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1. Ski Trip - Mount Stowe, VT Sat., Mar. 18 from 5:30 AM - 4:30 PM $65.00/person ($20.00/person ski rental) Blue Man Group - Boston Playhouse Fri., Mar. 24 at 7:00 PM and Sat., Mar. 25 at 4:00 PM Free Guest Speaker Panel – SM 105 Mon., Mar. 20, 7:00 PM - 9:00 PM Free SIGN UPS TODAY

2. Quality Management Boston University School of Management Professor Peter Arnold

3. What is Quality? The ability of a product or service to consistentlymeet or exceed customer expectations.

4. The Customer • Internal and External • Customer Requirements • Customer Satisfaction • Conflict between Heterogeneous Customer Populations

5. The Customer Who are the customers of the Boston University School of Management?

6. The Customer Customers of the School of Management • Alumni • Boston University • Employers • Of Students • Of Faculty (e.g. consultants) • Faculty • Governments • Potential Students (applicants) • Staff (including administration) • Students • Universities (other than BU)

7. The Customer • What are the requirements of the student customers at BU SMG?

8. The Customer Student Requirements Reputation Housing Feedback Qualified Instructors Convenience Small Classes Fun Strong, Relevant Curriculum Case Studies Varied Learning Experiences Practical Skills Career Services Strong Peer Groups Campus Life Affordable Education

9. Dimensions of Quality Performance: Primary operating characteristics Features: Secondary characteristics Conformance: How well specifications are met Reliability: Consistency of performance Durability: Product life Perceived quality: Brand image/reputation Serviceability: Ease of service/friendliness of server Aesthetics: Effect on senses Garvin

10. Managing Quality • If Quality improvement is about any one thing it is about variance reduction. • Variation is a term used to describe deviation from the expected. • High variation or variability creates great uncertainty in outcome.

11. Variation How much variation in outcome is there?

12. Variation Which has more variation in outcome?

13. Variation Source of Variation? Source of Variation?

14. Six Sigma “The statistical representation of Six Sigma describes quantitatively how a process is performing. To achieve Six Sigma, a process must not produce more than 3.4 defects per million opportunities. A Six Sigma defect is defined as anything outside of customer specifications.” http://www.isixsigma.com/sixsigma/six_sigma.asp • Six Sigma focuses on process capability – Develop and operate processes that are capable of producing only “good” units of output. • Why would that be an appealing? • Savings – less waste, lower capacity utilization, lower fixed costs, increased premium….

15. Basketball and Six Sigma Suppose there was an outcry by fans of college basketball over the dearth of scoring in the game. Suppose further that the czar of basketball asked us to increase the scoring in college basketball games. The focus of the effort might be the process of shooting hoops. The best field goal percentage in Men’s NCAA Division I basketball is about 65%. How could the average be improved? • Study the data • Identify patterns in the data • Develop countermeasures • Implementation • Review Fundamental approach to quality improvement

16. F G C G F

17. Division 1 NCAA Men’s Basketball Statistics 2002-3 ncaa.org

18. Division 1 NCAA Men’s Basketball Statistics 2002-3 ncaa.org

19. Decrease the height of the basket Increase the diameter of the basket Make the rim out of thick fluffy cotton material Make the backboard convex Decrease the size of the ball Make the ball out of sponge materials Improving Field Goal Percentage Outlaw defense Do not take very many shots Practice, Practice, Practice Only shoot from short distances Permit only very tall players to shoot

20. Poor Quality What happens when quality is poor? • Costs increase • Customers complain  more costs • Customers don’t come back  highest costs • And along with increasing costs, you have fewer goods or services to sell.

21. Cost of Quality • Conceptual Framework • Not Always Totally Quantifiable • Useful for Attention Getting • Useful as a Mechanism for Keeping Score • Consistency of Measurement

22. Four Categories of Cost Increasing overall quality results from investment in these • Cost of Prevention • Cost of Appraisal • Cost of Internal Failure • Cost of External Failure Increasing overall quality results in lower experience with these

23. Total Cost Cost Internal and External Failures Prevention and Appraisal Poor Superior Level of Quality

24. Cost of Prevention • Quality Planning • Design (Prototyping, Field Testing) • Education and Training • Process Control • Information reporting • Quality Improvement Programs, Quality Improvement Teams (QIPs and QITs) • Supplier Involvement

25. Cost of Appraisal • Incoming Inspection • In-Process Inspection • Final Inspection • Testing Devices • Destructive Testing • Inventory Safeguarding

26. Cost of Internal Failures • Scrap – wasted materials and labor • Rework – doing the job twice • Retesting – checking the second time • Downtime - Capacity • Yield Losses – goods unavailable for sale • Managing Defective Materials – making sure the bad ones do not get out.

27. Calculating the Cost of Scrap: Yield Loss DataStor – Perfect Quality – Disk Fabrication

28. Calculating the Cost of Scrap: Yield Loss (cont.) DataStor – Yield Loss – Disk Fabrication

29. Cost of External Failures • Customer Complaint Adjustment • Returned Materials - Restocking and Reshipping • Warranty Charges • Allowances for Defective Materials • Lost Business

30. Trade-offs • Appraisal and Prevention (Investment) • Internal and External Failures (Expense) • As the level of Quality Improves • Appraisal and Prevention Increase • Internal and External Decrease

31. Cost of Prevention • Quality Planning • Design (Prototyping, Field Testing) • Education and Training • Process Control • Quality Information Systems • Quality Reporting • Quality Improvement Programs, Quality Improvement Teams • Supplier Involvement What are the long-run consequences of investment in these items?

32. Total Cost Cost Internal and External Failures Prevention and Appraisal Poor Superior Level of Quality