1

The method is based on notion of aggregate units. They may be

Actual units of production Weight (tons of steel) Volume (gallons of gasoline) Dollars (value of sales) Fictitious aggregate units

Regular time costs

Costs of producing a unit of output during regular working hours, including direct and indirect labor, material, manufacturing expenses Costs associated with using manpower beyond normal working hours Costs incurred in substantially altering the production rate Out of pocket costs associated with carrying inventory

Overtime costs

Production-rate change costs

Inventory associated costs

Costs of insufficient capacity in the short run Control system costs

Costs incurred as a result of backordering, lost sales revenue, loss of goodwill + costs of actions initiated to prevent shortages
Costs of acquiring the data for analytical decision, computational effort and implementation costs

Constant production rate can be satisfied with constant capacity.

Work force is constant, production rate slightly less that capacity of people & machines: good utilization without overloading the facilities.
Raw material usage is also constant. If supplier and customers are also close, frequent deliveries of raw material and finished goods will keep inventory low. How realistic is this example? with fluctuating demand?anyway -- produce at constant rate

-- Strategiesdemand change the to cope

-- vary the production rate -- use combination of above strategies

Competitors Behavior

Raw Material Availability

Market Demand

External Capacity (outsourcing) Current Physical Capacity

Planning for Production

Economic Conditions

Current Inventory

Current Work Force

Required Production Activities

Review of forecasting Forecast errors Aggregate planning

Strategy or design: Forecast Planning: Forecast Operation Actual demand Since actual demands differs from forecasts so does the execution from the plans.

E.g. Supply Chain concentration plans 40 students per year whereas the actual is ??.

Forecasts are always wrong. Should include expected value and measure of error. Long-term forecasts are less accurate than short-term forecasts. Too long term forecasts are useless: Forecast horizon

Forecasting to determine

Raw material purchases for the next week Annual electricity generation capacity in TX for the next 30 years

Several ways to aggregate

Products into product groups Demand by location Demand by time

Aggregate planning: Intermediate-range capacity planning,

usually covering 2 to 12 months. In other words, it is matching the capacity and the demand.

Long range Intermediate range

Short range

Now

2 months

1 Year

Short-range plans (Detailed plans)

Machine loading Job assignments

Employment Output

Intermediate plans (General levels)

Long-range plans

Long term capacity Location / layout Product/Process design

10

Details are hard to gather for longer horizons

Demand for Christmas turkeys at Tom Thumbs vs Thanksgiving turkeys

Details carry a lot of uncertainty: aggregation reduces variability

Demand for meat during Christmas has less variability than the total variability in the demand for chicken, turkey, beef, etc.

If there is variability why bother making detailed plans, inputs will change anyway

Instead make plans that carry a lot of flexibility Flexibility and aggregation go hand in hand

11

Aggregate planning: General plan

Combined products = aggregate product

Short and long sleeve shirts = shirt Single product

Pooled capacities = aggregated capacity

Dedicated machine and general machine = machine Single capacity

Time periods = time buckets

Consider all the demand and production of a given

month together

12

Quite a few time buckets When does the demand or production take place in a time bucket?

Corporate strategies and policies

Economic, competitive, and political conditions

Aggregate demand forecasts

Business Plan

Establishes production and capacity strategies

Production plan

Establishes production capacity

Master schedule
13

Establishes schedules for specific products

Resources

Costs

Workforce Facilities

Demand forecast Policy statements

Subcontracting Overtime Inventory levels Back orders

Inventory carrying Back orders Hiring/firing Overtime Inventory changes subcontracting

14

Total cost of a plan Projected levels of inventory

Inventory Output Employment Subcontracting Backordering

15

Proactive

Alter demand to match capacity Alter capacity to match demand

Reactive

Mixed

Some of each

16

Pricing

Price reduction leads to higher demand

Not necessarily via pricing Free delivery, free after sale service
Some Puerto Rico hotels pay for your flight

Promotion

Back orders

Short selling: Sell now, deliver later Finding alternative uses for the product

New demand

17

Capacity (regular time, over time, subcontract) Inventory Backlog / lost sales: Customer patience?

