Instructor’s Manual – OMSC2 – Collier/Evans – C16 Quality Management
This chapter introduces students to quality management, leaders in the quality management
movement, the GAP Model, , IOS 9000 quality standards, philosophy and methods of Six Sigma,
DMAIC, cost of quality, the Seven QC Tools, kaizen, and breakthrough improvement.
Questions and problems are provided in four categories:
The chapter has three cases:
1. Bonnie Blaine, Director of Hospital Operations is the first case study. The case confronts
2. The second case, Sunshine Enterprises, allows students to apply cause-and-effect diagrams,
3. The integrative case study, Hudson Jewelers, with case assignment questions in all chapters,
asks students to research cost-of-quality issues in the diamond value chain.
KEY TERMS
Appraisal costs are those expended on ascertaining quality levels through measurement and
analysis of data to detect and correct problems.
Internal failure costs are costs incurred as a result of unsatisfactory quality that is found before
the delivery of a good or service to the customer.
Kaizen focuses on small, gradual, and frequent improvements over the long term, with
minimum financial investment and with participation by everyone in the organization.
A kaizen event is an intense and rapid improvement process in which a team or a department
throws all its resources into an improvement project over a short time period, as opposed to
traditional kaizen applications, which are performed on a part-time basis.
Service quality is consistently meeting or exceeding customer expectations (external focus) and
service-delivery system performance criteria (internal focus) during all service encounters.
Six Sigma is a business improvement approach that seeks to find and eliminate causes of
defects and errors in manufacturing and service processes by focusing on outputs that are
critical to customers, resulting in a clear financial return for the organization.
REVIEW QUESTIONS
1. Define quality management. Why is it important for every manager to understand?
Quality management refers to systematic policies, methods and procedures used to ensure
that goods and services are produced with appropriate levels of quality to meet the needs
2. What does the history of quality management suggest to today’s managers?
Despite the fact that quality has been important throughout history, many companies are
3. How is quality defined from a customer perspective?
Quality is meeting or exceeding customers’ expectations. Customers may be consumers,
4. What is the most useful definition of quality from an operations perspective? How might
an operations manager use this definition in making daily decisions?
From an operations perspective, the most useful definition is how well the output of a
5. How do you define service quality? Explain the five dimensions of service quality.
Service quality is consistently meeting or exceeding customer expectations (external focus)
and service delivery system performance criteria (internal focus) during all service
6. List and explain the three principles of total quality.
The principles of total quality are:
1. A focus on customers and stakeholders
First, the customer is the principal judge of quality. Thus, a quality–focused company’s
efforts need to extend well beyond merely meeting specifications, reducing defects and
errors, or resolving complaints. They must include knowing what the customer wants, how
the customer uses its goods or services, and anticipating needs that the customer may not
even be able to express; designing new goods and services that truly delight the customer;
responding rapidly to changing consumer and market demands; and continually developing
new ways of enhancing customer relationships.
in teams – in decisions that affect their jobs and the customer can make substantial
contributions to quality. Teamwork encourages the involvement of everyone in attacking
systemic problems, particularly those that cross functional boundaries.
7. Describe the quality philosophies and principles of Deming, Juran, and Crosby.
The Deming philosophy focuses on bringing about improvements in product and service
quality by reducing variability in goods and services design and associated processes.
Deming professed that higher quality leads to higher productivity and lower costs, which in
turn leads to improved market share and long-term competitive strength.
8. Explain the five gaps in the GAP model. What can managers do to reduce these gaps?
See Exhibit 16.1.
Gap 1 is the discrepancy between customer expectations and management perceptions of
those expectations. Managers may think they understand why customers buy a good or
service, but if their perception is wrong, then all subsequent design and delivery activities
may be misdirected.
Gap 4 is the discrepancy between actual manufacturing and service delivery system
performance and external communications to the customers. The customer should not be
promised a certain type and level of quality unless the delivery system can achieve or
exceed that level.
9. Explain the purpose and structure of ISO 9000. What are the seven underlying principles?
The intent of ISO 9000 is to ensure that organizations certified under the ISO 9000
standards have quality equal to their peers by defining quality system standards , based on
the premise that certain generic characteristics of management practices can be
standardized and that a well-designed, well-implemented, and carefully managed quality
system provides confidence that the outputs will meet customer expectations and
requirements. The seven principles are:
1. Customer Focus
2. Leadership
10. What is Six Sigma? How is it measured?
Six Sigma is a business improvement approach that seeks to find and eliminate causes of
11. Explain the key concepts used in implementing a Six Sigma quality initiative.
Implementing Six Sigma should address the following:
• Emphasizing dpmo as a standard metric that can be applied to all parts of an
organization: manufacturing, engineering, administrative, software, and so on.
