EXERCISE-3: LINK BETWEEN QUALITY & PRODUCTIVITY

TOPIC: INTRODUCTION
INSTRUCTION: TO BE SUBMIT IN NEXT CLASS on L-3
Student

Name:

Batch:

Producing high-quality products in the modern industrial environment is not easy. A significant aspect of
the problem is the rapid evolution of technology. The past 20 years have seen an explosion of technology
in such diverse fields as electronics, metallurgy, ceramics, composite materials, biotechnology, and the
chemical and pharmaceutical sciences, which has resulted in many new products and services. For
example, in the electronics field the development of the integrated circuit has revolutionized the design and
manufacture of computers and many electronic office products Basic integrated circuit technology has
been supplanted by large-scale integration (LSI) and very large-scale integration (VLSI) technology, with
corresponding developments in semiconductor design and manufacturing. When technological advances
occur rapidly and when the new technologies are used quickly to exploit competitive advantages, the
problems of designing and manufacturing products of superior quality are greatly complicated.
Often, too little attention is paid to achieving all dimensions of an optimal process economy, efficiency,
productivity, and quality. Effective quality improvement can be instrumental in increasing productivity and
reducing cost. To illustrate, consider the manufacture of a mechanical component used in a copier
machine The parts are manufactured in a machining process at a rate of approximately 100 parts per day.
For various reasons, the process is operating at a first-pass yield of about 75%. (That is, about 75% of the
process output conforms to specifications, and about 25% of the output is nonconforming.) About 60% of
the fallout (the 25% nonconforming) can be reworked into an acceptable product, and the rest must be
scrapped. The direct manufacturing cost through this stage of production per part is approximately $20.
Parts that can be reworked incur an additional processing charge of $4. Therefore, the manufacturing cost
per good part produced is
S20(J 00) + $4( 15)
Cost/ ,t
cood 'Jar!
= $22.89
90
Note that the total yield from this process, after reworking, is 90 good parts per day.

An engineering study of this process reveals that excessive process variability is responsible for the
extremely high fallout. A new statistical process-control procedure is implemented that reduces variability,
and consequently the process fallout decreases from 25% to 5%. Of the 5% fallout produced, about 60%
can be reworked, and 40% are scrapped. After the process control program is implemented, the
manufacturing cost per good part produced is
_,
$20(100)+$4(3)
__
,
l ost/ good pan = .
98
= ::'-::'O..:'l_'
Note that the installation of statistical process control and the reduction of variability that follows result in a
10.3% reduction in manufacturing costs. Furthermore, productivity is up by almost 10%; 98 good parts are
produced each day as opposed to 90 good parts previously. This amounts to an increase in production
capacity of almost 10%, without any additional investment in equipment, workforce, or overhead. Efforts to
improve this process by other methods (such as Just-in-Time, lean manufacturing, etc.) are likely to be
completely ineffective until the basic problem of excessive variability is solved.

Course Instructor: Ali Zulqarnain

Total Quality Management

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