Operations and Supply Chain Management The Core

QUALITY MANAGEMENT AND SIX SIGMA chapter 10 333
Cost of quality (COQ) Expenditures related to achieving product or service quality such as the
costs of prevention, appraisal, internal failure, and external failure.
LO10–2 Illustrate globally recognized quality benchmarks.
∙ The International Organization for Standardization (ISO) has developed specifications that
define best-quality practices and are accepted internationally.
∙ ISO 9000 relates to manufacturing and business-to-business processes.
∙ ISO 14000 is concerned with environmental management.
∙ External benchmarking is a useful approach for seeking ways to make innovative
improvement.
ISO 9000 Formal standards for quality certification developed by the International Organization
for Standardization.
External benchmarking Looking outside the company to examine what excellent performers
inside and outside the company’s industry are doing in the way of quality.
LO10–3 Understand the Six Sigma approach to improving quality and productivity.
∙ Six Sigma is a philosophy and set of tools developed to measure and reduce defects.
∙ Six Sigma projects are completed in five steps: (1) define, (2) measure, (3) analyze, (4)
improve, and (5) control.
∙ There is a comprehensive set of analysis tools that can be used in Six Sigma projects and
many of these use statistics to analyze performance data.
Six Sigma A statistical term to describe the quality goal of no more than 3.4 defects out of every
million units. Also refers to a quality improvement philosophy and program.
Defects per million opportunities (DPMO) A metric used to describe the variability of a
process.
DMAIC An acronym for the Define, Measure, Analyze, Improve, and Control improvement
methodology followed by companies engaging in Six Sigma programs.
LO10–4 Illustrate process variation and explain how to measure it.
∙ Variation is inherent in all processes and can be caused by many factors.
∙ Variation caused by identifiable factors is called assignable variation and can possibly be
managed.
∙ Variation inherent in a process is called common or random variation.
∙ Statistical quality control (SQC) involves sampling output from a process and using statistics
to find when the process has changed in a nonrandom way.
∙ When a product or service is designed, specification limits are assigned relative to critical
parameters.
∙ The capability index of a process measures its ability to consistently produce within
specifications limits.
Statistical quality control (SQC) A number of different techniques designed to evaluate quality
from a conformance view.
Assignable variation Deviation in the output of a process that can be clearly identified and
managed.
Common variation Deviation in the output of a process that is random and inherent in the
process itself.
Upper and lower specification limits The range of values in a measure associated with a
process that is allowable given the intended use of the product or service.
Capability index (C pk) The ratio of the range of values allowed by the design specifications
divided by the range of values produced by the process.