Basic Strategies

Chase (the demand) strategy; Matching capacity to demand; the planned

output for a period is the expected demand for that period

fast food restaurants

Time flexibility from high levels of workforce or capacity;

machining shops, army

Level strategy; Maintaining a steady rate of regular-time output while

meeting variations in demand by a combination of options.

swim wear

18

Use inventory

Demand

Use delivery time

Demand

Demand

19

Chase Approach

Level Approach
Advantages
Stable output rates and workforce

Advantages

Investment in inventory is low

Labor utilization in high

Disadvantages
Greater inventory costs Increased overtime and idle time Resource utilizations vary over time

Disadvantages

The cost of adjusting output rates and/or workforce levels

20

Inputs:

Determine demand for each period Determine capacities for each period Identify policies that are pertinent Determine units costs
Develop alternative plans and costs Select the best plan that satisfies objectives

Analysis

21

Technique
Graphical/ charting Linear programming Simulation

Solution
Trial and error Optimizing Trial and error

Characteristics
Intuitively appealing, easy to understand; solution not necessarily optimal. Computerized; linear assumptions not always valid. Computerized models can be examined under a variety of conditions.

Linear decision rule???

22

Services occur when they are rendered

Limited time-wise aggregation

Limited location-wise aggregation

Services occur where they are rendered

Demand for service can be difficult to predict

Personalization of service

Capacity availability can be difficult to predict Labor flexibility can be an advantage in services

Human is more flexible than a machine, well at the expense of low efficiency.

23

Aggregate Planning

Disaggregation

Master Schedule

For a short planning range 2-4 months: Master schedule: The result of disaggregating an aggregate plan; shows quantity and timing of specific end items for a scheduled horizon. Rough-cut capacity planning: Approximate balancing of capacity and demand to test the feasibility of a master schedule.

24

Master schedule
Determines quantities needed to meet demand Interfaces with

Master Scheduler
Evaluates impact of new orders Provides delivery dates for orders Deals with problems

Marketing Capacity planning Production planning Distribution planning

Production delays Revising master schedule Insufficient capacity

25

Inputs
Beginning inventory Forecast Committed Customer orders

Outputs
Projected inventory

Master Scheduling

Master production schedule ATP: Uncommitted inventory

26

Requirements=Forecast Assuming that the forecasts include committed orders Net inventory before production= Projected on hand inventory in the previous period - Requirements Produce in lots if Net inventory is less than zero

Net inventory after production= Net inventory before production+ Production

27

Aggregate planning: conception, demand and capacity option Basic strategy: level capacity strategy, chase demand strategy Techniques: Trial and Error, mathematical techniques Master scheduling

28

1. The goal of aggregate planning is to achieve a production plan that attempts to balance the organization's resources and meet expected demand. Answer: True 2. A chase strategy in aggregate planning would attempt to match capacity and demand. Answer: True 3. Ultimately the overriding factor in choosing a strategy in aggregate planning is overall cost. Answer: True

29

1. Which of the following best describes aggregate planning? A) the link between intermediate term planning and short term operating decisions B) a collection of objective planning tools C) make or buy decisions D) an attempt to respond to predicted demand within the constraints set by product, process and location decisions E) manpower planning Answer: D

30

2.Which of the following is an input to aggregate planning? A) beginning inventory B) forecasts for each period of the schedule C) customer orders D) all of the above E) none of the above Answer: D

31

3.Which of the following is not an input to the aggregate planning process: A) resources B) demand forecast C) policies on work force changes D) master production schedules E) cost information Answer: D

32

4. Which one of the following is not a basic option for altering demand? A) promotion B) backordering C) pricing D) subcontracting E) All are demand options. Answer: D

33

5. Which of the following would not be a strategy associated with adjusting aggregate capacity to meet expected demand? A) subcontract B) vary the size of the workforce C) vary the intensity of workforce utilization D) allow inventory levels to vary E) use backorders Answer: E

34

6. Moving from the aggregate plan to a master production schedule requires: A) rough cut capacity planning B) disaggregation C) sub-optimization D) strategy formulation E) chase strategies Answer: B

35

Outline

Hierarchy of Production Decisions Operations Scheduling Production Systems

36

Hierarchy of Production Decisions

After a production facility and processes are set up, a series of production planning decisions are required. The entire decision making process may be viewed as a hierarchical process. A conceptual view of the hierarchical process is given in Text Figure 8-1 (see the next slide). First, one would like to know how much demand may be expected and when the demand may be expected. This question is addressed by forecasting. An aggregate plan determines the aggregate production levels and resource capacities over the planning horizon. The production levels are often different from the

37

Figure 8-1: Hierarchy of Production Decisions

Forecast of demand

Aggregate Plan

Master Production Schedule

Material Requirements Planning System

Detailed Job Shop Schedule

38

Hierarchy of Production Decisions

forecasted demand levels because of seasonality associated with the demand, constraints on the availability of production resources, etc. The resource capacities such as workforce levels are determined assuming one aggregate unit of production. Master production schedule (MPS) translates the aggregate plan in terms of specific units of production and time period. For example, an aggregate plan may require 550 units of chairs in April. MPS then translates the requirement into 200 units of desk chair in Week 1, 150 units of ladder-back chair in Week 2 and 200 units of Kitchen chair in Week 3.

