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Exam solution

Q1 (a) A shipment of 2,000 portable battery units for microcomputers is

about to be inspected by a Malaysian importer. The Korean manufacturer
and the importer have set up a sampling plan in which the _ risk is limited
to 5% at an acceptable quality level (AQL) of 2% defective, and the _
risk is set to 10% at Lot Tolerance Percent Defective (LTPD) = 7%
defective. We want to construct the OC curve for the plan of n = 120
sample size and an acceptance level of c 3 defectives. Both firms want
to know if this plan will satisfy their quality and risk requirements.
N.B (varying the percent defective (p) from 0.01 (1%) to .08(8%))
(a)To solve the problem, we turn to the cumulative Poisson table in
Appendix II of the text, whose columns are set up in terms of the
acceptance level, c . We are interested only in the c = 3 column for this
The rows in the table are (= np), which represents the number of defects
we would expect to find in each sample.
By varying the percent defectives (p) from .01 (1%) to .08 (8%) and
holding the sample size at n = 120, we can compute the probability of
acceptance of the lot at each chosen level. The values for P (acceptance)
calculated in what follows are then plotted to produce the OC curve
shown in Figure T2.2.

Now back to the issue of whether this OC curve satisfies the quality and
risk needs of the consumer and producer of the batteries. For the AQL of
p = .02 = 2% defects, the P (acceptance) of the lot = .779. This yields an
_ risk of 1 _ .779 = .221, or 22.1%, which exceeds the 5% level desired
by the producer. The _ risk of .032, or 3.2%, is well under the 10%
sought by the consumer. It appears that new calculations are necessary
with a larger sample size if the _ level is to be lowered.

(b) To illustrate the AOQ relationship, use the data developed for the OC
curve in problem section a above. The lot size in that case was N = 2,000
and the sample size was n = 120. Assume that any defective batteries
found during inspection are replaced by good ones. Then using the
formula for AOQ given before and the probabilities of acceptance from
problem section a, develop the AOQ curve:

These numbers are graphed in Figure T2.3 as the average outgoing
quality as a function of incoming quality

Did you notice how AOQ changed for different percent defectives? When
the percent defective of the incoming lots is either very high or very low,
the percent defective of the outgoing lots is low. AOQ at 1% was .009,
and AOQ at 8% was .001. For moderate levels of the incoming percent
defective, AOQ is higher:
AOQ at 2% to 3% was .015. Thus, AOQ is low for small values of the
incoming percent defective. As the incoming percent defective increases,
the AOQ increases up to a point. Then, for increasing incoming percent
defective, AOQ decreases.

Q2 a (i) California Instruments, Inc., produces 3,000 computer chips per

day. Three hundred are tested for a period of 500 operating hours each.
During the test, six failed: two after 50 hours, two at 100 hours, one at
300 hours, and one at 400 hours.
Find FR(%) and FR(N). and MTBF
(ii) If 300 of these chips are used in building a mainframe computer, how
many failures of the computer can be expected per month?
FR(%) = failures per number tested = 6/300 = 0.02 = 2%
FR(N) = failures per operating time:
Total time = 300 * 500 = 150,000 hours

Downtime = 2(450) + 2(400) + 1(200) + 1(100) = 2,000 hours
Operating time = Total time Downtime = 150,000 2,000 = 148,000
Therefore: FR(N) = 6/148,000 = 0.0000405 failures/hour
MTBF = 1/FR(N) = 24,691 hours
(ii)Converting the units of FR(N) to months:
FR(N) = 0.0000405 * 24 hours/day * 30 days/month = 0.029
FR(N) for the 300 units:
FR(N) = 0.029 failures/month * 300 units = 8.75 failures/month
MTBF for the mainframe:
MTBF = 1/FR(N) = 1/8.75 = 0.11 month = 0.11 * 30 = 3.4 days
Calculation for MTBF assumes that failure of any one chip brings down
entire system.
(b) Find the reliability of this system:


(b) = [0.95 + 0.92(1 0.95) [0.98] [0.90 + 0.90(1 0.90)]

= [0.996 0.98 0.99 = 96.6%
Q3(a) The Take-Charge Company produces batteries. From time to
time a random sample of six batteries is selected from the output and
the voltage of each battery is measured, to be sure that the system is
under control. Here are statistics on 16 such samples.

Sample Mean Range Sample Mean Range

1 4.99 0.41 9 5.01 0.49

2 4.87 0.57 10 5.19 0.56

3 4.85 0.59 11 5.40 0.44

4 5.26 0.74 12 5.15 0.63

5 5.09 0.74 13 5.00 0.35

6 5.02 0.21 14 4.89 0.45

7 5.13 0.56 15 4.99 0.54

8 5.09 0.92 16 5.05 0.33

a. What type of control chart should be used here? Why?

b. What is the centerline of the chart?
c. What is the lower control limit? The upper control limit?
d. What statistic should be plotted on the control chart for each
e. Draw the control chart on a piece of graph paper.
f. s this system under control?
g. What should the quality control engineer do?

a. Use the x-bar chart; this is measurement data.

b. Image257 v.
(k = the number of samples)
c. Because the value of the population standard deviation is
unknown, use Image258.gif and the A2 control chart factor.

