ended comments? Advantages of using data from comments?Advantages of using data from comments? How to design questions in survey?How to design questions in survey? Advantages of using survey dataAdvantages of using survey data

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Analyze Survey Data

Weights Total/250

4 3 2 1 0 Total (Average)

Parking 360 315 135 10 0 820 3.28 Entertainment 640 105 52 10 0 807 3.23 Traffic 200 255 96 52 0 603 2.41 Printed Program 264 102 196 22 0 584 2.34 Seating 180 90 230 35 0 535 2.14

Ticket Pricing 420 312 32 65 10 839 3.36 Season Ticket

Plans 300 240 108 41 5 694 2.78

Food Selection 620 180 48 11 0 859 3.44 Concession

Prices 66 348 116 58 2 590 2.36

Speed of Service 140 135 92 48 75 490 1.96

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Ranking  

  Speed of Service 1.96 Poor

  Seating 2.14  

  Printed Program 2.34  

  Concession Prices 2.36  

  Traffic 2.41  

  Season Ticket Plans 2.78  

  Entertainment 3.23  

  Parking 3.28  

  Ticket Pricing 3.36  

 

Items in Weighted Descending Order    

Food Selection 3.44 Good

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Issues for Analyzing Open-Ended Comments A direct way to find out customer’s biggest A direct way to find out customer’s biggest

concerns about qualityconcerns about quality Data would be abstract and subjectiveData would be abstract and subjective Difficult to encodeDifficult to encode Difficult to rank and interoperateDifficult to rank and interoperate May miss some secondary issuesMay miss some secondary issues Good for pilot study on qualityGood for pilot study on quality

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Categorize Open-Ended Comments

Results by Topic Negative Entertainment Positive Negative Facilities Positive Entertainment 8 14 Seats — 3 Student

Behavior 9 Parking —

2 Crowded 5 Need Sky Boxes — 1 Cheerleaders 5 Other 1 1 Programs 2 Bathroom — Band 1 1 Traffic — Coach 3 Food 3 Access/Variety — 1 Quality 1 1 Price —

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Ranking (ABC Analysis) Results in Descending Order

(Most negative to least negative)

Seats 14 Parking 9 Need Sky Boxes 5 Other Facilities 5 Student Behavior 3 Access/Variety 3 Crowded 2 Bathrooms 2 Cheerleaders 1 Programs 1 Traffic 1 Quality 1 Price 1 Band Coach

 

  Speed of Service 1.96 Poor

  Seating 2.14  

  Printed Program 2.34  

  Concession Prices 2.36  

  Traffic 2.41  

  Season Ticket Plans 2.78  

  Entertainment 3.23  

  Parking 3.28  

  Ticket Pricing 3.36  

 

Items in Descending Order    

Food Selection 3.44 Good

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Pareto Chart

0

5

10

15

20Pareto Chart of Comment Results 100%

70%

40%

10%

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Internal Facility Manpower

External Facility Food Stands

Too many complains

Too many complains

Main Cause

Main Cause

Cause and Effect Diagram

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Other Concerns about Data Collection Time horizonTime horizon DemographyDemography Sample sizeSample size Sampling techniquesSampling techniques Question designQuestion design

Set hypothesisSet hypothesis Identify factorsIdentify factors

Data analysisData analysis Statistic methodsStatistic methods Models for testing hypothesisModels for testing hypothesis