ON-LINE QUALITY MANAGEMENT: INTEGRATION OF PRODUCT INSPECTION AND PROCESS CONTROL

A growing recognition that quality management is an important factor in defining a firm's competitive position has led to renewed attention to this function and has resulted in implementation of elaborate systems for on-line quality control comprising product inspection and process control. Traditionally, these functions have been treated independently, with very little interaction. In this paper we examine, in detail, a scheme that integrates the two functions, and we demonstrate that such an approach can result in significant cost savings. The motivation for this work comes from our experience in a wafer fabrication facility that suggested that exchange of quality information between different stages of production could result in significant performance improvements. To illustrate this approach, we consider a specific environment characterized by a single-stage continuous production process whose status is monitored by an X̄ control chart. We assume that quality-related costs may be described as a function of the process output. This is analogous to Taguchi's quality loss function and may be interpreted as a generalization of conventional classification of process output as either acceptable or defective units. The integrative scheme essentially relies on utilization of the process status information (based on process control) in making product inspection decisions. For this system we derive a cost model and develop a solution procedure to determine optimal decision parameters. Limited computational results indicate that the scheme has significant potential for reducing quality-related costs.     

WHY FIRMS SEEK ISO 9000 CERTIFICATION: REGULATORY COMPLIANCE OR COMPETITIVE ADVANTAGE?

Proponents of iso 9000 certification claim that it is a low-cost signal of a firm's commitment to quality and a meaningful component of total quality management (TQM). Critics claim that it has little relation to TQM and is a tariff on international trade. We test the hypothesis that firms obtain ISO 9000 certification to comply with government and customer demands by estimating a probit model of the certification decision. The results support the view of proponents of ISO 9000. After controlling for regulatory and customer pressures to obtain ISO 9000, other factors related to quality management and quality-based competition explain the adoption decision.     

DYNAMIC INTERACTION OF PRICE AND DESIGN QUALITY FOR PRODUCTS WITH CONVEX PRODUCTION COSTS

Price and design quality define value for customers and are often used by firms to position products in the marketplace. Setting price and quality level on a new product for the first time and making appropriate changes over time to these variables to reflect changing conditions in the market requires careful coordination of design, manufacturing, and marketing variables. We present a control theoretic model to study the complex interaction among price, quality, and cost during the life cycle of a product. Our model considers the major design-manufacturing-marketing tradeoffs and helps determine optimal pricing, design quality, and production strategies in a dynamic environment with convex production costs.     

A TOTAL QUALITY MANAGEMENT-BASED INCENTIVE SYSTEM SUPPORTING TOTAL QUALITY MANAGEMENT IMPLEMENTATION

Although there have been many cases of total quality management (TQM) success, embracing TQM does not always lead to performance improvements. Many companies resist the changes in organizational processes such as compensation and performance appraisal systems that are required to link TQM efforts to bottom-line performance. We present the basic structure of a TQM-based compensation system that can provide incentives based on a variety of performance measures, including an explicit incentive for the reduction of variability in product variables. As a result, this approach encourages the continuous improvement central to the TQM philosophy, rather than serving as a disincentive for such improvement as do many traditional compensation systems. The set of performance measures can be adjusted periodically to focus on those measures deemed most likely to yield significant increases in customer satisfaction, further supporting the core elements of TQM. The approach is described using examples from the paper manufacturing operation where it has been successfully implemented. A longitudinal analysis of several performance measures is used to demonstrate the effectiveness of the new compensation system.     

Technische Ineffizienz als Ergebnis rationalen Entscheidungsverhaltens

In this paper, we discuss several approaches that explain why technical inefficiencies may result from rational decision-making. The reasons behind the rational inefficiencies discussed are (1) individuals using their discretionary space in order to maximise their own instead of their organisation's objective function, (2) input slacks having value in the sense that they can be used to produce outputs that are not yet accounted for by the enterprise's production function, (3) decision makers maximising a profit function that is – due to specific market conditions – non-monotonic with respect to the quantities of inputs and outputs involved in the production process, and (4) a manager choosing a technically inefficient combination of working pace and working time in a service production process in order to maximise his individual utility function. All these approaches demonstrate that, contrary to the assumption in traditional production theory, technical efficiency is not a prerequisite for optimality. Hence, thoughtlessly applying the traditional quantity-based efficiency criterion for the pre-selection of production alternatives may lead to suboptimal results.     

