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Controlling: As a Management Function
Mehdi Zaman
Roll No: 62
Asif Rezwan
Roll No: 64
Rahmat Ali
Roll No: 82
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May 13, 2010
Dear Sir:
In going through the subject of controlling, we’ve consulted many library volumes as
well as online resources. We are expectant that the information in this term paper will
benefit all concerned.
Hoping for your appreciation, we’ll be glad to converse with you at your convenience
should you need any assistance.
Sincerely yours,
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Table of Contents
.............................................................................................1
Controlling: .............................................................................................1
As a Management Function...................................................................................1
Executive Summery.............................................................................................................6
Introduction..........................................................................................................................7
Objective .............................................................................................................................8
The purpose of controlling...................................................................................................8
Areas of controlling.............................................................................................................8
Responsibilities of controlling.............................................................................................9
Most large organizations also have one or more specialized managerial positions called
controller. The controller is responsible for helping line managers with their control
activities, coordinating the organization’s overall control system. Many businesses that
use a divisional form of organization design have several controllers: one for the
corporation and one for each division. ...............................................................................9
The planning controlling link..............................................................................................9
The organization continuously cycles back and forth between planning and controlling.
The manager makes plans and then uses the control system to monitor progress toward
fulfillment of those plans. The control system, in turn, tells the manager that things are
going as they should. ..........................................................................................................9
The Control Process.............................................................................................................9
7.1 Establishing standards................................................................................................9
7.2 Measuring performance .........................................................................................10
7.3 Comparing performance against standards..............................................................10
7.4 Evaluation and Action.............................................................................................11
Types of operational control:.............................................................................................11
Forms of organizations control..........................................................................................12
Managing the control process............................................................................................13
Understanding Resistance to Control................................................................................14
Overcoming resistance to control......................................................................................15
Choosing a style of control................................................................................................16
Effective Controls..............................................................................................................16
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Organizational Control Systems........................................................................................17
Operations Management and Control................................................................................17
Features of Controlling Function.......................................................................................18
Characteristics of the Control Process ..............................................................................19
Management Control Strategies .......................................................................................19
Designing Effective Control Systems ...............................................................................20
Dysfunctional Consequences of Control ..........................................................................20
Various Administrative Controls.......................................................................................21
22.1 Delegation..............................................................................................................21
22.2 Evaluations.............................................................................................................21
Financial Statements (particularly budget management)..................................................21
Quality Control and Operations Management...................................................................22
Relationship between planning and controlling................................................................23
Quality control...................................................................................................................23
View of Organizational Control........................................................................................24
Statistical Process Control Charts......................................................................................25
Control Chart Elements.....................................................................................................26
Use of Statistical charts in Controlling..............................................................................28
Common Types of Charts..............................................................................................28
Control Individual Observations........................................................................................29
Out-Of-Control Process: Runs Tests.................................................................................30
Learning.............................................................................................................................32
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Executive Summery
Performance standards come from the planning function. No matter how difficult,
standards should be established for every important task. Although the temptation may be
great, lowering standards to what has been attained is not a solution to performance
problems. On the other hand, a manager does need to lower standards when they are
found to be unattainable due to resource limitations and factors external to the business.
Control helps an organization adapt to changing conditions, limits the compounding of
errors, helps an organization cope with complexity, and helps minimize cost.
In today’s complex and turbulent environment, all organizations must contend with
change. If managers could establish goals and achieve them instantaneously, control
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would not be needed. But between the time a goal is established and the time it is
reached, many things can happen in the organization and its environment to disrupt
movement toward the goal or even to change the goal itself. A properly designed control
system can help managers anticipate, monitor, and to changing circumstances.
Small mistakes and errors do not often seriously damage the health of an organization.
With the passage of time, however, small errors may accumulate and become very
serious.
When a firm purchases only one raw material, produces but one product, has a simple
structure, and enjoys constant demand for its product, its managers can probably
maintain control with a note pad and pencil. But in an organization that produces many
products from myriad raw materials, has a large market area and complicated
organization structure, and operates in a competitive environment, it is difficult to
maintain adequate control without and elaborate control system.
