2-1. How does the consumer’s perspective of quality differ from the producer’s?
2-2. Briefly describe the dimensions of quality, for which a con- sumer looks in a product, and apply them to a specific product.
2-3. How does quality of design differ from quality of confor- mance?
2-4. Define the two major categories of quality cost and how they relate to each other.
2-5. What is the difference between internal and external failure costs?
2-6. A defense contractor manufactures rifles for the military.
The military has exacting quality standards that the con- tractor must meet. The military is very pleased with the quality of the products provided by the contractor and rarely has to return products or has reason for complaint.
However, the contractor is experiencing extremely high quality-related costs. Speculate on the reasons for the con- tractor’s high quality-related costs.
2-7. Consider your school (university or college) as a produc- tion system in which the final product is a graduate. For this system:
a. Define quality from the producer’s and customer’s perspectives.
b. Develop a fitness-for-use description for final product quality.
c. Give examples of the cost of poor quality (internal and external failure costs) and the cost of quality assurance (prevention and appraisal) costs.
d. Describe how quality circles might be implemented in a university setting. Do you think they would be effective?
2-8. Discuss how a quality management program can affect productivity.
2-9. The Aurora Electronics Company has been receiving a lot of customer complaints and returns of a DVD player that it manufactures. When a DVD is pushed into the loading mechanism, it can stick inside and it is difficult to get the DVD out. Consumers will try to pull the DVD drawer out with their fingers or pry it out with an object such as a knife, pencil, or screwdriver, frequently damaging the DVD or hurting themselves. What are the different costs of poor quality and costs of quality assurance that might be associated with this quality problem?
2-10. What are the different quality characteristics you (as a con- sumer) would expect to find in the following three prod- ucts: a DVD player, a pizza, running shoes?
2-11. AMERICARD, a national credit card company, has a toll- free, 24-hour customer service number. Describe the input for this system function and the final product. What quality- related costs might be associated with this function? What impact might a quality management program have on this area?
2-12. A number of quality management philosophies hold that prevention costs are the most critical quality-related costs.
Explain the logic behind this premise.
2-13. Why is it important for companies to measure and report quality costs?
2-14. Describe the primary contribution to quality management of each of the following: W. E. Deming, Joseph Juran, Phillip Crosby, Armand Feigenbaum, and Kaoru Ishikawa.
2-15. Describe the impact that the creation of the Malcolm Baldrige Award has had on quality improvement in the United States.
2-16. Write a one- to two-page summary of an article from Qual- ity Progress, about quality management in a company or organization.
2-17. More companies probably fail at implementing quality- management programs than succeed. Discuss the reasons why a quality-management program might fail.
2-18. Select a service company or organization and discuss the dimensions of quality on which a customer might eval- uate it.
2-19. Select two competing service companies that you are fa- miliar with or can visit, such as fast-food restaurants, banks, or retail stores, and compare how they interact with customers in terms of quality.
2-20. Develop a hypothetical quality-improvement program for the class in which you are using this textbook. Evaluate the class according to the dimensions of quality for a service.
Include goals for quality improvement and ways to mea- sure success.
2-21. Identify a company or organization from which you have received poor-quality products or services, describe the na- ture of the defects, and suggest ways in which you might improve quality.
2-22. Identify a company or organization from which you have received high-quality products and describe the character- istics that make them high-quality.
2-23. Explain why strategic planning might benefit from a TQM program.
2-24. Why has ISO 9000 become so important to U.S. firms that do business overseas?
2-25. Go to the Baldrige Award Web site, http://www.quality.
nist.gov and research several companies that have won the Malcolm Baldrige Award. Describe any common charac- teristics that the quality-management programs in those companies have.
2-26. The discussion in this chapter has focused on the benefits of implementing a quality management program; however, many companies do not have such a program. Discuss the reasons why you think a company would not adopt a qual- ity management program.
2-27. Access a Web site of a company that sells products to the general public on the Internet. Discuss the quality attrib- utes of the site, and evaluate the quality of the Web site.
2-28. For an airline you have flown on list all of the quality “de- fects” you can recall. Discuss whether you think the airline exhibited overall good or poor quality. If it exhibited good quality, explain what made it so; if it exhibited poor qual- ity, what actions do you think could be taken by the airline to improve quality?
2-29. Identify three Web sites that you think are poor quality and three that are good quality. What common characteristics are exhibited by the group of poor-quality sites? the group of good-quality sites? Compare the two groups.
