BASIC QUALITY CONCEPT

CHAPTER1:
 QUALITY
• QUALITY IS THE ABILITY OF A PRODUCT OR SERVICE TO CONSISTENTLY MEET
OR EXCEED CUSTOMER EXPECTATION.
• THE IMPORTANCE OF QUALITY:
a) TO ACHIEVE CONSUMER SATISFACTION
b) TO GET GREATER CUSTOMER LOYALTY AND CONFIDENCE TOWARDS
PRODUCTS
c) TO INCREASE HEALTHY COMPETITION
d) TO LOWER COST OF PRODUCTION AND MAINTENANCE
e) TO DECREASE PRODUCTION AND SERVICE PROBLEM
 IMPORTANCE OF QUALITY
TO CUSTOMER AND SOCIETY
• THE MOST SUCCESSFUL ORGANIZATIONS ARE THOSE THAT GIVE CUSTOMERS WHAT THEY
WANT.
• SATISFIED CUSTOMERS ARE RELIABLE TO THOSE SUPPLIERS THEY FEEL BEST UNDERSTAND THEIR
REQUIREMENTS.
• AS A RESULT THEY WILL MAKE REPEAT PURCHASES AND WILL RECOMMEND A BUSINESS TO
THEIR FRIENDS.
• QUALITY AND SERVICE IS RELATED TO EACH OTHER THE OBSERVATION OF HAVING RECEIVED
QUALITY IN CUSTOMER SERVICE IS MOST IMPORTANT IN THE DECISION-MAKING PROCESS.
• CUSTOMER WANT TO HAVE A MEMORABLE SHOPPING EXPERIENCE AND THE MOST
IMPORTANT ASPECT OF A CUSTOMER’S SHOPPING EXPERIENCE IS PERCEPTION OF SERVICE.
 IMPORTANCE OF QUALITY
TO CUSTOMER AND SOCIETY
• ACCORDING TO REICHHELD AND TEAL, “CREATING VALUE FOR CUSTOMERS BUILDS LOYALTY,
AND LOYALTY IN TURN BUILDS GROWTH, PROFIT, AND MORE VALUE” (1996, P. 3).
• BY BUILDING VALUE AND CREATING CUSTOMER LOYALTY, THE CUSTOMER WILL SEE THAT THE
ORGANIZATION VALUES HIS INVESTMENT AS A CONSUMER AND THOSE CONSUMERS WHO
EXPERIENCE A CONTINUALLY HIGH DEGREE OF QUALITY CUSTOMER SERVICE WILL SEE THE
FIRM AS MORE ATTRACTIVE THAN OTHER ALTERNATIVES IN THE MARKETPLACE. (ANDREASSEN
AND OLSEN, 2008, P. 322).
• ORGANIZATION THAT VALUE CUSTOMER SERVICE AND CREATES VALUE IN ITS SERVICES
UNDERSTANDS THAT “THE ONLY WAY A BUSINESS CAN RETAIN CUSTOMER AND EMPLOYEE
LOYALTY IS BY DELIVERING SUPERIOR VALUE, HIGH LOYALTY IS A CERTAIN SIGN OF SOLID
VALUE CREATION”(REICHHELD&TEAL,1996,P.5).
 ZERO DEFECTS
• A QUALITY PHILOSOPHY BASED ON THE IDEA THAT A LEVEL OF PERFECT
QUALITY, AS IN ZERO DEFECTS, IS ACHIEVABLE AND SHOULD BE A COMPANY-
WIDE GOAL.
• THE CHARACTERISTICS OF ZERO DEFECT:
a) DO IT RIGHT AND BEST FROM THE BEGINNING/ AT THE FIRST TIME
b) QUALITY PREVENTION IS PREFERABLE THAN QUALITY INSPECTION AND
CORRECTION
c) OPENED RELATIONSHIP BETWEEN WORKERS AND EMPLOYER
 INTERNAL CUSTOMER AND
EXTERNAL CUSTOMER
• INTERNAL CUSTOMER ~ EMPLOYEE WHO RECEIVES GOODS OR SERVICE
PRODUCED ELSEWHERE IN THE COMPANY AS INPUT TO HIS/HER WORKS IN
THE ORGANIZATION. EXAMPLE: THE NEXT STATION IN PRODUCTION LINE.
• EXTERNAL CUSTOMER~ AN OUTSIDE ORGANIZATION OR INDIVIDUAL THAT
RECEIVES A PRODUCT OR SERVICE FROM THE COMPANY.
 THE IMPORTANCE OF INTERNAL
CUSTOMER AND EXTERNAL CUSTOMER
Internal customer External customer
a) Improved cost effectiveness a) Customers gets the correct product and
b) Better control in the process services
c) Reduction of wastage b) Correct specification
d) Improved productivity c) Customers satisfaction
e) Better relation, employees job d) Customers retention
satisfaction, employees participation
f) Increased consumer retention
g) Standardization of work routine
h) Increase sales and market share
i) Improved competitiveness
j) Better profitability
 QUALITY CONTROL
• THE DEFINITION: QUALITY CONTROL IS A PROCESS THAT MEASURES OUTPUT