39

Hierarchy of Production Decisions

The MPS generates the production plan in terms of finished products which often require components or subassemblies. The materials requirements planning (MRP) computes the changes in the inventory levels of components and subassemblies over the planning horizon and determines the size and timing of ordering the components and subassemblies. Next comes operations scheduling. After generating demand forecast, workforce capacities, production plan, and purchasing plan, its logical to ask which worker or machine will be used to produce which product and when the products will be produced. This is answered by operations scheduling.

40

Operations Scheduling
An operations scheduling question is given in the previous slide. In more general terms, operations scheduling is the allocation of resources over time to perform a collection of tasks. Examples of resources: Workers, Machines, Tools Examples of tasks: Operations that bring some physical changes to material in order to eventually manufacture products Setups such as walking to reach the workplace, obtaining and returning tools, setting the required jigs and fixtures, positioning and inspecting material, cleaning etc.

41

Operations Scheduling
Operations and Jobs The above definition of scheduling uses the more general term of task that includes both operations and setup. We shall most often use the terms operation and job. A collection of operations on a single product is a job. The planning horizon The planning horizon of a scheduling decision is very short say days, weeks or months. Schedule A schedule is the final outcome of operations scheduling and gives a detail chart of what activities will be done using various resources over the planning horizon.

42

Operations Scheduling
Sequencing Sequencing and scheduling are similar terms. But sequencing does not refer to time. For example, if a bank teller processes 5 customers, the bank teller may just process the customers on a first come first served basis without any planning about exact start and end times for each customer. Thats sequencing. Scheduling, in contrast, produces a detail plan of various activities over time. A Gantt chart representation of a schedule A Gantt chart representation of a schedule is shown on the next slide. Suppose that there are two machines: one lathe machine and one grinding machine. Two jobs Job A12 and Job B23 are to be produced over the next 14 days.

43

Operations Scheduling

Lathe machine

Job A12

Job B23

Grinding machine

Job A12

Job B23

8 Days

10

12

14

44

Operations Scheduling
The schedule shown on the Gantt chart gives a detail plan: The lathe machine will be used by Job A12 on days 1-4, and Job B23 on days 5-8 The grinding machine will be used by Job A12 on days 5-10 and Job B23 on days 11-14. Notice that No job uses more than one machine simultaneously No machine processes more than one job simultaneously. The above are some standard assumptions/ requirements which will be maintained throughout this chapter/ course.

45

Operations Scheduling
As it is in the example Gantt chart, it is customary to show: resources such as machines on the y-axis time on the x-axis and each job (or operation) by a rectangle proportional to the length of the time required to process the job (or operation). The Gantt chart is used not only for planning but also for monitoring. For example, on Day 8, one can check if Job B23 is completed by the lathe machine. There will be more exercises on Gantt chart in Lessons 2, 5, 6 and 9.

46

Operations Scheduling
Generalization of scheduling models, job and machine The scheduling models use the terms like job and machine. However, the models actually apply to many processes that has nothing to do with jobs and machine at all! For example, suppose that Mary and Marcia require advising in three subjects: business, computer science and mathematics. Each of Mary and Marcia will see the advisors separately. They would like to complete discussions as soon as possible. One can view the situation a 3-machine, 2job problem where the machines represent the advisors and jobs represent Mary and Marcia.

47

Production Systems
Product characteristics differ. Some products are standard and require minimal or no variation from one item to another. These products are produced in large volume on the basis of demand forecast. Examples of standard products include staple products, economy cars, etc. Some other products are produced only on the basis of customer order and there exist significant differences among the items. These products are produced in low volumes. Examples of custom products include luxury cars, fashion clothes, etc.

