Operations and Supply Chain Management The Core

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QUALITY MANAGEMENT AND SIX SIGMA chapter 10 303Examples of Dimensions of Qualityexhibit 10.3MEASURESDIMENSIONPerformanceFeaturesPRODUCT EXAMPLE:LASER PRINTERPages per minutePrint densityMultiple paper traysColor capabilitySERVICE EXAMPLE:CHECKING ACCOUNT AT A BANKTime to process customer requestsAutomatic bill payingReliability/durabilityServiceabilityAestheticsPerceived qualityMean time between failuresEstimated time to obsolescenceExpected life of major componentsAvailability of authorized repair centersNumber of copies per print cartridgeModular designControl button layoutCase styleCourtesy of dealerBrand name recognitionRating in Consumer ReportsVariability of time to process requestsKeeping pace with industry trendsOnline reportsEase of getting updatedinformationAppearance of bank lobbyCourtesy of tellerEndorsed by community leadersPRODUCTS WITH TORN ORIMPROPERLY POSITIONEDLABELS REFLECT POORLY ONTHE BRAND AND BRING INTOQUESTION THE QUALITY OFTHE CONTENTS. A VISIONSENSOR IS USED TO CHECKTHE LABELS BEFORE THEBOTTLES ARE PLACED INCARTONS FOR SHIPMENT.©Omron Electronics LLC
304 OPERATIONS AND SUPPLY CHAIN MANAGEMENTHow significant is the cost of quality? It has been estimated at between 15 and 20 percentof every sales dollar—the cost of reworking, scrapping, repeated service, inspections, tests,warranties, and other quality-related items. It is generally believed that the correct cost fora well-run quality management program should be under 2.5 percent.Three basic assumptions justify an analysis of the costs of quality: (1) failures occur, (2)prevention is cheaper, and (3) performance can be measured.The costs of quality are generally classified into four types:∙ Appraisal costs. Costs of the inspection, testing, and other tasks to ensure that theproduct or process is acceptable.∙ Prevention costs. The sum of all the costs to prevent defects, such as the costs toidentify the cause of the defect, to implement corrective action to eliminate thecause, to train personnel, to redesign the product or system, and to purchase newequipment or make modifications.∙ Internal failure costs. Costs for defects incurred within the system: scrap, rework,repair.∙ External failure costs. Costs for defects that pass through the system: customerwarranty replacements, loss of customers or goodwill, handling complaints, andproduct repair.Exhibit 10.4 illustrates the type of report that might be submitted to show the various costsby categories. Prevention is the most important influence. A rule of thumb says that forevery dollar you spend in prevention, you can save $10 in failure and appraisal costs.Often, increases in productivity occur as a by-product of efforts to reduce the cost ofquality. A bank, for example, set out to improve quality and reduce the cost of quality andfound that it had also boosted productivity. The bank developed this productivity measurefor the loan processing area: the number of tickets processed divided by the resourcesrequired (labor cost, computer time, ticket forms). Before the quality improvement program,the productivity index was 0.2661 [2,080/($11.23 × 640 hours + $0.05 × 2,600 forms+ $500 for systems costs)]. After the quality improvement project was completed, labortime fell to 546 hours and the number of forms rose to 2,100, for a change in the index to0.3106 [2,100/($11.23 × 546 hours + $0.05 × 2,600 forms + $500 for system costs)], anincrease in productivity of over 16 percent.ISO 9000 AND ISO 14000LO10–2 Illustrateglobally recognizedquality benchmarks.ISO 9000Formal standards forquality certificationdeveloped bythe InternationalOrganization forStandardization.ISO 9000 and ISO 14000 are international standards for quality management and assurance.The standards are designed to help companies document that they are maintainingan efficient quality system. The standards were originally published in 1987 by theInternational Organization for Standardization (ISO), a specialized international agencyrecognized by affiliates in more than 160 countries. ISO 9000 has become an internationalreference for quality management requirements in business-to-business dealing, and ISO14000 is primarily concerned with environmental management.The idea behind the standards is that defects can be prevented through the planning andapplication of best practices at every stage of business—from design through manufacturingand then installation and servicing. These standards focus on identifying criteria bywhich any organization, regardless of whether it is manufacturing- or service-oriented, canensure that product leaving its facility meets the requirements of its customers. These standardsask a company first to document and implement its systems for quality management
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To Cole, Connor,and Grant—the nex
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viiPREFACEJust as lava flows from t
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ixA NOTE TO INSTRUCTORSOperations a
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TECHNOLOGY xisoftware, EZ Test and
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For StudentsEffective, efficient st
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WALKTHROUGH xvOpening VignettesEach
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related to resources such as invent
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WALKTHROUGH xixAnalytics ExercisesT
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xxiCONTENTS1 OPERATIONS AND SUPPLY
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CONTENTS xxiiiConcept Connections 2
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In the context of major business fu
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OPERATIONS AND SUPPLY CHAIN MANAGEM
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products and interconnected service
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STRATEGY AND SUSTAINABILITY chapter
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The creation of a single, globallog
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FORECASTING chapter 3 47In Chapter
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FORECASTING chapter 3 49Common Type
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FORECASTING chapter 3 51Forecast De
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FORECASTING chapter 3 53Although ma