RELATIVES TO A STANDARD AND TAKE CORRECTIVE ACTION WHEN OUTPUT
DOES NOT MEET STANDARDS.
• THE BASIC OBJECTIVES OF QUALITY CONTROL ARE:
a) TO MAINTAIN QUALITY STANDARDS IN ORDER TO ENSURE CUSTOMER
SATISFACTION AND
b) TO REDUCE THE COSTS ASSOCIATED WITH THE SCRAPPING OF DEFECTIVE
GOODS.
 QUALITY ASSURANCE
• THE DEFINITIONS: THE PLANNED AND SYSTEMATIC ACTIVITIES IMPLEMENTED IN
A QUALITY SYSTEM SO THAT QUALITY REQUIREMENTS FOR A PRODUCT OR
SERVICE WILL BE FULFILLED
• THE IMPORTANCE OF QUALITY ASSURANCE:
a) TO ENHANCE SELLING OF PRODUCTS/SERVICE
b) TO DETERMINE THE PERFORMANCE OF THE BUSINESS
c) TO ACHIEVE CUSTOMER SATISFACTION WITH THE LOWEST COST OF
PRODUCTION
 TOTAL QUALITY MANAGEMENT
• A PHILOSOPHY THAT INVOLVES EVERYONE IN AN ORGANIZATION IN A
CONTINUAL EFFORT TO IMPROVE QUALITY AND ACHIEVE CUSTOMER
SATISFACTION.
• BASIC CONCEPTS OF TQM:
a) DESIGN A PRODUCT OR SERVICE THAT WILL MEET WHAT CUSTOMER WANT
b) THE MANAGEMENT ARE MORE OPEN, ENCOURAGING EMPLOYEE INPUT
c) CONTINUOUS IMPROVEMENT
d) ASSUMED THE SUPPLIERS AS PARTNERS IN BUSINESS
e) BASED ON TEAM APPROACH
f) FOCUS ON PROCESS ORIENTED
 CONTINUOUS IMPROVEMENT
• THE DEFINITION: A PHILOSOPHY THAT SEEKS TO
MAKE NEVER-ENDING IMPROVEMENT TO THE
PROCESS OF CONVERTING INPUTS INTO
OUTPUTS.
• KAIZEN IS THE JAPANESE TERMS FOR
CONTINUOUS IMPROVEMENT. IT COVERS
EQUIPMENT, METHODS, MATERIALS AND
PEOPLES.
 SIX SIGMA
• A MANAGEMENT PHILOSOPHY DEVELOPED BY MOTOROLA
THAT EMPHASIZES SETTING EXTREMELY HIGH OBJECTIVES,
COLLECTING DATA, AND ANALYZING RESULTS TO A FINE
DEGREE AS A WAY TO REDUCE DEFECTS IN PRODUCTS AND
SERVICES.
• SIX SIGMA PROPONENTS CLAIM THAT ITS BENEFITS INCLUDE:
a) PROCESS COST REDUCTION
b) CYCLE-TIME IMPROVEMENT
c) LESS WASTE OF MATERIALS
d) A BETTER UNDERSTANDING OF CUSTOMER
REQUIREMENTS
e) INCREASED CUSTOMER SATISFACTION
f) MORE RELIABLE PRODUCTS AND SERVICES.
 ISO 9000 SERIES
FOR QUALITY SYSTEM MANAGEMENT
• ISO 9000 IS DEFINED AS A SET OF INTERNATIONAL STANDARDS ON QUALITY
MANAGEMENT AND QUALITY ASSURANCE DEVELOPED TO HELP COMPANIES
EFFECTIVELY DOCUMENT THE QUALITY SYSTEM ELEMENTS NEEDED TO MAINTAIN AN
EFFICIENT QUALITY SYSTEM. THEY ARE NOT SPECIFIC TO ANY ONE INDUSTRY AND
CAN BE APPLIED TO ORGANIZATIONS OF ANY SIZE.
• ISO 9000 CAN HELP A COMPANY SATISFY ITS CUSTOMERS, MEET REGULATORY
REQUIREMENTS, AND ACHIEVE CONTINUAL IMPROVEMENT. IT SHOULD BE
CONSIDERED TO BE A FIRST STEP OR THE BASE LEVEL OF A QUALITY SYSTEM.
 ISO 9000 VS. 9001
• ISO 9000 IS A SERIES, OR FAMILY, OF QUALITY MANAGEMENT STANDARDS, WHILE ISO 9001 IS A
STANDARD WITHIN THE FAMILY.
• THE ISO 9000 FAMILY OF STANDARDS ALSO CONTAINS AN INDIVIDUAL STANDARD NAMED ISO
9000. THIS STANDARD LAYS OUT THE FUNDAMENTALS AND VOCABULARY FOR QUALITY
MANAGEMENT SYSTEMS (QMS).
ISO 9000 SERIES OF STANDARDS
THE ISO 9000 FAMILY CONTAINS THESE STANDARDS:
a) ISO 9001:2015: QUALITY MANAGEMENT SYSTEMS - REQUIREMENTS
b) ISO 9000:2015: QUALITY MANAGEMENT SYSTEMS - FUNDAMENTALS AND
VOCABULARY (DEFINITIONS)
c) ISO 9004:2018: QUALITY MANAGEMENT - QUALITY OF AN ORGANIZATION - GUIDANCE TO
ACHIEVE SUSTAINED SUCCESS (CONTINUOUS IMPROVEMENT)
d) ISO 19011:2018: GUIDELINES FOR AUDITING MANAGEMENT SYSTEMS
QUALITY MANAGEMENT PRINCIPLES
QUALITY MANAGEMENT PRINCIPLES
QUALITY MANAGEMENT PRINCIPLES
 BASIC STATISTIC
IN QUALITY CONTROL