48

Production Systems
Different product characteristic requires a different production system. Standard products require a make-to-stock or assemble-to-stock production system Custom products require a make-to-order or assemble-to-order production system

49

LESSON 13: SCHEDULING OBJECTIVES

Outline
Job Characteristics Comparison of Schedules Scheduling Terms Scheduling Objectives

50

Job Characteristics
Lesson 1 provides a brief discussion on production systems. We have discussed some alternative ways of arranging machines. In this lesson, we shall first discuss some job characteristics and scheduling objectives. Generally, every job is different (an exception is an assembly line where the jobs are identical). For example, in case of a make-to-order or an assemble-to-order production system, every order is placed at a different time, requires a different amount of processing time and is delivered at a different time.

51

Job Characteristics
Job characteristics are important inputs to job shop, batch production and flow shop scheduling. Every job has a ready time: the time when the job arrives at the shop floor processing time: the time required to process the job due date: the time when the job must be completed Notation:

r j Ready time for job j t j Processing time for job j d j Due date for job j

52

Job Characteristics
Assumptions: A machine can process one job at a time A job can be processed by one machine at a time We usually assume an equal importance and the same arrival time for all jobs (Example 1 is an exception, where jobs arrive at different times). Further, we assume that preemption is not allowed. So, once a job is started on a machine, the job must be completed before another job can be processed by that machine.

53

Comparison of Schedules
There are two alternative schedules (sequences) Schedule 1: process Job 1 first, then Job 2. Schedule 2: process Job 2 first, then Job 1. Schedule 1 (see the next slide): Only 3 hours will be needed to complete the jobs. However, Job 2 can be completed at time 3 which is late by 1 hour. Schedule 2 (see the next slide): Both the jobs are completed right when they are needed. However, a total of 4 hours will be needed

54

Comparison of Schedules
Schedule 1 requires the facility to be open for fewer hours (3 hours only in contrast to 4 hours required by Schedule 2) Schedule 2 meets the due dates (Schedule 1 does not)

Schedule 1 Job 1 0 1 Schedule 2 Job 2 Job 1 Job 2

d2
2 Time, t 3

d1
4

d2
0 1 2 Time, t 3

d1
4
55

Comparison of Schedules
Next, we shall see a similar example with a different pair of criteria. Example 2: An auto repair shop has a space problem and requires parking fees for all cars waiting for service. The shop starts at 8:30 am and two cars are waiting to be repaired. Car 1 will require 1 hour and the customer wants the job done by 12:30 pm. Job 2 will require 3 hours and the customer wants the job done by 11:30 am.

Car

j
1 2

Ready Processing Due Time (hr) Time (hr) Date (hr)

rj
0 0

tj
1 3

dj
4 3
56

Comparison of Schedules
Schedule 3 requires less parking fees (1 hour only in contrast to 3 hours required by Schedule 4) Schedule 4 meets the due dates (Schedule 3 does not)

Schedule 3 Car 1 0 1 Car 2

d2
2 Time, t 3

d1
4

Schedule 4 Car 2 Car 1

d2
0 1 2 Time, t 3

d1
4
57

Scheduling Terms
Makespan, maximum lateness, total completion time In Example 1, Slides 5-8, Schedule 1 minimizes makespan and Schedule 2 minimizes maximum lateness. Total completion time is the sum of all completion times. Notice that total completion time is not the same as makespan. Total completion time is denoted by In Example 2, Slides 9-10, Schedule 3 minimizes not only parking fees but also total completion time. In general, if a schedule frees up space j fast, the schedule minimizes total completion time. Schedule 4 minimizes maximum lateness. j 1 2 3 n

C C C C

58

Scheduling Objectives
As it may be observed from Examples 1 and 2, different schedule may be better with respect to different criterion (scheduling objective). So, its very important to set up a suitable scheduling objective in order to get a suitable schedule. There are many scheduling objectives and different situation calls for a different objective. The next slide provides a brief list of scheduling objectives divided into four groups. See Section 8.5, pp. 423-424 for a discussion on how different situation requires a different schedule.

59

Scheduling Objectives
Conformance to prescribed deadlines Meet customer due dates, minimize job lateness, minimize maximum lateness, minimize number of tardy jobs Response time or lead time Minimize mean completion time, minimize average time in the system Efficient utilization of resources Maximize machine or labor utilization, minimize idle time, maximize throughput, minimize the length of time the shop is open, minimize utilities and wages Costs Minimize work-in-process inventory, minimize overtime

60

LESSON 14: SCHEDULING WITH PRIORITY SEQUENCING RULES

Outline
Sequencing Sequencing Rules Sequencing Rule Example Remarks

Project management concerned with managing organizational activities. Often used to integrate and coordinate diverse activities. Projects are special types of processes.