2-30. The production and home delivery of a pizza is a relatively straightforward and simple process. Develop a fishbone di- agram to identify potential defects and opportunities for poor quality in this process.
2-31. Most students live in a dormitory or apartment that they rent. Discuss whether this type of living accommodation is a product or service. Assess the quality of your living ac- commodation according to your previous response.
2-32. Develop a fishbone diagram for the possible causes of flight delays.
2-33. Observe a business with which you are familiar and inter- act with frequently, such as a restaurant or food service, a laundry service, your bank, or the college bookstore.
Develop a Pareto chart that encompasses the major ser- vice defects of the business, identify the most signifi- cant service problems and suggest how quality could be improved.
2-34. County school buses are inspected every month for “de- fects.” In a recent monthly inspection, 27 worn or torn seats were found, 22 buses had dirty floors, there were 14 cases of exterior scratches and chipped paint, there were 8 cracked or broken windows, the engines on 4 buses had trouble starting or were not running smoothly, and 2 buses had faulty brakes. Develop a Pareto chart for the bus inspections and indicate the most significant quality-problem categories. What does this tell you about the limitations of applying Pareto chart analysis. How might these limitations be overcome in Pareto chart analysis?
2-35. Joseph Juran created a “quality spiral” showing that each element of the business process, each function, not just the end product, is important. Describe how each of the follow- ing business process areas might impact quality: marketing, engineering, purchasing/sourcing, human resources, and distribution.
2-36. Referring to Table 2.3, research the winner of an interna- tional quality award at one of the award Web sites and write a brief report.
2-37. Go to the Malcolm Baldrige Award Web site, www.quality.
nist.gov, and write a brief report on one of the most recent years’ Baldrige Award winners similar to the “Along the Supply Chain” boxes in this chapter.
2-38. Write a brief summary on the application of quality man- agement in a company from Qualityworld, a professional trade magazine published in the United Kingdom.
2-39. Develop a fishbone diagram for the possible causes of your car not starting.
2-40. Describe the differences between Black Belts, Green Belts, and Master Black Belts in a Six Sigma program.
2-41. Describe the steps in the Six Sigma breakthrough strategy for quality improvement.
2-42. Develop a quality-improvement project in a situation you are familiar with such as a current or former job, a part- time job, a restaurant, your college bookstore, your dorm or apartment, a local business, and so on, and describe how you would apply the steps of the six sigma breakthrough strategy.
2-43. Reference the Web site for the American Customer Satis- faction Index (ACSI) at www.theacsi.org and write a brief summary describing how the numerical ACSI value is de- termined. Also, select an industry or service sector and pick two companies, one with a high ACSI and one with a relatively low ACSI; using your own knowledge and re- search about the companies, explain why you think they have different ACSI values.
2-44. Develop a Six Sigma-type quality improvement project employing the DMAIC steps for your own personal health such as losing weight, improving your diet, exer- cise, etc.
2-45. Develop a Six Sigma-type project employing the DMAIC steps for improving any phase of your personal life that you feel may be “defective.”
2-46. Visit your university infirmary and study the process in-patients follow to see a doctor and describe a quality improvement project to improve this process.
2-47. At most universities course registration for future semes- ters typically involves some type of computerized online process possibly combined with some personal consulta- tion with an academic advisor. Describe the registration process in your academic college or at your university and suggest ways the process could be improved.
2-48. The Japanese are generally credited with starting the global quality revolution that in the 1970s became an in- tegral part of corporate culture, and eventually led to the development of quality improvement programs systems like TQM and Six Sigma. Research and write a report about what Japan did to initiate the quality movement and why it differed from what was being done in the United States.
2-49. Describe the general steps a company must go through to obtain ISO 9001:2008 certification.
2-50. Select a retail store you are familiar with such as a grocery store, J. Crew, Macy’s, Best Buy, Target, etc., and identify what might be considered as “defects” in their processes and how improvement might be measured.
2-51. ISO 9000 and the Malcolm Baldrige Award competition are both programs that seek to achieve recognition for outstanding quality, one in the form of a certificate and the other in the form of an award. Discuss how the two are similar and different, and how they might comple- ment each other.
2-52. Explain how you would determine customer satisfaction with a bank, your university, a football game, an airline, a car, a cell phone, and a television. Describe the tools and processes you would use to measure customer satisfaction.
