Quiz 2 Study Guide — BCOR440/IE425

Chapter 12: Quality Management

Six Sigma, TQM, Lean, Quality Costs, Quality Gurus, 7 Tools, ISO, Baldrige

Quality Basics

Design QualityInherent value of the product in the marketplace (features, performance, aesthetics)

Conformance QualityDegree to which the product/service meets its design specifications

Dimensions of Design Quality (6)Performance, Features, Reliability/Durability, Serviceability, Aesthetics, Perceived Quality

Quality at the SourceMaking the person who does the work responsible for ensuring that specifications are met — quality is everyone's job, not just the inspector's

Four Costs of Quality

Prevention CostsMoney spent to PREVENT defects (training, process design, quality planning)

Appraisal CostsCosts of INSPECTION and TESTING to ensure product/process is acceptable

Internal Failure CostsCosts for defects found BEFORE reaching the customer (rework, scrap, downtime)

External Failure CostsCosts for defects found AFTER reaching the customer (warranty, returns, lawsuits, lost reputation) — always the most expensive!

Remember PAIE — Prevention, Appraisal, Internal failure, External failure. The rule of thumb: every $1 in prevention saves $10 in failure and appraisal costs.

The Three Quality Gurus — Know Who Said What!

Topic	Philip Crosby	W. Edwards Deming	Joseph Juran
Definition of Quality	Conformance to requirements	A predictable degree of uniformity and dependability at low cost	Fitness for use (satisfies customer needs)
Key Contribution	Zero defects standard; quality is free	14 points for management; reduce variation continuously	General management approach; the human elements of quality
View on SPC	Rejects statistically acceptable quality levels (wants 100% perfection)	Statistical methods must be used	Recommends SPC but warns against tool-driven approach
On Workers	—	Responsible for 94% of quality problems (management, not workers)	Less than 20% of quality problems are due to workers

"Crosby = conformance to requirements + zero defects. Deming = reduce variation + 14 points for management. Juran = fitness for use + less than 20% of problems are workers. This one comparison covers a classic matching question."

Six Sigma

Six SigmaPhilosophy & methods to eliminate defects. Goal: no more than 3.4 defects per million opportunities (DPMO)

DPMO = (Number of defects ÷ (Number of opportunities per unit × Number of units)) × 1,000,000

DMAIC CycleDefine → Measure → Analyze → Improve → Control

DefineIdentify customers and their priorities

MeasureDetermine how to measure the process and how it is performing

AnalyzeDetermine the most likely causes of defects

ImproveIdentify means to remove the causes of defects

ControlDetermine how to maintain the improvements

When asked about process improvement, say: "I'd follow the DMAIC framework — first Define the problem, then Measure current performance, Analyze root causes, Improve the process, and Control to sustain gains."

Six Sigma Belt Hierarchy

Role	What They Do
Champion	Executive sponsor — removes organizational barriers and provides resources
Master Black Belt	Full-time teacher/trainer — has in-depth training on statistical tools and process improvement
Black Belt	Full-time project leader — leads improvement teams
Green Belt	Part-time participant — has enough training to participate in improvement teams

Top to bottom: C → MBB → BB → GB. These are real job titles at companies like GE, Honeywell, and Amazon — not just textbook terms!

Lean vs Six Sigma

LeanUses PDCA cycle (Plan-Do-Check-Act). Focuses on eliminating waste and maximizing customer value.

Six SigmaUses DMAIC cycle. Focuses on reducing variation and defects using data-driven methods.

Lean Six SigmaCombines Lean's waste-reduction tools with Six Sigma's quality control tools

FMEAFailure Mode and Effect Analysis — structured approach to identify and prioritize risk of possible failures

DOEDesign of Experiments — statistical methodology for cause-and-effect relationships between process variables and output

Lean: 7 Wastes (TIMWOOD)

TransportUnnecessary movement of materials

InventoryExcess stock beyond what's needed

MotionUnnecessary movement of people

WaitingIdle time between process steps

OverproductionMaking more than demand requires

Over-processingDoing more work than necessary

DefectsProducts/services that don't meet requirements

TIMWOOD — just remember Tim would hate waste!

Key Lean Terms

KaizenContinuous improvement through small, incremental changes. Japanese for "change for the better."