Chapter 11: Project Management

62

Projects are processes that are performed infrequently and ad hoc, with a clear specification of the desired objective.

Chapter 11: Project Management

63

Constructing highways, bridges, tunnels and dams Erecting skyscrapers, steel mills, and homes Organizing conferences and conventions Managing R&D projects Running political campaigns, war operations, and advertising campaigns

Chapter 11: Project Management

64

More Sophisticated Technology Better-Educated Citizens More Leisure Time Increased Accountability Higher Productivity Faster Response to Customers Greater customization for customers
Chapter 11: Project Management 65

Planning. Determining what must be done and which tasks must precede others. Scheduling. Determining when the tasks must be completed; when they can and when they must be started; which tasks are critical to the timely completion of the project; and which tasks have slack and how much.

Chapter 11: Project Management

66

Basic concerns: how are the organizational resources managed in achieving the desired results? * All resources should be fully utilized or * Results should be achieved with minimum use if resources

General Guidelines: * Productivity improvement should be an integral part of firms strategic plan. * Productivity objectives and measures should be derived firms business and operations strategies * Productivity plan should cover both short-term and long-term objectives. * Productivity objectives should be linked with quality and customer service concerns * Make productivity improvement an organizational culture and involve all functional areas.

White-collar productivity is more important than ever before. Need different and unique productivity measurement in different service industries in terms of input, output and processing time.

New approaches in service: --More effective design of service jobs. --Effective use of incentive and rewarding system --Participative management style. --Direct feedback from customers. --Organizational design and development --System approach vs behavioral approach --

Productivity
The Physical Work Environment Motivation Employee Job Performance

Employee Ability

Formal Organization
Informal Groups Union Job Design Leadership

Individual Employee Personal Situations

Individual Employee Psychological Needs

Economic Conditions

Why job design? Organizing work content in a best way to improve labor productivityconsideration of human factors. Classical approach: labor specialization: through standardization/ mechanization/fixed job layout/fixed work method/.. New approach: Human factors are must considered in job design

Major objectives of job design: improve labor efficiency and productivity with high worker satisfaction. * Job design is a complex task. ---A major topic in IE ,many guidelines are suggested. * Job design in service operations: less formalized, more flexible.

Job design: decision relate to how much jobs should be specialized or enlarged. Benefits of specialization: * less training time * faster work pace * lower wages

Maslows Ladder: Needs People Fill Through Work

Self realization needs

Esteem needs Social needs Safety needs Physiological needs

Disadvantages of narrowly defined jobs: * Poor employee morale, high turnover, low quality * The need for more management attention * Less flexibility to handle changes, absences Alternatives to specialization: * Job enlargement * Job rotation * Job enrichment

Job Rotation: training workers to perform several jobs so that they can be moved about from job to job during their work shift Job Enlargement: adding more tasks to a workers job. Adding more similar tasks is referred to as horizontal job enlargement Job Enrichment: adding more planning, inspecting, and tasks that have been regarded as management functions. Job enrichment is often referred to as vertical job enlargement Sociotechnical System Studies: attempts to design jobs that adjust the production technology to the needs of the workers Employee Empowerment Team Production

Elements of workers jobs Workers job tasks

Suggested design guidelines Avoid machine pacing Combine inspection tasks into jobs so that workers inspect their own output Allow open communication Combine machine changeover, new job layouts, setups and other elements of immediate job planning into workers jobs Rotate workers where practical between jobs that are repetitive Assign new workers to undesirable jobs for fixed periods of time then transfer them to more preferred jobs Select and train supervisors who openly communicate Remove barriers between managing and other employees

Workers needs affected Self control Self direction/ control Socialization, team building

Immediate job setting

Variety and relief of boredom and monotony equity recognition and socialization Equity and recognition

Larger work environment

Work Measurement: establish a measurable work standard upon which to evaluate, compare and improve labor productivity. Work (labor) Standard: Determine on averagehow many labor-hour are required to produce one unit of desired output for a well-trained worker under normal operating conditions

Level of standard: * Operations/Department/Plant standards * Element/Operations/Product standards Use of work standard: * Work and personnel planning * Cost estimation for labor and machine Techniques to set work standard: * Time study * Work sampling * Elemental timing * Predetermined motion-time study