非对称信息供应链质量信号传递博弈分析

基于博弈论和委托代理理论,研究了非对称信息条件下供应链节点企业间如何进行质量信号传递的问题。供应商对生产过程投资水平进行决策并采取质量预防策略,为获得最优质量契约可将其生产过程水平类型以信号传递给生产商,其对接收到的中间部件或原材料进行质量评价决策和加工处理决策。运用最优化原理,构建了生产商产品质量决策控制模型,并对生产商支付的"信息租金"进行了量化的描述并进行了仿真检验,结果证明:供应商有激励性动机将其生产过程水平类型以信号传递给生产商,并提高中间部件或原材料质量水平;当生产商观测到供应商所提供的产品质量信号后,将降低其产品质量检验水平、提高加工处理水平,增加向供应商的前向支付,作为对供应商提高产品质量水平的质量奖励,同时整个供应链的联合期望收益将显著增加,并使生产商为获取供应商产品质量水平向其支付的"信息租金"减少。最后论证了供应商进行产品质量信号传递过程中"棘轮效应"的成因,并给出了以上各结论相应的定量分析与证明。     

UNDERSTANDING THE IMPORTANT DIFFERENCES BETWEEN THE MALCOLM BALDRIGE NATIONAL QUALITY AWARD AND ISO 9000 REGISTRATION

Market globalization, higher requirements for improved quality, and tough, faster-pace, price-sensitive competition have led to two parallel and visible quality thrust: the Baldrige Award in the U.S. and, internationally, the ISO 9000 standards. The relationship between the Baldrige Award and ISO 9000 registration is widely confused. Two common misper-ceptions stand out: (1) that they both cover the same requirements and (2) that they both address improvement, relying on high quality results, and thus, are both forms of recognition. Many have concluded that the Baldrige Award and ISO 9000 are equivalent and that companies should choose one or the other. These conclusions are incorrect. The Baldrige Award and ISO 9000 registration differ fundamentally in focus, purpose, and content. The focus of the Baldrige Award is on enhanced competitiveness. The Award Criteria reflect two key competitiveness thrusts: (1) delivery of ever-improving value to customers and (2) improvement of overall operational performance. The Award's central purpose is educational-to encourage sharing knowledge and experience of competitiveness and to drive this learning, creating an evolving fund of knowledge. By contrast, the focus of ISO 9000 registration is on conformity to practices specified in the registrant's own quality systems. Its central purpose is to enhance and facilitate trade. The Baldrige Award addresses competitiveness factors either not addressed in ISO 9000 registration or addressed differently. These factors include a customer and market focus, results orientation, continuous improvement, competitive comparisons, a tie to business strategy, cycle time and responsiveness, integration via analysis, public responsibility, human resource development, and information sharing. Overall, ISO 9000 registration covers less than 10% of the scope of the Baldrige Award Criteria and does not fully address any of the 28 Criteria items. As a result, the national drive to improve competitiveness could be diminished. Companies required to or electing to seek ISO 9000 registration are encouraged to integrate their conformity efforts with the Baldrige Award competitiveness improvement framework.     

PROCESS IMPROVEMENT: AN EXPLORATORY DATA ANALYSIS APPROACH WITHIN AN INTERVAL-BASED OPTIMIZATION FRAMEWORK

This article revisits an old problem; “systematically explore the information contained in a set of operating data records and find from it how to improve operational performance by taking the appropriate decisions in the space of operating conditions,” thus leading to continuous process improvement. A series of industrial case studies within the framework of the internships in the Leaders for Manufacturing (LFM) program at Massachusetts Institute of Technology led us to a reexamination of the traditional formulations for the above problem. The resulting methodology is characterized by the following features: (1) problem statement and solutions are expressed in terms of hyperrectangles in the decision space, replacing conventional pointwise results; (2) data-driven, nonparametric learning methodologies were advanced to produce the requisite mapping between performance and decisions; (3) operating performance is in essence multifaceted, leading to a multiobjective problem, which is treated as such. The proposed methodology has been applied to a number of industrial examples and in this paper we provide a brief overview only of those that can be discussed in the open literature.     

