Production and Operations Management CHAPTER FIVE

Acceptance sampling

the application of statistical techniques to determine whether a quantity of material should be accepted or rejected based on the inspection or test of a sample

Appraisal costs

costs incurred in assessing the level of performance attained by the firm's processes

Assignable causes of variation

any variation-causing factors that can be identified and eliminated


service or products characteristics that can be quickly counted for acceptable performance

Black Belt

An employee who reaches the highest level of training in a Six Sigma Program and spends all of his or her time teaching and leading teams with their projects


a chart used for controlling the number of defects when more than one defect can be present in a service or product

Common causes of variation

the purely random, unidentifiable sources of variation that are unavoidable with the current process

Continuous improvement

the philosophy of continually seeking ways to improve processes based on a Japanese concept called kaizen

Control chart

a time-ordered diagram that is used to determine whether observed variations are normal


any instance when a process fails to satisfy its customer

Employee empowerment

an approach to teamwork that moves responsibility for decisions farther down the organizational chart - to the level of the employee actually doing the job

External failure costs

costs that arise when a defect is discovered after the customer has received the service or product

Green Belt

An employee who achieved the first level of training in a Six Sigma program and spends part of his or her time teaching and helping teams with their projects

Internal failure costs

costs resulting from defects that are discovered during the production of a service or product

ISO 9000:2000

a set of standards governing documentation of a quality program

ISO 14000:2000

documentation standards that require participating companies to keep track of their raw materials use and their generation, treatment, and disposal of hazardous wastes

Malcolm Baldrige National Quality Award

an award named for the late secretary of commerce, who was a strong proponent of enhancing quality s a means of reducing the trade deficit; the award promotes, recognizes, and publicizes quality strategies and achievements

Master Black Belt

Full time teachers and mentors to several black belts

Nominal value

a target for design specification


a chart used for controlling the proportion of defective services or products generated by the process

Plan-do-study-act cycle

a cycle, also called the Deming Wheel, used by firms actively engaged in continuous improvement to train their work teams in problem solving

Prevention costs

costs associated with preventing defects before they happen

Process capability

the ability of the process to meet the design specifications for a service or product

Process capability index, Cpi

an index that measures the potential for a process to generate defective outputs relative to either upper or lower specifications

Process capability ratio, Cp

the tolerance width divided by 6 standard deviations (process variability)


a term used by customers to describe their general satisfaction with a service or product

Quality at the source

a philosophy whereby defects are caught and corrected where they are created

Quality circles

another name for problem-solving teams; small groups of supervisors and employees who meet to identify, analyze, and solve process and quality problems

Quality engineering

an approach originated by Genichi Taguchi that involves combining engineering and statistical methods to reduce costs and improve quality by optimizing product design and manufacturing processes

Quality loss function

the rationale that a service or product that barely conforms to the specifications is more like a defective service or product than a perfect one


a chart used to monitor process variability

Sample size

a quantity of randomly selected observations of process outputs

Sampling plan

a plan that specifies a sample size, the time between successive samples, and decision rules that determine when action should be taken

Self-managing team

a small group of employees who work together to produce a major portion, or sometimes all, of a service or product

Six Sigma

a comprehensive and flexible system for achieving, sustaining, and maximizing business success by minimizing defect and variability in processes

Special-purpose teams

groups that address issues of paramount concern to management, labor, or both

Statistical process control (SPC)

the application of statistical techniques to determine whether a process is delivering what the customer wants


small groups of people who have a common purpose, set their own performance goals and approaches, and hold themselves accountable for success


an allowance above or below the nominal value

Total quality management (TQM)

a philosophy that stresses three principles for achieving high levels of process performance and quality: customer satisfaction, employee involvement, and continuous improvement in performance

Type I error

an error that occurs when the employee concludes that the process is out of control based on a sample result that falls outside the control limits, when in fact it was due to pure randomness

Type II error

an error that occurs when the employee concludes that the process is in control and only randomness is present, when actually the process is out of statistical control


service or products characteristics, such as weight, length, column, or time, that can be measured


a written guarantee that the producer will replace or repair defective parts or perform the service to the customer's satisfaction

x-bar chart

a chart used to see if the process is generating output on average consistent with a target value management has set for the process or whether its current performance, with respect to the average of the performance measure, is consistent with past perfor