1. MEAN
For ungrouped data &
2. RANGE grouped data
3. STANDARD DEVIATION
GROUPED AND UNGROUPED
DATA
 MEAN (UNGROUPED DATA)
• THE MEAN FOR UNGROUPED DATA IS OBTAINED BY DIVIDING THE SUM OF
ALL VALUES BY THE NUMBER IF VALUES IN THE DATA SET.
• THE FORMULA: x
x
n
• EXAMPLE1: GIVEN THE FOLLOWING SET OF NUMBERS: 57, 86, 42, 38, 90, AND
66. THE SAMPLE MEAN IS 63.167. THE COMPUTATIONS FOLLOW:

X
 X X X X
 1 2 3
 ...  X n
n n
57  86  42  38  90  66

6
379

6
 63.167
 MEAN (UNGROUPED DATA)
• EXAMPLE2: GIVES THE 2002 TOTAL PAYROLLS OF FIVE MAJOR LEAGUE
BASEBALL (MLB) TEAMS.
FIND THE MEAN OF THE 2002 PAYROLLS OF THESE FIVE MLB TEAMS.

62 + 93 + 126 + 75 + 34
𝑥ҧ =
5

x
 x 390
  $78 million
n 5
 MEAN (GROUPED DATA)
Σ𝑓𝑥
• FORMULA: 𝑥ҧ =
Σ𝑓
SOLUTION:
EXAMPLE: Class Midpoint (x) Frequency (f) fx
0-4 2 30 60

Class Frequency (f) 5-9 7 51 357

0-4 30 10-14 12 10 120

5-9 51 15-19 17 10 170

10-14 10 Σ𝑓 = 101 Σ𝑓𝑥 = 707

15-19 10 Σ𝑓𝑥 707

𝑥ҧ = = =7
Σ𝑓 101
 RANGE & STANDARD DEVIATION
(UNGROUPED DATA)
• RANGE (HIGHEST VALUE OF DATA-LOWEST VALUE OF DATA)
• FORMULA STANDARD DEVIATION: 𝑆 = 𝑣𝑎𝑟𝑖𝑎𝑛𝑐𝑒

𝑛Σ𝑥𝑖 2 − Σ𝑥𝑖 2
𝑆=
𝑛(𝑛−1)
 RANGE & STANDARD DEVIATION
(UNGROUPED DATA)
EXAMPLE:
𝒙 𝒙 𝟐
CALCULATE THE VARIANCE AND STANDARD
12 144
DEVIATION FOR THE FOLLOWING DATA:
6 36
12, 6, 15, 3, 12, 6, 21, 15, 18, 12 15 225
3 9