DEVELOPING SOPHISTICATED QUALITY IMPROVEMENT APPROACHES THROUGH BUSINESS-ACADEME COLLABORATIONS: INTRODUCTION TO THE SPECIAL ISSUE

The pursuit of better performance has led to a number of business-academe collaborations. These collaborators have developed a number of sophisticated approaches that go far beyond such traditional simple methods as benchmarking against the best company, Ishikawa diagrams on feedback and control, Pareto diagrams, incentive systems based solely on output or quality, standard process control charts, and separate treatment of control charts and product inspection. The authors in this special issue report on approaches like benchmarking industrial performance through industry studies; the use of an artificial-intelligence statistical-tree growing method to analyze complex customer service data; an incentive system based on the total quality management (TQM) concepts of continuous improvement, teamwork, adaptation to change, and a focus on customer satisfaction; and integration of product inspection and process control. Because of the continuing widespread interest in TQM, there is an opportunity to take stock of how successful TQM initiatives have been and how we should consolidate and further extend the knowledge in TQM. Two of the papers report on the gap between what organizations espouse as TQM and what they actually implement and on the literature on TQM.     

MANUFACTURING QUALITY,RELIABILITY AND PREVENTIVE MAINTENANCE

We consider an important topic from the traditional quality literature-the impact of conformance quality of a manufactured product on the preventive maintenance costs to downstream users of this product. Folk wisdom supports the notion that higher conformance quality translates into lower maintenance costs (as well as other components of life-cycle costs) for these users. We examine this proposition in some detail on the basis of a failure-time model that relates conformance quality to reliability. We consider both repairable and nonrepairable items that are maintained by a block-replacement or a minimal-repair strategy. In addition to maintenance cycles and costs, we discuss the value of information to the user as to the actual production quality, and the value of inspection.     

IMPLEMENTING INITIATIVES ON QUALITY: AN INTRODUCTION TO THE SPECIAL ISSUE ON TOTAL QUALITY MANAGEMENT

In the early 1980s, companies around the world, learning from the Japanese experience, saw that they could address their severe competitive problems related to productivity and quality only by looking at the entire set of processes and organizational relationships in the context of the customer's needs. This approach was termed total quality management (TQM). As companies pursue quality-related initiatives, they must deal with a number of issues; some of these issues are addressed here: measurement of benefits, feedback and recognition, work-teams, teaching continuous improvement, and enhancing the effectiveness of statistical process control charts.     

一类产品质量成本优化问题的研究

在生产实际中,工艺指标往往难以精确控制在某一具体数值上,据此提出了针对质量控制范围决策的质量成本优化问题。以电石产品质量成本优化为应用背景,定义了基于边际分析思想的质量成本函数,建立了基于质量指标控制范围决策的非线性规划形式的质量成本优化模型,给出了模型的求解思路,并通过实际数据进行验证,该方法比传统质量管理策略具有较大程度的改进。     

Simultaneous determination of production lot size and process parameters under process deterioration and process breakdown

The purpose of this study is to combine production-inventory management with process-quality design for determining production lot size and process parameters under the possibility of process deterioration and breakdown. The total cost of such an integrated model includes: the combined setup cost (production setup and process resetting), the costs of quality loss, tolerance and mean costs for processes established, a penalty cost for process breakdown and carrying costs for cumulated inventory. The quadratic quality loss function is introduced to assess quality loss within the system. Decision variables include the initial setting (process mean) and process tolerance for process parameters determination, and production lot size for production-inventory management. The cycle time for production-inventory management is assumed to be the same as the resetting cycle for the new process-quality system. The contribution of this study lies in its development of an integrated model that enables process parameters, production lot size, and cycle time to be determined concurrently for quality and economic considerations, and at an earlier time in the process design and production management stage. An example is presented to demonstrate the proposed model.     