5SSort (Seiri), Set in Order (Seiton), Shine (Seiso), Standardize (Seiketsu), Sustain (Shitsuke)

Poka-yokeMistake-proofing — any mechanism that prevents operators from making errors (e.g., USB ports only fit one way)

Value Stream MappingFlowcharting method to visualize all steps in a value stream from beginning to delivery

Takt TimeThe rate at which you must complete a product to meet customer demand — the "heartbeat" of lean production

7 Analytical & Graphical Tools

#	Tool	What It Does
1	Flowchart	Maps steps in a process to identify where problems occur
2	Check Sheet	Simple data collection form for counting defects/events
3	Pareto Chart	Bar chart ranking problems by frequency (80/20 rule — focus on the vital few)
4	Run Chart	Plots data over time to spot trends or shifts
5	Control Chart	Run chart with UCL/LCL — detects when a process goes out of control
6	Cause-and-Effect (Fishbone/Ishikawa)	Identifies root causes. Categories: People, Methods, Materials, Machinery/Equipment
7	Opportunity Flow Diagram	Flowchart highlighting value-added vs non-value-added steps

The textbook lists these 7 tools. Note: the ASQ "seven basic quality tools" list substitutes Scatter Diagram and Histogram for Run Chart and Opportunity Flow Diagram. Know your textbook's list for the quiz, and both lists for interviews!

"If an interviewer asks how you'd diagnose a quality problem, walk them through: (1) Flowchart the process, (2) Collect data with Check Sheets, (3) Prioritize with a Pareto Chart, (4) Root-cause with a Fishbone Diagram, (5) Monitor with Control Charts."

Quality Certifications & Awards

ISO 9000International quality management standards based on 7 principles: Customer focus, Leadership, Involvement of people, Process approach, Continual improvement, Factual decision-making, Mutually beneficial supplier relationships

ISO 14000Environmental management standards

Malcolm Baldrige AwardU.S. national quality award. 7 categories: Leadership, Strategic Planning, Customer & Market Focus, Information & Analysis, Human Resource Focus, Process Management, Business Results

Shingo SystemFail-safe design philosophy: SQC doesn't prevent defects — feedback on errors does. Uses successive check, self-check, and source inspection.

TQM (Total Quality Management)

TQMA comprehensive management approach centered on quality, with participation from ALL members of the organization. Two goals: (1) Design quality into the product/service, (2) Ensure consistency in production/delivery.

Chapter 13: Statistical Quality Control

SPC, Control Charts, Process Capability (Cp & Cpk)

Types of Variation

Common (Random) VariationNatural, inherent variation in every process. Expected and unavoidable. Process is "in control."

Assignable (Special) VariationVariation with an identifiable cause (machine malfunction, new operator, bad material). Process is "out of control." Must be investigated!

"Control charts help us distinguish between normal process noise (common variation) and real problems (assignable variation). This prevents overreacting to random fluctuations AND missing real issues."

Attribute vs. Variable Quality

Feature	Attribute	Variable
Measurement	Binary (pass/fail, yes/no) or counting defects	Continuous (temperature, weight, length)
Charts	p-Chart, c-Chart	X̄-Chart, R-Chart
Example	% defective meals, # delayed flights	Weight of Coca-Cola bottles, salt content in chips

Control Charts — Which One to Use?

Chart	Type	Measures	Example
p-Chart	Attribute (binary)	Proportion defective in a sample	Patient meal satisfaction (yes/no) surveys
c-Chart	Attribute (count)	Count of defects per unit (total unknown)	# medical errors per day, # defects per plastic sheet
X̄ and R-Chart	Variable (σ unknown)	Sample mean & range using A₂, D₃, D₄ constants	Weight of cola bottles (new process, no history)
X̄-Chart (σ known)	Variable (σ known)	Sample mean using process standard deviation	Temperature of oven (established process)

Quick decision: Binary (pass/fail) → p-chart. Counting defects → c-chart. Continuous measurement → X̄ & R chart. This three-way decision is one of the most tested concepts.

Key Formulas

p-Chart:
p̄ = Total defective ÷ Total inspected
sp = √[ p̄(1 − p̄) / n ]
UCL = p̄ + 3sp LCL = p̄ − 3sp (or 0 if negative)

c-Chart:
c̄ = Total defects ÷ Number of samples
UCL = c̄ + 3√c̄ LCL = c̄ − 3√c̄ (or 0 if negative)

X̄ and R-Chart (σ unknown):
UCL_X̄ = X̿ + A₂ × R̄ LCL_X̄ = X̿ − A₂ × R̄
UCL_R = D₄ × R̄ LCL_R = D₃ × R̄
(A₂, D₃, D₄ come from Exhibit 13.7 based on sample size n)