SOLUTION: 12 144

𝑛Σ𝑥𝑖 2 − Σ𝑥𝑖 2 6 36
𝑆= 21 441
𝑛(𝑛 − 1)
15 225
10(1728) − 120 2
𝑆= 18 324
10(10 − 1)
12 144
= 5.66 120 1728
 RANGE & STANDARD DEVIATION
(GROUPED DATA)
• RANGE: (UPPER CLASS BOUNDARY OF THE HIGHEST CLASS -
LOWER CLASS BOUNDARY OF THE LOWEST CLASS)
• FORMULA STANDARD DEVIATION: 𝑆 = 𝑣𝑎𝑟𝑖𝑎𝑛𝑐𝑒

𝑛(Σ𝑓𝑖𝑥𝑖 2 )− Σ𝑓𝑖𝑥𝑖 2
𝑆=
𝑛(𝑛−1)
 RANGE & STANDARD DEVIATION
(GROUPED DATA)
EXAMPLE:
CALCULATE THE VARIANCE AND STANDARD DEVIATION FOR THE FOLLOWING
DISTRIBUTION FREQUENCY TABLE USING THE FORMULA.

Class Frequency
0-4 30
5-9 51
10-14 10
15-19 10
 STANDARD DEVIATION
(GROUPED DATA)
SOLUTION:

Class 𝒙 𝒇 𝒙𝒇 𝒇𝒙𝟐 𝑛(Σ𝑓𝑖𝑥𝑖 2 ) − Σ𝑓𝑖𝑥𝑖 2

𝑆=
0-4 2 30 60 120 𝑛(𝑛 − 1)
5-9 7 51 357 2499
10-14 12 10 120 1440 2
101(6949) − 707
15-19 17 10 170 2890 𝑆=
101(101 − 1)
101 707 6949

𝑆 = 4.47
 NORMAL DISTRIBUTION
• MANY DEPENDENT VARIABLES ARE COMMONLY ASSUMED TO BE NORMALLY
DISTRIBUTED IN THE POPULATION
• SYMMETRICAL, BELL-SHAPED CURVE
• ALSO KNOWN AS GAUSSIAN DISTRIBUTION
• MATHEMATICAL FORMULA
(X  ) 2
1 
f (X )  (e) 2 2
 2
 NORMAL DISTRIBUTION
• THE MEAN OF THE DATA IN A STANDARD NORMAL DISTRIBUTION IS 0 AND THE STANDARD
DEVIATION IS 1.
• A STANDARD NORMAL DISTRIBUTION IS THE SET OF ALL Z-SCORES.
• WHEN A SET OF DATA VALUES ARE NORMALLY DISTRIBUTED, WE CAN STANDARDIZE EACH
SCORE BY CONVERTING IT INTO A Z-SCORE.
• Z-SCORES MAKE IT EASIER TO COMPARE DATA VALUES MEASURED ON DIFFERENT SCALES.

x
z

 NORMAL DISTRIBUTION
The shaded area is
1.0 or 100%

σ=1
The normal distribution µ=0
with μ = 0 and σ = 1
is called the standard
normal distribution.

-3 -2 -1 0 1 2 3
NORMAL DISTRIBUTION USING
NORMAL TABLE
N (0,1)
 0
 1
2

(1) Area Below z = -2; P(z < -2) = 0.0228

NORMAL DISTRIBUTION USING
NORMAL TABLE
N (0,1)
 0
 2 1

(2) Area Below z = -1; P(z < -1) = 0.1587

NORMAL DISTRIBUTION USING
NORMAL TABLE
N (0,1)
 0
 2 1

(3) Area Below z = +1; P(z > +1) = 0.1587

NORMAL DISTRIBUTION USING
NORMAL TABLE
N (0,1)
 0
 1
2

(4) Area Below z = 0; P(z > 0) = 0.5000

 NORMAL DISTRIBUTION USING
NORMAL TABLE
N (0,1)
 0
 2 1

(5) Area between -1, +1; P( -1 < z < +1)

up to z = +1: .8413
up to z = -1 : .1587
.6826
 NORMAL DISTRIBUTION USING
NORMAL TABLE
N (0,1)
 0
 2 1

Z
(6) Area between -2, +1; P( -2 < z < +1)
up to z = +1: .8413
up to z = -2 : .0228
.8185
THANK YOU