PRODUCT AND SERVICE QUALITY: THE ANTECEDENTS OF CUSTOMER LOYALTY IN THE AUTOMOTIVE INDUSTRY

Prior literature has examined product quality and service quality separately as antecedents of customer loyalty. In the context of the automotive industry, we present a framework that examines the simultaneous impact of product and service quality on consumers' purchase intentions. The framework is operationalized as several hypotheses that posit relationships between service quality, service satisfaction, product quality, and customer loyalty. The hypotheses are tested using three sources of data: (i) archival data on product quality and customer purchases, (ii) consumersíresponses to a survey instrument, and (iii) Consumer Reports. Results indicate general support for main hypotheses proposed.     

EFFECTS OF RANDOM SHIFTS OF TESTING EQUIPMENT ON PROCESS CONTROL SYSTEM DESIGN AND SELECTION OF PROCESS CONTROL POLICIES*

This paper studies issues associated with designing process control systems when the testing equipment is subjected to random shifts. We consider a production process with two states: in control and out of control. The process may shift randomly to the out‐of‐control state over time. The process is monitored by periodically sampling finished items from the process. The equipment used to test sampled items also is assumed to have two states and may shift randomly during the testing process. We formulate a cost model for finding the optimal process control policy that minimizes the expected unit time cost. Numerical results show that shifts of the testing equipment may significantly affect the performance of a process control policy. We also studied the effects of the testing equipment's shifts on the selection of process control policies.     

AN EXAMINATION OF THE INDIRECT PRODUCTIVITY GAINS FROM QUALITY IMPROVEMENT

Recent theoretical work suggests that quality-improvement activities can yield significant indirect effects through process improvements and reduced factory congestion and confusion, benefits that are overlooked or hidden in most management accounting or cost of quality systems. Using time series data from two consumer durables manufacturing plants, I estimate the indirect productivity gains from quality improvement. The evidence from the plants indicates that the indirect effects from improved quality are at least two to three times the direct benefits attributable to lower scrap, rework, and inventory holding costs. An important implication of these findings is that companies that justify investments and measure performance based only on the direct costs of poor quality will motivate managers to make suboptimal decisions regarding quality-improvement activities.     

Dynamic Pricing,Production, and Channel Coordination with Stochastic Learning

We consider a decentralized two‐period supply chain in which a manufacturer produces a product with benefits of cost learning, and sells it through a retailer facing a price‐dependent demand. The manufacturer's second‐period production cost declines linearly in the first‐period production, but with a random learning rate. The manufacturer may or may not have the inventory carryover option. We formulate the resulting problems as two‐period Stackelberg games and obtain their feedback equilibrium solutions explicitly. We then examine the impact of mean learning rate and learning rate variability on the pricing strategies of the channel members, on the manufacturer's production decisions, and on the retailer's procurement decisions. We show that as the mean learning rate or the learning rate variability increases, the traditional double marginalization problem becomes more severe, leading to greater efficiency loss in the channel. We obtain revenue sharing contracts that can coordinate the dynamic supply chain. In particular, when the manufacturer may hold inventory, we identify two major drivers for inventory carryover: market growth and learning rate variability. Finally, we demonstrate the robustness of our results by examining a model in which cost learning takes place continuously.     

ADAPTING THE QFD APPROACH TO EXTENDED SERVICE TRANSACTIONS

This paper proposes an adaptation of quality function deployment (qfd) for services, more specifically extended service transactions. We propose two modifications to service applications of Qfd. One is the inclusion of higher-level customer needs (consequences, benefits, experiences, and personal values) to incorporate the experiential and personal nature of extended service transactions into the process. The second modification is to use customers' knowledge and expertise regarding service production and delivery as input beyond the house of quality. An interviewing method is proposed for a comprehensive assessment of customer needs at multiple levels. Results from an empirical application of this technique to luxury business hotels support the proposed modifications to Qfd to increase its potential for application to services.     

基于顾客选择行为的多质量等级时鲜产品定价策略研究

基于现实中广泛存在的不同质量等级时鲜产品销售的现象,本文研究了追求收益最大化的销售商定价策略。我们考虑两种质量等级的情形,从顾客在不同等级产品之间的选择行为出发,研究了产品数量既定情形下销售商的最优折扣定价决策。同时,我们将这种"分离"销售策略与混合销售策略进行了对比。研究表明,当潜在顾客规模较小或产品供给相对较多时,分离策略相对混合策略的收益改进是更为显著的。