When control is practiced effectively, it can help reduce costs and boosts output.
Effective control system can eliminate waste, lower labor costs, and improve output per
unit of input.
Introduction
Controlling is a systematic exercise which is called as a process of checking actual
performance against the standards or plans with a view to ensure adequate progress and
also recording such experience as is gained as a contribution to possible future needs.”
It sees to it that the right things happen, in the right ways, and at the right time. Done
well, it ensures that the overall directions of individuals and groups are consistent with
short and long range plans. It helps ensure that objectives and accomplishments are
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consistent with one another throughout an organization. It also helps maintain compliance
with essential organizational rules and policies.
Objective
As a part of our “Management of organization” course we are working on Controlling.
We believe this study will help us learning the concept of controlling in detailed with
various perspective in it. Further more this study will help us learn how to take a group
decision effectively as well as how to work in a group efficiently toward a single group
task. Besides learning controlling we tried to develop our communication skill by
interacting with each other which will help us in the long run while working in an
organization.
Areas of controlling
Organizational control can focus on any area of an organization. Two useful ways of
identifying areas of control are in terms of resource focus and level.
The resource view of control, as shown in the fig: deals with financial, physical, human,
and information resources. The management process itself involves efficiently and
effectively combining these resources into appropriate outputs. Control of physical
resources includes inventory management, quality, control, and equipment control.
Control of human resources includes selection and placement activities, training and
development, performance appraisal, and compensation levels. Control of information
resources involves sales and marketing forecasting, environmental analysis, public
relations, production scheduling, and economic forecasting.
Control can also classified by level. Operations control is control focused on one or more
operation systems within an organization. Quality control is one type of operations
control. Organizational control is concerned with the overall functioning of the
organization. Strategic control is concerned with how effectively organization
understands and aligns itself with its environment.
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Responsibilities of controlling
Managers have always been responsible for managing control. It is they who actually
implement control systems and take appropriate actions based on the information
provided by those control systems.
Most large organizations also have one or more specialized managerial positions called
controller. The controller is responsible for helping line managers with their control
activities, coordinating the organization’s overall control system. Many businesses
that use a divisional form of organization design have several controllers: one for the
corporation and one for each division.
The first step in the control process is the establishment of standards. A standard is a
target against which subsequent performance is to be compared. As much as possible,
standard established for control purposes should be derived from the organizations goals.
On a broader level, control standards also reflect organizational strategy. A final aspect of
establishing standards is to decide which performance indicators are relevant. When a
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new product is introduced, its manufacturer should have some idea in advance whether
the first month’s sale will take a while to gather momentum.
• The control process begins with planning and the establishment of performance
objectives.
• Performance objectives are defined and the standards for measuring them are set.
The second step in the control process is measuring performance. Performance refers to
that which we are attempting to control. The measurement of performance is a constant,
ongoing activity for most organizations, and for control to be effective, relevant
performance measures must be valid. When a manager is concerned with controlling
sales, daily, weekly, or monthly sales figures represent actual performance. For a
production manager, performance may be expressed in terms of unit cost, quality or
volume. For employees, performance may be measured in terms of quality or quantity of
output.
The third step in the control process is to compare measured performance against the
standards developed in step 1. Performance may be higher than, lower than, or the same
as the standards. The issue is how much leeway is permissible for remedial action is
taken. In some cases comparison is easy. It is relatively simple to determine whether this
standard has been met.
In other settings, however, comparison is less clear-cut. Assume that each of three sales
managers has a goal of increasing sales by 10% during the year. At the end of year, one
manager has increased sales by 9.9%, another by 9.3% and the third by 8.7%. How do we
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decide whether each has met the standard? For the most part, this is a management
decision that must be based on many relevant factors. Although none of the three sales
managers attained the precise goal of 10%, one was very close. Another may have met
with unexpected competition from a new company. These and other relevant factors must
be considered.
The final step in the control process is to evaluate performance and then take appropriate
action. This evaluation draws heavily on a manager’s analytic and diagnostic skills. After
evaluation, one of three actions is usually appropriate.