12. Summarize the DMAIC process for problem solving.
DMAIC employs five phases:
1. Define (D)
• Identify customers and their priorities.
2. Measure (M)
• Determine how to measures the process and how is it performing.
3. Analyze (A)
• Determine the most likely causes of defects.
4. Improve (I)
• Identify means to remove the causes of the defects.
• Confirm the key variables and quantify their effects on the CTQ’s.
5. Control (C)
• Determine how to maintain the improvements.
13. What tools and methods are used in Six Sigma projects?
• elementary statistical tools (basic statistics, statistical thinking, hypothesis testing,
• correlation, simple regression);
14. How can Six Sigma be applied in services?
In applying Six Sigma to services, there are four key measures of the performance:
accuracy, as measured by correct financial figures, completeness of information, or
15. What does “cost of quality” mean? Why is it important?
The cost of quality refers specifically to the costs associated with avoiding poor quality or
16. Explain the classification of quality costs. Provide some specific examples in a fast-food
operation and in the operation of your college or university.
Quality costs can be organized into four major categories: prevention costs, appraisal costs,
internal-failure costs, and external-failure costs. Prevention costs are those expended to
17. Summarize the Seven QC Tools used for quality improvement and provide an example of
each.
The Seven QC Tools are flowcharts, check sheets, histograms, Pareto diagrams, cause-and-
effect diagrams, scatter diagrams, and control charts. Details are explained in the text.
18. What is a root cause? How can root causes be identified?
The root cause is a term used to designate the source of a problem. A useful approach to
19. Explain the concept of kaizen. What must an organization do to successfully operate a
kaizen initiative?
Kaizen focuses on small, gradual, and frequent improvements over the long term with
20. What is a kaizen event? How does it differ from the original notion of kaizen?
A kaizen event is an intense and rapid improvement process in which a team or a
department throws all its resources into an improvement project over a short time period,
21. What is breakthrough improvement?
Breakthrough improvement refers to discontinuous change, as opposed to the gradual,
22. How do benchmarking and best practices support breakthrough improvement?
Benchmarking is the search for industry best practices that lead to superior performance.
other organizations in a creative fashion to radically improve processes and quality.
DISCUSSION QUESTIONS AND EXPERIENTIAL ACTIVITIES
23. Find two examples similar to the introductory example in this chapter that describe the
economic consequences of poor quality.
The lead-in story for this chapter is about a problem at General Motors with the engine
24. Discuss how either good or poor quality affects you personally as a consumer. For instance,
describe experiences in which your expectations were met, exceeded, or not met when
you purchased goods or services. Did your experience change your regard for the
organization and/or its product? How?
Students should have numerous personal examples of how good and poor quality has
affected them. Often, they are harder pressed to come up with an example of good quality
25. A top Ford executive stated, “You can’t have great value unless you have great quality.”
Comment on this statement. Do you agree? Why or why not?
This statement essentially validates the value perspective we discussed back in Chapter 1.
26. Select a service activity with which you are familiar. If you were the manager of this
activity, what “conformance to specifications” criteria would you use to monitor it?
Student answers will vary here, also, according to their experience. For this question,
students will need to determine the targets and tolerances for their individual service
activities that permit “conformance-to-specifications” to be measured. Targets will be the
27. Develop a portfolio of advertisements from the Internet, newspapers, and magazines, and
illustrate how quality is used in promoting these products.
The results will vary, depending on the ads that the student chooses. Here are some
examples we’ve found:
An ad for Rosetta Stone language software that features dozens of languages, covers a
range of five levels (beginning to advanced), provides live online practice sessions with
To justify their top-of–the-line oil change service at $49.95, a Goodyear store features
Valvoline oil. The ad states: SynPower Full Synthetic Lube, Oil, Filter 100% synthetic oil
outperforms all other oil types delivering maximum protection against heat, deposits, and
wear. Valvoline SynPower Full Synthetic Lube is crafted with 100% synthetic motor oil and
outperforms all other oil types. It also:
• Delivers more protection than any other oil type
A Bulova watch add that explains “Most quartz watches are accurate to 15 seconds a
month—Bulova Precisionist is accurate to 10 seconds a year. The key is Precisionist’s
unique three-prong quartz crystal, which produces a vibration frequency of 262.144
kilohertz, eight times greater than the usual two-prong crystal and the highest of any
An ad for the Microsoft Surface computer tablet explains: “Can’t decide between a new
28. Examine the annual reports of one company over a period of years. Summarize how quality
is discussed or implied in the company’s statements and philosophy. Are any changes in
the perspectives of quality evident over time?