Image259 v.
= . (. ) = = .
= Image260 v.
= + = . (. ) = . Image261 v.
d. The sample mean.

e. UCL



0 5 10 15

f. No, sample #11 is out of control.

g. He should look for an assignable cause for sample #11.

Q3b Use the data in Problem 3 to draw an R chart.

a. What is the lower control limit? The upper control limit?
b. What statistic should be plotted on the control chart for each
c. Draw the control chart on a piece of graph paper.
d. Is this system under control?
e. What should the quality control engineer do?
a. Because s is unknown, use Image262 and the factors, D3 and
D4 from the Table of Control Chart
= = . (. ) = . Image263 v.
= = . (. ) = . Image264 v.
b. The sample ranges.

c. UCL



0 5 10 15

d. Yes.
e. No action is needed.

Q4 The Poseidon Fabric Co. produces large beach towels (among

other things): they are supposed to be brightly colored and have a
fringe on each end. From time to time, a towel is selected from the

finished goods and subjected to an intense inspection in search of any
and all defects. A defect is a stain, a badly dyed spot, a hole, a missing
fringe, etc., each occurrence counts as a distinct defect. Here are data
on 12 sample towels.
Towel 1 2 3 4 5 6 7 8 9 10 11 12
Number of defects 2 1 3 0 1 4 0 1 3 2 3 1

a. What type of control chart should be used here? Why?

b. What is the centerline of the chart?
c. What is the lower control limit? The upper control limit?
d. What statistic should be plotted on the control chart for each
e. Draw the control chart on a piece of graph paper.
f. Is this system under control?
g. What should the quality control engineer do?
a. Use a c-chart, because the data consists of the number of defects
per unit; a unit is a towel.

b. = = = = . defects per towel

c. = = . . = .
= = . + . = .

d. The number of defects per towel.

e. UCL



0 5 10 15
f. Yes.
g. No action is necessary.

Q 4 (b) Tinker Belle Peanut Butter is sold in .50 kilograms jars. The
plant produces thousands of jars of peanut butter per working day;
the process is rather simple and quite standardized, and is thought to
be highly stable, with a standard deviation of .016 kg. Management
has specified that the jars should fall between .446 kg and .554 kg.
a. What is the process capability index?
b. Is this process capable?
a. x2 (upper specification - lower specification/6 = (.554 -
.446)/6(.016) = 1.125.
b. Yes, but not by much.
Q 7 Explain the basic philosophy behind quality management systems
such as those specified in ISO 9000:2000 series. How can an effective
quality management system contribute to continuous improvement in an
international banking operation? Explain what is meant by independent
third party certification to a standard such as ISO 9000 and discuss the
merits of such a scheme for an organization.
Eight principles were identified to be used by top management as
they lead their organizations and improve performance.

Customer focus
Involvement of people
Process approach
System approach to management
Continual improvement
Factual approach to decision making
Mutually beneficial supplier relationships

Enable organizations to gauge how well they are performing

against others who undertake similar tasks and activities. But a
more important aspect of best practice benchmarking is gaining an
understanding of how other organizations achieve superior
The assessment by an independent organization, not connected
with any contract between customer and supplier, but acceptable to
them both, is known as an independent third party assessment
One advantage of the third party schemes is that they obviate the
need for customers to make their own detailed checks, potentially
saving both suppliers and customers time and money, and
avoiding issues of commercial confidentiality. Just one
Principles of total quality management:

1. Customer-focused 2. Total employee


3. Process-centered 4. Integrated system

5. Strategic and systematic approach 6. Continual
7. Fact-based decision making 8. Communications
Strategy Model for Implementing TQM Systems
Top management learns about and decides to commit to
TQM. TQM is identified as one of the organizations strategies.
The organization assesses current culture, customer
satisfaction, and quality management systems.
Top management identifies core values and principles to be
used, and communicates them.
A TQM master plan is developed on the basis of steps 1, 2,
and 3.

The organization identifies and prioritizes customer demands
and aligns products and services to meet those demands.
Management maps the critical processes through which the
organization meets its customers needs.
Management oversees the formation of teams for process
improvement efforts.
The momentum of the TQM effort is managed by the
steering committee.
Managers contribute individually to the effort through
hoshin planning, training, coaching, or other methods.
Daily process management and standardization take place.
Progress is evaluated and the plan is revised as needed.
Constant employee awareness and feedback on status are
provided and a reward/recognition process is established.
Examples of Total Quality Management System Strategies
The TQM element approach
The guru approach
The organization model approach
The Japanese total quality approach
The award criteria approach
Clear Goal-Setting clear, well-defined objectives for quality
Communicative communication skills to give marching orders in
ways that inspire and motivate rather than discourage followers.
play a strong role in drafting new policy initiatives and guideline
Aggressive pursue change, circumventing or eliminating any
institutional barriers that hinder organizational growth and
Deeply Committed to Change
Personally Involved working alongside their followers to improve
the organization. From designing training and education protocols
to analyzing results of new initiatives, leaders must be personally
involved to ensure high standards are upheld and to inspire
followers to keep working hard