Production and operations standards: individuals job standards Department standards: sum of performance of the individual and team in a department Plant standards: quantity and labor standards of the plant are the goals management strives to meet

Evaluating individual performance: subsequent compensation Evaluating department performance: subsequent supervisor compensation Evaluating process design, layout, and work methods Estimating expense and revenue streams in equipment evaluation as alternative are compared Formulating standards costs

Aggregate planning of work force levels and production rates Capacity planning and utilization Scheduling operations: time sequencing jobs Cost estimating of products and production lots Planning types of labor skills necessary and budgeting labor expenses

Determined by observing several workers and estimating their average performance Sampling costs increase with number of workers sampled: accuracy of estimate increases as sample size increases Must tradeoff sampling cost and accuracy (See Supplement Example p.6-8)

Time study (stopwatch and micromotion analysis) Elemental standards time data Predetermined motion- time data Work sampling

Standards time=

Normal time (1-allowance)

Normal time= (average cycle time)* (rating factor) Average cycle time=
Time recorded to perform an element
Number of cycles observed

Allowance fraction= fraction of time for personal needs, unavoidable work delays, fatigue

Purpose:
To estimate what proportion of a workers time is

devoted to work activities

Main Issues:
What level of statistical confidence is desired in the

results? How many observations are necessary

Primary Applications:
Time standards: to obtain the standards time for a task

Proportion of Performance Time Employee Total Study Time * Observed Working * Rating Factor
Normal Time= Number of Units Produced

Proportional of = Time Employee Observed Working Or

Number of observations in which working occurred

Number of Observations
x

P=

Example:

N= 100 (observations) X= 83 (sampled worker is working) P= 83/100 = 0.83 Total Study Time = 37.5 (hours) Rating Factor = 1.05 Number of Units Produced = 100

Given:

Normal Time

= (37.5*0.83*1.05)/100 = 1/3 (hours) = 20 (min)

Description: used in the planning process when the jobs are not currently being performed Can also be an alternative to observed time studies Basis in the historical information on basic human movement and motion such as reaching, gasping, lifting, etc. Elemental times have been developed for the basic human motion Commonly industry specific

New Trend Job Design: * Efficiency: more simple, easy-eliminate all unnecessary moves/operations/ materials/ * Motivation: more responsible/more creative/more control more challengeable/

Learning (experience) curve in work measurement: Learning curve: representing the relationship between the time used in producing an item and the quantity to be reproduced repeatedly.

Value Methodology (also called ValueEngineering, Value Analysis or ValueManagement) is a powerful problem-solving tool that can reduce costs whilemaintaining or improving performanceand quality requirements. It is a function-oriented, systematicteam approach to providing value in a product or service

The value methodology helps organizationscompete more effectively in local, national and international markets by: Decreasing costs Increasing profits Improving quality Expanding market share Saving time Solving problems Using resources more effectively

VA is an step by step approach to identify thefunctions of a product, process, system or service; to establish a monetary value for that function and then provide the desired functionat an overall minimum cost without affectingany of the existing parameters like Quality,Maintainability, Productivity, Safety and other Performance characteristics

Value Engineering is where the value of allthe components used in the construction of a product from design to final delivery stage arecompletely analyzed and pursued

VALUE ANALYSIS Indicates application onthe product that is intomanufacturing. All factors come togetherincluding workers,subcontractors, engineersto make a team with totalexperience and knowledge VALUE ENGINEERING Indicates application onthe product at its designstage. It is always done by aspecific product design(engineers) team.

VALUE ANALYSIS It may change thepresent stage of theproduct or operation It is worked out mostly with help of knowledgeand experience VALUE ENGINEERING the changes are executedat the initial stages only. It requires specifictechnical knowledge

Does its use contribute value? Is its cost proportional to its usefulness? Does it need all its features? Is there anything better for the intended use? Can a usable part be made by a lower cost method? Can a standard product be found which will beusable? Is it made on proper tooling, considering quantitiesused? Do materials, reasonable labour, overhead, andprofit total its cost? Will another dependable supplier provide it for less? Is anyone buying it for less?