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FORECASTING chapter 3 55Exponential
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FORECASTING chapter 3 57the chapter
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FORECASTING chapter 3 59wherea = Y
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FORECASTING chapter 3 61Decompositi
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FORECASTING chapter 3 63Example 3.4
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FORECASTING chapter 3 65limits) to
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FORECASTING chapter 3 67whereRSFE =
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FORECASTING chapter 3 69Because the
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FORECASTING chapter 3 71products, a
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FORECASTING chapter 3 73Step 5. Inv
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S yt = √FORECASTING chapter 3
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FORECASTING chapter 3 77SOLVED PROB
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FORECASTING chapter 3 79The seasona
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FORECASTING chapter 3 81OBJECTIVE Q
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FORECASTING chapter 3 8312. Assume
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FORECASTING chapter 3 8518. A parti
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FORECASTING chapter 3 87the quad-co
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FORECASTING chapter 3 89Using a pro
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FORECASTING chapter 3 9110. If the
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TESLA—MANUFACTURING CAPACITYFOR T
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STRATEGIC CAPACITY MANAGEMENT chapt
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The company uses many workers durin
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PROJECTS chapter 5 129products such
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PROJECTS chapter 5 131flexibility a
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PROJECTS chapter 5 133Sample of Gra
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PROJECTS chapter 5 135Earned Value
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PROJECTS chapter 5 137Step 1: Calcu
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PROJECTS chapter 5 139group will co
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PROJECTS chapter 5 1411 30 1A(1)0 1
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PROJECTS chapter 5 143CPM Network f
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PROJECTS chapter 5 145Activity E
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PROJECTS chapter 5 147Example of Ti
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PROJECTS chapter 5 149is $9, or $3
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PROJECTS chapter 5 151be output. De
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PROJECTS chapter 5 153EXPECTEDAC
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PROJECTS chapter 5 155d. Show th
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PROJECTS chapter 5 157(1) 1st week:
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PROJECTS chapter 5 159a. Draw the n
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PROJECTS chapter 5 161a. Draw the n
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PROJECTS chapter 5 163d. Here is a
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PROJECTS chapter 5 165completing th
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now improved to the point wherethes
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MANUFACTURING PROCESSES chapter 6 1
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recommendations are based on past p
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SERVICE PROCESSES chapter 7 205airf
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SERVICE PROCESSES chapter 7 207prov
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SERVICE PROCESSES chapter 7 213Cust
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SERVICE PROCESSES chapter 7 215Pois
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SERVICE PROCESSES chapter 7 217Numb
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SERVICE PROCESSES chapter 7 219foll
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SERVICE PROCESSES chapter 7 221Prob
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SERVICE PROCESSES chapter 7 229Mode
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SERVICE PROCESSES chapter 7 231LO7-
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SERVICE PROCESSES chapter 7 235ANAL
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SERVICE PROCESSES chapter 7 237Give
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∙ Marketing chimes in with, “We
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SALES AND OPERATIONS PLANNING chapt
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INVENTORY MANAGEMENT chapter 11
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manufacturing without limiting styl
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LEAN SUPPLY CHAINS chapter 12 399Le
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are manufactured in Japan, horizont
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GLOBAL SOURCING AND PROCUREMENT cha
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small arrow hidden there. This arro
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LOCATION, LOGISTICS, AND DISTRIBUTI
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After running Solver, we get the fo
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481APPENDIX ALINEAR PROGRAMMINGUSIN
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LINEAR PROGRAMMING USING THE EXCEL
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ANSWERS TO SELECTED OBJECTIVE QUEST
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507APPENDIX DNEGATIVE EXPONENTIALDI
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509NAME INDEXAAlvarez, Ricardo, 236
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SUBJECT INDEX 511Crashing, 145-149C
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SUBJECT INDEX 513Linear programming
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SUBJECT INDEX 515Risk-hedging suppl
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Operations and Supply Chain Management The Core

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