There is a great deal of information available on the annual reports of companies available
29. Conduct some research on quality practices that is focused on a particular country or
global region. Summarize your findings in a two- to three-page report.
Doing research on quality practices focused on a particular country or global region can help
30. How do you think that quality management concepts can support sustainability efforts?
Find some sources or examples to support your beliefs.
All quality management principles can support sustainability. For example, if we think in
terms of customers, then society is an important customer of organizations. Other
principles, such as those described by the ISO 9000:2000 standards, are useful for
CSR has been prominent in the Baldrige Criteria (see Chapter 2) since its inception. [Note: A
review of management theories and their relationships with CSR and the Baldrige Criteria
can be found in Jessica Foote, Nolan Gaffney, and James R. Evans, “Corporate Social
Responsibility: Implications for Performance Excellence,” Total Quality Management &
Business Excellence, 21, 8, August 2010, 799-812.] In the initial 1988 Criteria, public
responsibility was focused narrowly on mechanisms used for external communication of
31. Find the websites for the W. Edwards Deming Institute, the Juran Institute, and Philip
Crosby Associates. What services do they offer? How do these organizations maintain the
philosophies and legacies of these quality leaders?
The Deming System of Profound Knowledge
The following is an excerpt from Chapter 4 of The New Economics, second edition by W.
Edwards Deming:
Once the individual understands the system of profound knowledge, he will apply its
principles in every kind of relationship with other people. He will have a basis for judgment
of his own decisions and for transformation of the organizations that he belongs to. The
individual, once transformed, will:
• Set an example
The layout of profound knowledge appears here in four parts, all related to each other:
• Appreciation for a system
One need not be eminent in any part nor in all four parts in order to understand it and to
apply it. The 14 points for management (Out of the Crisis, Ch. 2) in industry, education, and
32. Two of Deming’s 14 Points are Point 8: Drive Out Fear (in the workplace) and Point 4: Stop
Making Decisions Purely on the Basis of Cost. Discuss the importance of them to
operations managers (as well as all managers) in today’s business environment.
Point 8: Drive Out Fear. Fear is manifested in many ways: fear of reprisal, fear of failure,
fear of the unknown, fear of relinquishing control, and fear of change. No system can work
without the mutual respect of managers and workers. Workers are often afraid to report
Point 4: Stop Making Decisions Purely on the Basis of Cost Purchasing departments have
long been driven by cost minimization and competition among suppliers without regard for
quality. Deming recognized that the direct costs associated with poor quality materials that
arise during production or during warranty periods, as well as the loss of customer
because each supplier’s process is different. In contrast, a reduced supply base decreases
the variation coming into the process, thus reducing scrap, rework, and the need for
adjustment to accommodate this variation. A long-term relationship strengthens the
33. Identify an organization that has achieved ISO 9000 certification and write a short paper
(one page maximum) that summarizes the benefits and results that the organization has
achieved using ISO 9000. See if you can find a service organization rather than a traditional
manufacturing company.
WHAT IS ISO 9000?
The ISO 9000 philosophy can be summarized in four steps:
1. say what you do,
2. do what you say,
ISO 9000 is a rigorous, thorough system of quality assurance standards for both
manufacturing and service organizations. These standards were first widely adopted by
businesses in the European Economic Community and are now being accepted and
implemented by many North American companies. Intended to help businesses improve
internal processes through the implementation of effective quality management systems,
ISO 9000 BENEFITS
Companies that adopt ISO 9000 standards offer their customers a reliable, widely accepted
yardstick against which to measure performance or quality. Internally, the formalization
and standardization of processes helps employees become more productive.
As companies clearly document their operating procedures and methodically audit them,
Also, certification provides a competitive advantage when seeking new business and
forming strategic partnerships. As an added bonus, companies discover that ISO 9000
certification helps their marketing efforts.
A Different Vantage Point
ISO 9000, however, has its critics because it focuses on processes and does not guarantee
the quality of the finished product. Detractors have suggested that quality would be
WHY DID SPECIALTIES GET ISO 9000 CERTIFIED?