A History of Quality An overview of how the concepts and processes of quality have evolved from the craft guilds of medieval Europe to the workplaces of today. Continuous Improvement How to take your products, services and processes to the next level through an ongoing cycle of activities that capitalize on improvement opportunities. Cost of Quality Quality doesn't cost money. It's poor-quality products and services that pile up extra costs for your organization. Here's how to get started eliminating these expensive shortcomings. Customer Satisfaction Tips and resources for helping you identify your customers and what it will take to satisfy them. Glossary A handy guide to the unique terminology of quality. Problem Solving Using four basic steps to implement solutions by accurately defining problems and identifying alternatives. Process View of Work Analyze how work gets done so that you can increase efficiency, effectiveness, and adaptability. Quality Assurance and Quality Control What's the difference? In the world of quality, these terms have very different meanings. Root Cause Analysis Use a wide range of approaches, tools, and techniques to uncover causes of problems. Supplier Quality The quality of what goes into a product or service determines the quality of what comes out. Here's how to keep costs low and quality high. Variation Variation represents the difference between an ideal and an actual situation.

Continuous improvement is an ongoing effort to improve products, services or processes. These efforts can seek incremental improvement over time or breakthrough improvement all at once. Among the most widely used tools for continuous improvement is a four-step quality modelthe plan-do-check-act (PDCA) cycle, also known as Deming Cycle or Shewhart Cycle: Plan: Identify an opportunity and plan for change. Do: Implement the change on a small scale. Check: Use data to analyze the results of the change and determine whether it made a difference. Act: If the change was successful, implement it on a wider scale and continuously assess your results. If the change did not work, begin the cycle again. Other widely used methods of continuous improvement such as Six Sigma, Lean, and Total Quality Management emphasize employee involvement and teamwork; measuring and systematizing processes; and reducing variation, defects and cycle times.

Continuous improvement is an ongoing effort to improve products, services or processes. These efforts can seek incremental improvement over time or breakthrough improvement all at once. Among the most widely used tools for continuous improvement is a four-step quality modelthe plan-do-check-act (PDCA) cycle, also known as Deming Cycle or Shewhart Cycle: Plan: Identify an opportunity and plan for change. Do: Implement the change on a small scale. Check: Use data to analyze the results of the change and determine whether it made a difference. Act: If the change was successful, implement it on a wider scale and continuously assess your results. If the change did not work, begin the cycle again. Other widely used methods of continuous improvement such as Six Sigma, Lean, and Total Quality Management emphasize employee involvement and teamwork; measuring and systematizing processes; and reducing variation, defects and cycle times. Continuous or Continual? The terms continuous improvement and continual improvement are frequently used interchangeably. But some quality practitioners make the following distinction: Continual improvement: a broader term preferred by W. Edwards Deming to refer to general processes of improvement and encompassing discontinuous improvements that is, many different approaches, covering different areas. Continuous improvement: a subset of continual improvement, with a more specific focus on linear, incremental improvement within an existing process. Some practitioners also associate continuous improvement more closely with techniques of statistical process control.

"The cost of quality." Its a term that's widely used and widely misunderstood. The "cost of quality" isn't the price of creating a quality product or service. It's the cost of NOT creating a quality product or service. Every time work is redone, the cost of quality increases. Obvious examples include: The reworking of a manufactured item. The retesting of an assembly. The rebuilding of a tool. The correction of a bank statement. The reworking of a service, such as the reprocessing of a loan operation or the replacement of a food order in a restaurant. In short, any cost that would not have been expended if quality were perfect contributes to the cost of quality.

Prevention Costs The costs of all activities specifically designed to prevent poor quality in products or services. Examples are the costs of: New product review Quality planning Supplier capability surveys Process capability evaluations Quality improvement team meetings Quality improvement projects Quality education and training

Appraisal Costs The costs associated with measuring, evaluating or auditing products or services to assure conformance to quality standards and performance requirements. These include the costs of: Incoming and source inspection/test of purchased material In-process and final inspection/test Product, process or service audits Calibration of measuring and test equipment Associated supplies and materials

Failure Costs The costs resulting from products or services not conforming to requirements or customer/user needs. Failure costs are divided into internal and external failure categories. Internal Failure Costs Failure costs occurring prior to delivery or shipment of the product, or the furnishing of a service, to the customer. Examples are the costs of: Scrap Rework Re-inspection Re-testing Material review Downgrading

External Failure Costs Failure costs occurring after delivery or shipment of the product and during or after furnishing of a service to the customer. Examples are the costs of: Processing customer complaints Customer returns Warranty claims Product recalls Total Quality Costs: The sum of the above costs. This represents the difference between the actual cost of a product or service and what the reduced cost would be if there were no possibility of substandard service, failure of products or defects in their manufacture.