• Maintain the status quo: One response is to do nothing, or maintain the statues
quo. This action is generally appropriate when performance more or less measures
up to the standard.
• Correct the deviation: It is more likely that some action will be needed to correct a
deviation from the standard. If the cost-reduction standard is 4% and we have thus
far managed only a 1% reduction, something must be done to get us back on
track. We may need to motivate our employees to work harder or supply them
with new machinery. Managers at sharper image saw a clear problem with their
same–store sales and took corrective action immediately.
• Change standards: A final response to the outcome of comparing performance to
standards is to change the standards. The standard may have been too high or too
low to begin with. The company may need to reassess its standard and adopt a
lower one to better reflect the realities of its marketplace.
• Taking any action necessary to correct or improve things.
• Management-by-Exception focuses managerial attention on substantial
differences between actual and desired performance.
.
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a. Preliminary Control (feed forward)
Preliminary Control concentrated on inputs to the system early in the overall process.
Preliminary control attempts to monitor the quality or quantity of financial, physical,
human and information resources before they become part of the system. Firms like
Proctor & Gamble and General Mills hire only college graduates for their management
training programmes-and only after several interviews and other selection criteria have
been satisfied. Thus, they control the quality of he human resource entering the
organization. When Sears orders merchandise to be manufactured under its own brand
name, it specifies rigid standards of quality, thereby controlling material inputs.
Similarly, organizations often take steps to control financial and information resources as
they enter the system.
Screening Control takes place during the transformation process. Screening control relies
heavily on feedback processes. Suppose that a manager of a manufacturing control
establishes a number of checkpoints along the assembly line. As the product moves along
the line, it is periodically checked to make sure that all of the components assembled so
far are working properly. This is screening control, because the product is being
controlled during the transformation process itself. Because screening control are widely
applicable and useful in identifying the cause of problems they tend to be used more
often than other forms of control.
More and more companies are adopting a screening control philosophy. Such control
systems are an effective way to promote employee participation and catch problems in
the transformation process.
Post action control focuses on the outputs of the organization after the transformation
process is complete. If a product can be manufactured in only two or three steps, post
action control may be the most effective method. Although post action control is
generally not as useful as preliminary or screening control, it can be effective in two
important ways. It provides management with information for future planning. Post
action control also provides a basis for rewarding employees.
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concentrate on ensuring that people meet minimally acceptable levels of performance and
have a tall structure. Moreover they focus their rewards on individual performance and
allow only limited and formal employee participation.
One that is self-contained in its performance monitoring and correction capabilities. The
control process practiced in organizations is not cybernetic, but it does follow similar
principles.
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Developing Effective Control Systems
Control systems tend to be most effective when they are integrated with planning and are
flexible, accurate, timely and objective.
We noted earlier that control should be linked with planning. In general, the more explicit
and precise this linkage is, the more effective the control system will be. The most
important factor in effectively integrating planning and control is to account for control
as plans are developed.
Flexible
Accurate
Control systems must also be accurate. This seems obvious enough, but it is surprising
how many managers base decisions on inaccurate information. Denied accurate
measurement and reporting of performance, managers may take inappropriate action, and
the results of inaccurate information can be quite dramatic.
Timely
Objective
To the extent possible, the information provided by the control system should be
objective or it can be said that the control system should therefore provide objective
information to the manager for evaluation and action, but the manager must take
appropriate precautions in interpreting it.
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Over control
Occasionally, organizations make the mistake of over control-they try to control too
many things. This becomes especially problematic when the control relates directly to
employee behavior. As for example when a company tells an employee how to dress,
how to wear their hair, employees are likely to feel over controlled.
Inappropriate fears
Another reason for resistance is that the focus of the control system may be inappropriate.
The control system may be too narrow, or it may focus too much on quantifiable
variables and leave no room for analysis or interpretation.
If two separate departments in one company gets treated different way for their spending
or conserving like: one dept. is punished (budget cuts) for being overly efficient with
their funds while the other is rewarded (budget increase) for being inefficient. People
naturally resist this kind of control, because the rewards and punishments associated with
spending and conserving are unfair.