As a post press finishing company, Specialties is at the end of the production chain. The
company must respond to the quality expectations, not only of its customers, but also to
its customers’ customers. To maintain competitive selling proposition, Specialties felt it
must meet ongoing market demands for shorter production cycles, seamless client vendor
CUSTOMER BENEFITS
ISO 9000 standards have led to operational consistency and numerous customer benefits.
In the graphic arts industry, consistency is a major component of quality. Since Specialties
THE FINAL WORD
No matter how talented a company’s workforce is, without standardized procedures and
continuous improvement, even the best people cannot deliver consistently outstanding
34. Identify an organization that uses the Six Sigma DMAIC improvement approach. Describe in
a short paper (maximum of two pages) some of the ways that this organization has applied
DMAIC and the results it has achieved.
35. What types of defects or errors might the following organizations measure and improve as
part of a quality or Six Sigma initiative?
a. A department store such as Walmart or Macy’s
b. Walt Disney World or a regional amusement park such as Six Flags
c. Your college or university
a. A department store such as Wal-Mart or Macy’s
Customer complaints by category (checkout, gift wrapping, tailoring, retail clerks, etc.),
long wait times, mispriced labels, number of non-scannable items, etc.
36. Provide some specific examples of quality costs in a fast-food operation or in the operation
of your college or university. Classify the costs into the four major categories described in
the chapter.
Quality costs can be organized into four major categories: prevention costs, appraisal costs,
services reach the customer. Students should provide examples similar to those in the text
but for an organization they may be more familiar with, namely a fast food operation or
the university. Some examples might be:
Prevention: training fast food workers and college advisors; setting up and updating
information systems
Appraisal: double-checking food orders or student course choices to ensure they meet the
requirements for a degree
37. Explain how each of the Seven QC Tools would be used in the five phases of the Six Sigma
DMAIC problem-solving approach. For example, in which phase(s) (define, measure,
analyze, improve, or control) would you expect to use flowcharts, check sheets, and so on?
Define: Flowcharts for defining a process; Pareto analysis for identifying significant
38. Which of the Seven QC Tools would be most useful in addressing each of the following
situations? Explain your reasoning. (You may decide more than one tool is useful.)
a. A copy machine suffers frequent paper jams, and users are often confused as to how to
fix the problem.
e. A travel agency is interested in gaining a better understanding of how call volume varies
by time of year in order to adjust staffing schedules.
a. A copy machine suffers frequent paper jams and users are often confused as to how to
fix the problem.
Cause and effect diagram to help diagnose the source of the paper jams. (Comment:
b. The publication team for an engineering department wants to improve the accuracy of
its user documentation but is unsure of why documents are not error-free.
Flowcharts to understand the process of creating documents; check sheets and cause
c. A bank needs to determine how many teller positions, drive-through stations, and
ATM machines it needs for a new branch bank in a certain busy location. Its
information includes the average numbers and types of customers served by other
similar facilities, as well as demographic information to suggest the level of customer
traffic in the new facility.
Histograms would help to summarize and sort out the data. Scatter diagrams might
also help to examine relationships between the variables.
39. Refer to the automobile repair flowchart in Exhibit 7.5 in Chapter 7. Identify three activities
where a potentially serious service quality error may occur and discuss how such errors
might be reduced.
One of the most obvious potential errors is the accuracy of the mechanic diagnosing the
problem (s). Missing a serious problem or misdiagnosing it could lead to an accident, even
COMPUTATIONAL PROBLEMS AND EXERCISES
These exercises require you to apply the formulas and methods described in the chapter. The
problems should be solved manually.
40. Leatherlike Manufacturing Company makes an artificial leather-like product for the fashion
accessory market. The material is made in sheets and has the appearance of a thin rug.
41. Wellplace Insurance Company processes insurance policy applications in batches of 50.
One day, they had 10 batches to process and, after inspection, it was found that four
batches had nonconforming policies. One batch had three nonconformances, another had
five, another had two, and another had one nonconformance. What were (a) the
proportion nonconforming for each batch, and (b) the nonconformances per unit (NPU), in
total for the 10 batches?
(a) The proportion nonconforming for each batch was 3/50 = 0.06, 5/50 = 0.10, 2/50 =
0.04, and 1/50 = 0.02.
42. Nighthawk Airlines measured their numbers of lost bags in one month and found that they
had lost 35 bags for 10,000 customers. If the average number of bags per customer is 1.2,
how many errors per million opportunities (epmo) does this represent? The worldwide
rate of baggage mishandling reported by SITA (Société Internationale de