Organizations of all types and sizes have come to realize that their main focus must be to satisfy their customers. This applies to industrial firms, retail and wholesale businesses, government bodies, service companies, nonprofit organizations and every subgroup within an organization. Two important questions: Who are the customers? What does it take to satisfy them?

Supplier-customer relationship examples Supplier Automobile manufacturer Automobile manufacturer Bank High school County recorder Hospital Hospital Insurance company Steel cutting department Punch press department All departments Customer Individual customers Car dealer Checking account holders Students and parents Residents of county Patients Insurance company Hospital Punch press department Spot weld department Payroll department Cars Sales literature, etc. Secure check handling Education Maintenance of records Healthcare Data on patients Payment for services Steel sheets Shaped parts Data on hours worked, etc. Product or Service

What Does It Take to Satisfy Customers? Dont assume you know what the customer wants. There are many examples of errors in this area, such as new Coke and car models that didnt sell. Many organizations expend considerable time, money and effort determining the voice of the customer, using tools such as customer surveys, focus groups and polling. Satisfying the customer includes providing what is needed when its needed. In many situations, its up to the customer to provide the supplier with requirements. For example, the payroll department should inform other departments of the exact format for reporting the numbers of hours worked by employees. If the payroll department doesnt do this job properly, it bears some responsibility for the variation in reporting that will occur.

An organization needs to define some standard of problem solving, so that leadership can effectively direct others in the research and resolution of issues. In problem solving, there are four basic steps. 1. Define the problem Diagnose the situation so that your focus is on the problem, not just its symptoms. Helpful techniques at this stage include using flowcharts to identify the expected steps of a process and cause-and-effect diagrams to define and analyze root causes. The chart below identifies key steps for defining problems. These steps support the involvement of interested parties, the use of factual information, comparison of expectations to reality and a focus on root causes of a problem. Whats needed is to: Review and document how processes currently work (who does what, with what information, using what tools, communicating with what organizations and individuals, in what time frame, using what format, etc). Evaluate the possible impact of new tools and revised policies in the development of a model of what should be.

Postpone the selection of one solution until several alternatives have been proposed. Having a standard with which to compare the characteristics of the final solution is not the same as defining the desired result. A standard allows us to evaluate the different intended results offered by alternatives. When you try to build toward desired results, its very difficult to collect good information about the process. Considering multiple alternatives can significantly enhance the value of your final solution. Once the team or individual has decided the what should be model, this target standard becomes the basis for developing a road map for investigating alternatives. Brainstorming and team problem-solving techniques are both useful tools in this stage of problem solving. Many alternative solutions should be generated before evaluating any of them. A common mistake in problem solving is that alternatives are evaluated as they are proposed, so the first acceptable solution is chosen, even if its not the best fit. If we focus on trying to get the results we want, we miss the potential for learning something new that will allow for real improvement.

Skilled problem solvers use a series of considerations when selecting the best alternative. They consider the extent to which: A particular alternative will solve the problem without causing other unanticipated problems. All the individuals involved will accept the alternative. Implementation of the alternative is likely. The alternative fits within the organizational constraints.

Leaders may be called upon to order the solution to be implemented by others, sell the solution to others or facilitate the implementation by involving the efforts of others. The most effective approach, by far, has been to involve others in the implementation as a way of minimizing resistance to subsequent changes. Feedback channels must be built into the implementation of the solution, to produce continuous monitoring and testing of actual events against expectations. Problem solving, and the techniques used to derive elucidation, can only be effective in an organization if the solution remains in place and is updated to respond to future changes.

The terms quality assurance and quality control are often used interchangeably to refer to ways of ensuring the quality of a service or product. The terms, however, have different meanings. Assurance: The act of giving confidence, the state of being certain or the act of making certain. Quality Assurance: The planned and systematic activities implemented in a quality system so that quality requirements for a product or service will be fulfilled. Control: An evaluation to indicate needed corrective responses; the act of guiding a process in which variability is attributable to a constant system of chance causes. Quality Control: The observation techniques and activities used to fulfill requirements for quality.

A factor that caused a nonconformance and should be permanently eliminated through process improvement. Root cause analysis is a collective term that describes a wide range of approaches, tools, and techniques used to uncover causes of problems.