Accountability
Another reason some people resist control is that effective control systems create
accountability. When people have the responsibility to do something, effective controls
allow managers to determine whether they successfully discharge that responsibility. If
the standards are properly set and performance is accurately measured, managers not only
know when problems arise but also which dept. and even which individuals are
responsible.
Perhaps the best way to overcome resistance to control is to create effective control to
begin with. If control systems are properly integrated with an organization’s planning
system and if the controls are flexible, accurate, timely and objective, the organization
should not fall victim to the problems of over control, incorrect focus or rewarding
inefficiency.
Encourage Participation
Participation can help overcome resistance to change. By the same token, when
employees are involved with planning and implementing the control system they are less
likely to resist it.
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Use of MBO
Effective Controls
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• Fair and objective
• Flexible
• Management Processes
– Strategy and objectives
– Policies and procedures
– Selection and training
– Performance appraisal
– Job design and work structures
– Performance modeling, norms, and organization culture
Employee Discipline
Effective Discipline
• Immediate
• Focus on activity not personality
• Consistent
• Informative
• Occur in a supportive setting
• Support realistic rules
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– Economic Order Quantity
– automatic reorder points
– Just-In-Time Scheduling
– Project Management
• Program Evaluation and Review Technique (PERT) - Identifies and controls the
many separate events in complex projects.
1. It facilitates co-ordination
2. It helps in planning
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Characteristics of the Control Process
The control process is cyclical which means it is never finished. Controlling leads to
identification of new problems that in turn need to be addressed through establishment of
performance standards, measuring performance etc.
Employees often view controlling negatively. By its very nature, controlling often leads
to management expecting employee behavior to change. No matter how positive the
changes may be for the organization, employees may still view them negatively.
Control is both anticipatory and retrospective. The process anticipates problems and takes
preventive action. With corrective action, the process also follows up on problems.
Ideally, each person in the business views control as his or her responsibility. The
organizational culture should prevent a person walking away from a small, easily
solvable problem because "that isn't my responsibility." In customer driven businesses,
each employee cares about each customer. In quality driven dairy farms, for example,
each employee cares about the welfare of each animal and the wear and tear on each
piece of equipment.
Managers can use one or a combination of three control strategies or styles: market,
bureaucracy and clan. (Figure 18.3) Each serves a different purpose. External forces
make up market control. Without external forces to bring about needed control, managers
can turn to internal bureaucratic or clan control. The first relies primarily on budgets and
rules. The second relies on employees wanting to satisfy their social needs through
feeling a valued part of the business.
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Designing Effective Control Systems
Effective control systems have the following characteristics:
3. Flexibility
4. Accuracy
5. Timeliness
6. Cost effectiveness
7. Understandability
1. Game playing--> control is something to be beaten, a game between the "boss and me
and I want to win."
4. Following rules to the letter--> people following dumb and unprofitable rules in
reaction to "do as I say."
5. Sabotaging --> stealing, discrediting other workers, chasing customers away, gossiping
about the firm to people in the community
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6. Playing one manager off against another --> exploiting lack of communication among
managers, asking a second manager if don't like the answer from the first manager.
22.1 Delegation
22.2 Evaluations
Once the organization has establish goals and associated strategies (or ways to reach the
goals), funds are set aside for the resources and labor to the accomplish goals and tasks.
As the money is spent, statements are changed to reflect what was spent, how it was spent
and what it obtained. Review of financial statements is one of the more common methods
to monitor the progress of programs and plans. The most common financial statements
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include the balance sheet, income statement and cash flow statement. Financial audits are
regularly conducted to ensure that financial management practices follow generally
accepted standards, as well.
Performance Management (particularly observation and feedback phases)
Performance management focuses on the performance of the total organization, including
its processes, critical subsystems (departments, programs, projects, etc.) and employees.
Most of us have some basic impression of employee performance management, including
the role of performance reviews. Performance reviews provide an opportunity for
supervisors and their employees to regularly communicate about goals, how well those
goals should be met, how well the goals are being met and what must be done to continue
to meet (or change) those goals. The employee is rewarded in some form for meeting
performance standards, or embarks on a development plan with the supervisor in order to
improve performance.