2-53. In the ongoing national debate about health care that is likely to continue for years, one view holds that quality im- provement (and corresponding cost reduction) across the industry is fundamentally not possible because the direct consumer (i.e., the patient) is not who pays the bill, for most people the insurance company is. Since insurance companies do not directly receive the service provided, they cannot assess how well “value” is being delivered, and neither the customer nor the insurance company are moti- vated to reduce costs. Discuss this phenomenon of the health-care industry and make a case for why you think it is accurate or inaccurate. Also address in your discussion how health-care insurance differs from other forms of per- sonal insurance.
2-1. Backwoods American, Inc., produces expensive water- repellent, down-lined parkas. The company imple- mented a total quality-management program in 2005.
Following are quality-related accounting data that have been accumulated for the five-year period after the program’s start.
PROBLEMS
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cabinets averages 83% per week, and the percentage of poor-quality cabinets that can be reworked is 60%.
a. Determine the weekly product yield of file cabinets.
b. If the company desires a product yield of 145 units per week, what increase in the percentage of good-quality products must result?
2-4. In Problem 2-3, if the direct manufacturing cost for cabinets is $27 and the rework cost is $8, compute the manufactur- ing cost per good product. Determine the manufacturing cost per product if the percentage of good-quality file cabi- nets is increased from 83% to 90%.
2-5. The Omega Shoe Company manufactures a number of dif- ferent styles of athletic shoes. Its biggest seller is the X- Pacer running shoe. In 2008 Omega implemented a quality-management program. The company’s shoe pro- duction for the past three years and manufacturing costs are as follows.
Year
2008 2009 2010
Units produced/input 32,000 34,600 35,500
Manufacturing cost $278,000 291,000 305,000
Percent good quality 78% 83% 90%
Year
2006 2007 2008 2009 2010
Quality Costs (000s)
Prevention $3.2 10.7 28.3 42.6 50.0
Appraisal 26.3 29.2 30.6 24.1 19.6
Internal failure 39.1 51.3 48.4 35.9 32.1
External failure 118.6 110.5 105.2 91.3 65.2
Accounting Measures (000s)
Sales $2,700.6 2,690.1 2,705.3 2,310.2 2,880.7 Manufacturing
cost 420.9 423.4 424.7 436.1 435.5
a. Compute the company’s total failure costs as a percent- age of total quality costs for each of the five years.
Does there appear to be a trend to this result? If so, speculate on what might have caused the trend.
b. Compute prevention costs and appraisal costs, each as a percentage of total costs, during each of the five years. Speculate on what the company’s quality strat- egy appears to be.
c. Compute quality-sales indices and quality-cost indices for each of the five years. Is it possible to assess the effectiveness of the company’s quality-management program from these index values?
d. List several examples of each quality-related cost—that is, prevention, appraisal, and internal and external fail- ure—that might result from the production of parkas.
2-2. The Backwoods American company in Problem 2-1 pro- duces approximately 20,000 parkas annually. The quality management program the company implemented was able to improve the average percentage of good parkas pro- duced by 2% each year, beginning with 83% good-quality parkas in 2003. Only about 20% of poor-quality parkas can be reworked.
a. Compute the product yield for each of the five years.
b. Using a rework cost of $12 per parka, determine the manufacturing cost per good parka for each of the five years. What do these results imply about the company’s quality management program?
2-3. The Colonial House Furniture Company manufactures two- drawer oak file cabinets that are sold unassembled through catalogues. The company initiates production of 150 cabi- net packages each week. The percentage of good-quality
Only one-quarter of the defective shoes can be reworked, at a cost of $2 apiece. Compute the manufacturing cost per good product for each of the three years and indicate the annual percentage increase or decrease resulting from the quality- management program.
2-6. The Colonial House Furniture Company manufactures four-drawer oak filing cabinets in six stages. In the first stage, the boards forming the walls of the cabinet are cut;
in the second stage, the front drawer panels are wood- worked; in the third stage, the boards are sanded and finished; in the fourth stage, the boards are cleaned, stained, and painted with a clear finish; in the fifth stage, the hardware for pulls, runners, and fittings is installed;
and in the final stage, the cabinets are assembled. Inspec- tion occurs at each stage of the process, and the average percentages of good-quality units are as follows.