X̄-Chart (σ known):
σ_x̄ = σ / √n
UCL = X̿ + z × σ_x̄ LCL = X̿ − z × σ_x̄
(z = 3 for 99.7% confidence)

Control Chart Interpretation (Exhibit 13-5)

Normal behaviorPoints randomly distributed around center line, within UCL/LCL

One point out (above or below)Investigate for cause

Two points near a control limitInvestigate for cause of poor performance

Run of 5 above/below central lineInvestigate — sustained shift in process

Trend in either directionInvestigate for progressive change (tool wear, fatigue)

Erratic behaviorWild swings — investigate immediately

Sudden change in levelInvestigate for cause of abrupt shift

Process Capability — Cp vs. Cpk

Process CapabilityCan the process consistently meet customer specifications? This is DIFFERENT from being "in control" — a process can be stable (in control) but still not capable of meeting specs.

Cp = (USL − LSL) / 6σ
Measures potential capability — how wide is the process spread compared to the spec width?
Cp does NOT consider whether the process is centered.

Cpk = min( (USL − X̿) / 3σ , (X̿ − LSL) / 3σ )
Measures actual capability — accounts for both spread AND centering.

Cpk ≥ 1.0 → Process is capable
Cpk ≥ 1.33 → Process is very capable (often the target)
Cpk < 1.0 → Process is NOT capable — defects will occur

Cp vs. Cpk — The Key DistinctionCp = Cpk means the process is perfectly centered between the spec limits.
Cp > Cpk means the process has drifted off-center — the variation is fine, but the mean needs to be recentered.
Cp ignores centering. Cpk accounts for it. This is why Cpk is the more useful measure in practice.

Think of it this way: Cp asks "could this process fit within specs if perfectly aimed?" Cpk asks "does this process actually fit within specs given where it's aimed right now?" You need BOTH questions answered.

"A favorite interview question: 'What does it mean when Cp is high but Cpk is low?' Answer: The process has enough precision (low variation) but the mean has drifted off-center. Fix the centering, not the variation."

Chapter 17: Internet of Things & ERP

ERP Systems, SAP, IoT, Supply Chain Integration

ERP Essentials

ERP (Enterprise Resource Planning)A computer system that integrates application programs across ALL functions (accounting, sales, manufacturing, HR) through a SINGLE shared database

Largest ERP VendorSAP

Transaction ProcessingPosting and tracking of activities that document a business

4 Major ERP AreasFinance, Manufacturing & Logistics (largest/most complex), Sales & Marketing, Human Resources

Data WarehouseA computer program used to facilitate database queries not part of the standard ERP system

"ERP systems give every department real-time access to the same data. This eliminates information silos and enables faster, better-coordinated decisions across the supply chain."

SAP Supply Chain Functions

4 SAP SC FunctionsSupply Chain Planning, Supply Chain Execution, Supply Chain Collaboration, Supply Chain Coordination

VMIVendor Managed Inventory — vendor-driven inventory replenishment

Enterprise PortalGives users personalized access to information, applications, and services

Collaborative ManufacturingSharing information with partners to coordinate production, increasing visibility and responsiveness

IoT (Internet of Things)

IoTBillions of devices connected to the Internet, constantly collecting and storing data. Integration with ERP creates opportunities for radically changing business operations.

Key BenefitReal-time data from connected devices feeds directly into ERP for automated decision-making

ERP & Supply Chain Planning

How SCM fits ERPManaging materials → Scheduling machines & people → Coordinating suppliers & key customers. Requires coordination across ALL functional units.

3 Internal SC FunctionsPurchasing, Manufacturing, Sales & Distribution

Chapter 22: Workcenter Scheduling

Priority Rules, Johnson's Rule, Gantt Charts, Shop-Floor Control

Scheduling Basics

Workcenter SchedulingA timetable for performing work: (1) Allocate jobs to resources, (2) Sequence jobs, (3) Dispatch (release) jobs, (4) Monitor status

Job ShopProduct flow goes in ANY direction between departments

GT Cell (Group Technology)In between a job shop and flow shop

Flow ShopProducts follow a FIXED sequence (e.g., assembly line)

WIP (Work-in-Process)The type of inventory that workcenter scheduling primarily aims to minimize

Priority Rules (Know All 5!)