Policies and Procedures (to guide behaviors in the workplace)
Policies help ensure that behaviors in the workplace conform to federal and state laws,
and also to expectations of the organization. Often, policies are applied to specified
situations in the form of procedures. Personnel policies and procedures help ensure that
employee laws are followed (e.g., laws such as the Americans with Disabilities Act,
Occupational Health and Safety Act, etc.) and minimize the likelihood of costly
litigation. A procedure is a step-by-step list of activities required to conduct a certain
task. Procedures ensure that routine tasks are carried out in an effective and efficient
fashion.
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Relationship between planning and controlling
Planning and controlling are two separate functions of management, yet they are closely
related. The scope of activities if both is overlapping to each other. Without the basis of
planning, controlling activities becomes baseless and without controlling, planning
becomes a meaningless exercise. In absence of controlling, no purpose can be served by.
Therefore, planning and controlling reinforce each other. According to Billy Goetz,
“Relationship between the two can be summarized in the following points
In the present dynamic environment which affects the organization, the strong
relationship between the two is very critical and important. In the present day
environment, it is quite likely that planning fails due to some unforeseen events. There
controlling comes to the rescue. Once controlling is done effectively, it gives us stimulus
to make better plans. Therefore, planning and controlling are in separate functions of a
business enterprise.
Quality control
Quality control is a process employed to ensure a certain level of quality in a product or
service. It may include whatever actions a business deems necessary to provide for the
control and verification of certain characteristics of a product or service. The basic goal
of quality control is to ensure that the products, services, or processes provided meet
specific requirements and are dependable, satisfactory, and fiscally sound.
Essentially, quality control involves the examination of a product, service, or process for
certain minimum levels of quality. The goal of a quality control team is to identify
products or services that do not meet a company’s specified standards of quality. If a
problem is identified, the job of a quality control team or professional may involve
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stopping production temporarily. Depending on the particular service or product, as well
as the type of problem identified, production or implementation may not cease entirely.
Usually, it is not the job of a quality control team or professional to correct quality issues.
Typically, other individuals are involved in the process of discovering the cause of
quality issues and fixing them. Once such problems are overcome, the product, service,
or process continues production or implementation as usual.
Quality control can cover not just products, services, and processes, but also people.
Employees are an important part of any company. If a company has employees that don’t
have adequate skills or training, have trouble understanding directions, or are
misinformed, quality may be severely diminished. When quality control is considered in
terms of human beings, it concerns correctable issues. However, it should not be
confused with human resource issues.
Often, quality control is confused with quality assurance. Though the two are very
similar, there are some basic differences. Quality control is concerned with the product,
while quality assurance is process–oriented.
Even with such a clear-cut difference defined, identifying the differences between the
two can be hard. Basically, quality control involves evaluating a product, activity,
process, or service. By contrast, quality assurance is designed to make sure processes are
sufficient to meet objectives. Simply put, quality assurance ensures a product or service is
manufactured, implemented, created, or produced in the right way; while quality control
evaluates whether or not the end result is satisfactory.
I. Organization Control includes any process designed to assure that organization plans
are carried out the way they were designed.
b. Thus, the duty for establishment and analysis of control system results developed
primarily as an accounting function.
c. During the past decade, control systems have moved from strictly quantitative in
nature to both quantitative and qualitative in nature. i.e.; From performance bonuses
based on bottom-line net income to efforts that generate increased satisfaction of
customers with the quality of product services
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II. The contemporary attitude of control and control systems is that such control efforts
should motivate people toward desired organizational behavior and not promote
dysfunctional behavior.
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multivariate control chart can be used to acquire more useful information about a process
or activity when more than one characteristic is monitored at once.
Upper and lower control limits (three standard deviations from the
short-term process average).
Horizontal axis that identifies observations and preserves the time order
of their collection.