Average Percentage
Stage Good Quality
1 87%
2 91%
3 94%
4 93%
5 93%
6 96%
Alternative Quality Improvement
1 Stage 1: 93%
2 Stage 2: 96%. Stage 4: 97%
3 Stage 5: 97%, Stage 6: 98%
4 Stage 2: 97%%
Stage % Errors
1 12%
2 8%
3 4%
The cabinets are produced in weekly production runs with a product input for 300 units.
a. Determine the weekly product yield of good-quality cabinets.
b. What would weekly product input have to be in order to achieve a final weekly product yield of 300 cabinets?
2-7. In Problem 2-6, the Colonial House Furniture Company has investigated the manufacturing process to identify potential improvements that would improve quality. The company has identified four alternatives, each costing
$15,000, as follows.
good-quality phones, resulting in 13% defective phones, all of which can be reworked. The cost of reworking a defective telephone is $16.
a. Compute the quality-productivity ratio (QPR).
b. Compute the QPR if the company increased the production rate to 320 phones per week while reducing the processing cost to $42, reducing the rework cost to
$12, and increasing the product yield of good-quality telephones to 94%.
2-11. Burger Doodle is a fast-food restaurant that processes an average of 680 food orders each day. The average cost of each order is $6.15. Four percent of the orders are incor- rect, and only 10% of the defective orders can be corrected with additional food items at an average cost of $1.75. The remaining defective orders have to be thrown out.
a. Compute the average product cost.
b. In order to reduce the number of wrong orders, Burger Doodle is going to invest in a computerized ordering and cash register system. The cost of the system will increase the average order cost by $0.05 and will reduce defective orders to 1%. What is the annual net cost effect of this quality-improvement initiative?
c. What other indirect effects on quality might be realized by the new computerized order system?
2-12. Compute the quality–productivity ratio (QPR) for the Burger Doodle restaurant in parts (a) and (b) in Problem 2-11.
2-13. For the Medtek Company in Example 2.1, determine the break-even point (in sales) and draw the break-even dia- gram for both cases described in the example—with de- fects and without. (Refer to Chapter 6, “Processes and Technology,” for a description of break-even analysis).
Discuss the significance of the difference between the two break-even points.
2-14. The Blue Parrot is an expensive restaurant in midtown open only for dinner. Entrees are set at a fixed price of $42.
In a typical month the restaurant will serve 3,600 entrees.
Monthly variable costs are $61,200, and fixed costs are
$31,000 per month. Customers or waiters send back 8% of the entrees because of a defect, and they must be prepared again; they cannot be reworked. The restaurant owners hired a qualified black belt to undertake a Six Sigma pro- ject at the restaurant to eliminate all defects in the prepara- tion of the entrees (i.e., 3.4 DPMO). Compare the profit in both situations, with and without defects, and indicate both the percentage decrease in variable costs and the percent- age increase in profits following the Six Sigma project. As- suming that the restaurant paid the black belt $25,000 to achieve zero defects, and the restaurant owners plan to amortize this payment over a three-year period (as a fixed cost), what is the restaurant return on its investment (with- out applying an interest rate)? Discuss some other aspects of quality improvement at the restaurant that might result from the Six Sigma project.
2-15. A black belt has identified the following key input (X ) and output (Y ) variables for the process of laundering your clothes in your washing machine at home:
a. Which alternative would result in the greatest increase in product yield?
b. Which alternative would be the most cost effective?
2-8. The Backwoods American company operates a telephone order system for a catalogue of its outdoor clothing prod- ucts. The catalogue orders are processed in three stages. In the first stage, the telephone operator enters the order into the computer; in the second stage, the items are secured and batched in the warehouse; and in the final stage, the or- dered products are packaged. Errors can be made in orders at any of these stages, and the average percentage of errors that occurs at each stage are as follows.
If an average of 320 telephone orders are processed each day, how many errorless orders will result?
2-9. The total processing cost for producing the X-Pacer run- ning shoe in Problem 2-5 is $18. The Omega Shoe Com- pany starts production of 650 pairs of the shoes weekly, and the average weekly yield is 90%, with 10% defective shoes. One quarter of the defective shoes can be reworked at a cost of $3.75.
a. Compute the quality-productivity ratio (QPR).
b. Compute the QPR if the production rate is increased to 800 pairs of shoes per week.
c. Compute the QPR if the processing cost is reduced to $16.50 and the rework cost to $3.20.
d. Compute the QPR if the product yield is increased to 93% good quality.
2-10. Airphone, Inc., manufactures cellular telephones at a pro- cessing cost of $47 per unit. The company produces an average of 250 phones per week and has a yield of 87%