Rule	Full Name	Logic
FCFS	First Come, First Served	Process jobs in the order they arrive
SOT (SPT)	Shortest Operating Time	Shortest job first. Minimizes average flow time & WIP. Optimal on many criteria but may delay long jobs forever.
EDD	Earliest Due Date	Nearest due date first. Minimizes maximum lateness.
STR	Slack Time Remaining	STR = Time remaining before due date − Processing time remaining. Lowest STR goes first.
STR/OP	Slack Time Remaining per Operation	STR ÷ Number of remaining operations. Lowest goes first.

Key Calculations:
Flow Time = Completion time for a job (cumulative processing time from time zero)
Lateness = max(0, Flow Time − Due Date)
Average Flow Time = Total Flow Time ÷ Number of Jobs
Average Lateness = Total Lateness ÷ Number of Jobs

"SOT is optimal for minimizing average flow time and WIP inventory, but in practice you'd combine it with a due-date rule so long jobs don't get stuck indefinitely."

Johnson's Rule (2 Machine Sequencing)

When to Usen jobs, 2 machines, all jobs go Machine 1 → Machine 2. Goal: minimize total flow time.

Steps1. Find shortest time across all jobs/machines
2. If shortest is on Machine 1 → schedule FIRST
3. If shortest is on Machine 2 → schedule LAST
4. Remove that job, repeat until done

Shop-Floor Control

Tools of Shop-Floor Control(1) Daily dispatch list, (2) Status & exception reports (anticipated delay, scrap, rework, performance summary, shortage list), (3) Input/output control report

Gantt ChartVisual timeline showing when jobs are scheduled on each machine/resource

Data IntegrityCritical in industry — inaccurate data + computer usage = "speeds up the mess" (stockouts, excess inventory, missed due dates)

Chapter 22S: Theory of Constraints

TOC, Bottlenecks, Drum-Buffer-Rope, Goldratt's Rules

TOC Fundamentals

Theory of Constraints (TOC)Eli Goldratt's approach: focus on system limitations (constraints/bottlenecks) to improve the whole system

Goal of a Firm (Goldratt)To make money — measured by net profit, ROI, and cash flow

OPTOptimized Production Technology — Goldratt's original scheduling software

Synchronous ManufacturingThe entire production process working in harmony to achieve the profit goal

Performance Measurements

Financial	Operational
Net Profit (dollars)	Throughput — rate at which money is generated through SALES
Return on Investment (%)	Inventory — all money invested in things intended to sell
Cash Flow (survival)	Operating Expenses — all money spent to turn inventory into throughput

The operational goal: Increase throughput while reducing inventory and reducing operating expenses — all simultaneously!

TOC 5-Step Process

Step 1IDENTIFY the system constraint(s)

Step 2EXPLOIT the constraint (get maximum from it)

Step 3SUBORDINATE everything else to that decision

Step 4ELEVATE the constraint (invest to remove it)

Step 5If the constraint is broken, GO BACK to Step 1 — don't let inertia become the new constraint!

Bottlenecks & Capacity

BottleneckAny resource whose capacity is LESS than the demand placed on it

Non-bottleneckCapacity is GREATER than demand placed on it

CCRCapacity-Constrained Resource — capacity is CLOSE to demand (not quite a bottleneck, but risky)

Unbalanced CapacityTOC argues AGAINST balancing capacity — random variations make balanced lines fail. Instead, balance the FLOW.

Goldratt's Rules of Production Scheduling

Rule 1Do NOT balance capacity — balance the FLOW

Rule 2Utilization of a non-bottleneck is determined by some OTHER constraint — not by its own potential

Rule 3Utilization and activation are NOT the same (running a machine isn't the same as productive use)

Rule 4An hour LOST at a bottleneck = an hour lost for the ENTIRE system

Rule 5An hour SAVED at a non-bottleneck is a MIRAGE (it doesn't help throughput)

"Rules 4 and 5 are interview gold: An hour lost at a bottleneck costs the entire system an hour of throughput. But saving an hour at a non-bottleneck? That's just creating idle time — it doesn't help."

Drum-Buffer-Rope

DrumThe bottleneck — it sets the pace (beat) that the rest of the system must follow

BufferInventory kept IN FRONT OF the bottleneck so it never runs out of work

RopeCommunication UPSTREAM from the bottleneck — tells starting operations to only release what the bottleneck can handle. Prevents WIP buildup.

Batch Sizes

Process BatchThe total quantity produced before switching to another product (larger = fewer setups, more output)

Transfer BatchThe quantity moved to the next operation BEFORE the entire process batch is done (e.g., move 100 at a time from a batch of 1,000)

Dollar DaysMeasurement of inventory value × time it stays in an area. Goal: reduce dollar days.