SPC charts are used to identify points that differ from the process average as well as to
reveal shifts in the process. If the points (observations) in a chart fall within the upper and
lower limits then the process is considered to be in statistical control. If an observation
falls outside of the control limits or a run is detected in the data then the process is
considered to be out of control. (A run is a series of consecutive points above or below
the center line). An investigator tries to discover the source of variation and determine a
remedy by evaluating
A control chart can also be used to evaluate the non-financial aspects of various processes
and activities (i.e. cycle time, schedule attainment, machine availability, defect rate, etc.).
Performance measurement is a recurring part of the accounting function. Employees in
this area should have an understanding of the control chart and how they can help in
evaluating performance.
Administrative processes, especially repetitive ones, are also candidates for SPC (i.e.
payroll, accounts payable, accounts receivable). If SPC is used, personnel would gain a
greater understanding of the natural variability in the processes and of how reducing
variation could result in better services.
A multivariate control chart should be used to obtain more complete information about
the state of control when more than one variable is being measured simultaneously. The
purpose of this chart is to determine if the variation present in a process is attributable to
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unusual influences. This chart measures several variables at once and sends out a signal
when the relationship among the variables changes unexpectedly.
Three main differences occur between multi- and univariate control charts:
Both multivariate and univariate charts should be used together because they complement
each other. The univariate chart signals when an observation falls outside of the upper
and lower control limits. The multivariate chart sends out a signal when an imbalance
exists among the variables. This shows that when multiple variables are concurrently
monitored for the same process or activity, the best and most complete information is
generated when using the two charts in conjunction with one another.
May detect subtle changes in the relationships among the variables that
would not be noticeable from separate univariate charts.
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Allows users to evaluate the system as a whole rather than the sum of
many individual parts.
Interpreting the chart: The most standard display actually contains two charts, one is
called an X-bar chart, the other is called an R chart.
In both line charts, the horizontal axis represents the different samples; the vertical axis
for the X-bar chart represents the means for the characteristic of interest; the vertical axis
for the R chart represents the ranges. For example, suppose we wanted to control the
diameter of piston rings that we are producing. The center line in the X-bar chart would
represent the desired standard size (e.g., diameter in millimeters) of the rings, while the
center line in the R chart would represent the acceptable (within-specification) range of
the rings within samples; thus, this latter chart is a chart of the variability of the process
(the larger the variability, the larger the range). In addition to the center line, a typical
chart includes two additional horizontal lines to represent the upper and lower control
limits (UCL, LCL, respectively); we will return to those lines shortly. Typically, the
individual points in the chart, representing the samples, are connected by a line. If this
line moves outside the upper or lower control limits or exhibits systematic patterns across
consecutive samples then a quality problem may potentially exist.
The types of charts are often classified according to the type of quality characteristic that
they are supposed to monitor: there are quality control charts for variables and control
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charts for attributes. Specifically, the following charts are commonly constructed for
controlling variables:
• X-bar chart. In this chart the sample means are plotted in order to control the
mean value of a variable (e.g., size of piston rings, strength of materials, etc.).
• R chart. In this chart, the sample ranges are plotted in order to control the
variability of a variable.
• S chart. In this chart, the sample standard deviations are plotted in order to
control the variability of a variable.
• S**2 chart. In this chart, the sample variances are plotted in order to control the
variability of a variable.
For controlling quality characteristics that represent attributes of the product, the
following charts are commonly constructed:
• C chart. In this chart (see example below), we plot the number of defectives (per
batch, per day, per machine, per 100 feet of pipe, etc.). This chart assumes that
defects of the quality attribute are rare, and the control limits in this chart are
computed based on the Poisson distribution (distribution of rare events).
• U chart. In this chart we plot the rate of defectives, that is, the number of
defectives divided by the number of units inspected (the n; e.g., feet of pipe,
number of batches). Unlike the C chart, this chart does not require a constant
number of units, and it can be used, for example, when the batches (samples) are
of different sizes.
• Np chart. In this chart, we plot the number of defectives (per batch, per day, per
machine) as in the C chart. However, the control limits in this chart are not based
on the distribution of rare events, but rather on the binomial distribution.
Therefore, this chart should be used if the occurrence of defectives is not rare
(e.g., they occur in more than 5% of the units inspected). For example, we may
use this chart to control the number of units produced with minor flaws.
• P chart. In this chart, we plot the percent of defectives (per batch, per day, per
machine, etc.) as in the U chart. However, the control limits in this chart are not
based on the distribution of rare events but rather on the binomial distribution (of
proportions). Therefore, this chart is most applicable to situations where the
occurrence of defectives is not rare (e.g., we expect the percent of defectives to be
more than 5% of the total number of units produced).
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impossible. For example, the number of customer complaints or product returns may only
be available on a monthly basis; yet, you want to chart those numbers to detect quality
problems. Another common application of these charts occurs in cases when automated
testing devices inspect every single unit that is produced. In that case, you are often
primarily interested in detecting small shifts in the product quality (for example, gradual
deterioration of quality due to machine wear). The CUSUM, MA, and EWMA charts of
cumulative sums and weighted averages discussed below may be most applicable in those
situations.
as the sigma control limits discussed earlier, the runs rules are based on "statistical"
reasoning. For example, the probability of any sample mean in an X-bar control chart
falling above the center line is equal to 0.5, provided (1) that the process is in control
(i.e., that the center line value is equal to the population mean), (2) that consecutive
sample means are independent (i.e., not auto-correlated), and (3) that the distribution of
means follows the normal distribution. Simply stated, under those conditions there is a
50-50 chance that a mean will fall above or below the center line. Thus, the probability
that two consecutive means will fall above the center line is equal to 0.5 times 0.5 = 0.25.
Accordingly, the probability that 9 consecutive samples (or a run of 9 samples) will fall
on the same side of the center line is equal to 0.5**9 = .00195. Note that this is
approximately the probability with which a sample mean can be expected to fall outside
the 3- times sigma limits (given the normal distribution, and a process in control).
Therefore, you could look for 9 consecutive sample means on the same side of the center
line as another indication of an out-of-control condition. Refer to Duncan (1974) for
details concerning the "statistical" interpretation of the other (more complex) tests.
Zone A, B, C. Customarily, to define the runs tests, the area above and below the chart
center line is divided into three "zones."
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By default, Zone A is defined as the area between 2 and 3 times sigma above and below
the center line; Zone B is defined as the area between 1 and 2 times sigma, and Zone C is
defined as the area between the center line and 1 times sigma.
9 points in Zone C or beyond ( on one side of central line ). If this test is positive (i.e.,
if this pattern is detected), then the process average has probably changed. Note that it is
assumed that the distribution of the respective quality characteristic in the plot is
symmetrical around the mean. This is, for example, not the case for R charts, S charts, or
most attribute charts. However, this is still a useful test to alert the quality control
engineer to potential shifts in the process. For example, successive samples with less-
than-average variability may be worth investigating, since they may provide hints on how
to decrease the variation in the process.
6 points in a row steadily increasing or decreasing. This test signals a drift in the
process average. Often, such drift can be the result of tool wear, deteriorating
maintenance, improvement in skill, etc. (Nelson, 1985).
14 points in a row alternating up and down. If this test is positive, it indicates that two
systematically alternating causes are producing different results. For example, you may
be using two alternating suppliers, or monitor the quality for two different (alternating)
shifts.
2 out of 3 points in a row in Zone A or beyond. This test provides an "early warning"
of a process shift. Note that the probability of a false-positive (test is positive but process
is in control) for this test in X-bar charts is approximately 2%.
4 out of 5 points in a row in Zone B or beyond. Like the previous test, this test may be
considered to be an "early warning indicator" of a potential process shift. The false-
positive error rate for this test is also about 2%.
15 points in a row in Zone C (above and below the center line). This test indicates a
smaller variability than is expected (based on the current control limits).
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8 points in a row in Zone B, A, or beyond, on either side of the center line (without
points in Zone C). This test indicates that different samples are affected by different
factors, resulting in a bimodal distribution of means. This may happen, for example, if
different samples in an X-bar chart where produced by one of two different machines,
where one produces above average parts, and the other below average parts.
Learning
Controlling is a vital part in management and it is done to run the business activities
accordingly to reach a business purpose. we will finish the discussion on controlling by
stating our learning from this report.
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