Quality & Inventory Control - Ppt

7/27/2019 Quality & Inventory Control - Ppt

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1.) Product quality control (sometimes called

acceptance control) – relates to inputs or

outputs of the system; used when quality isevaluated with respect to a batch of existing

products or services.

Product quality control lends itself to

acceptance sampling procedures, in which

some portion of a batch of outgoing items (or

incoming materials) is inspected to ensurethat the batch meets specifications with

regard to the percentage of defective units

that will be tolerated in the batch.



2.) Process quality control – concerns

monitoring quality while the product or

service is being produced.

Under process control, periodic samples are

taken from a process and compared to apredetermined standard.

Process control relates to the control of the

equipment and processes used during the

production process.



Under process control, periodic samples are

taken from a process and compared to a

predetermined standard. If the sampleresults are acceptable, the process is

allowed to continue. If the sample results

are not acceptable, the process is halted and

adjustments are made to bring the machines

or processes back under control.



Acceptance sampling - is a method of

predicting the quality of a batch or a large

group of products from an inspection of asample or group of samples taken from the

batch. Acceptance sampling is used for one

of three basic reasons:

1.The potential losses or costs of passing

defective items are not great relative tothe cost of inspection; for example it

would not be appropriate to inspect every

match produced by a match factory.



2) Inspection of some items requires

destruction of the product being tested, as is

the case when testing prepared food items.

3) Sampling usually produces results more

rapidly than does a census.

If more than a certain number (determined

statistically) are found to be defective, theentire batch is rejected, as it is deemed to

have an unacceptably large percentage of

defective items.



Because of the possibility of making an

incorrect inference concerning the batch,

acceptance sampling always involves risks:

a)Producer’s risks – the risk the producer is

willing to take of rejecting the good batch.

b) Consumer’s risks – the risk of accepting abad batch.



The only method of simultaneously

lowering both of these risks is to increasethe sample size, which also increase theinspection costs.



Inventories

– quantity of raw materials, in-process

goods, or finished good on hand;

- serves as a buffer between different

rates of flow associated with the operating

system.



Raw material inventories serve as a buffer

between purchasing and production.

In-process inventories are used to buffer

differences in the rates of flow through the

various production processes.

Finished-goods inventories act as a buffer

between the final stage of production andshipping.



Inventories add flexibility to the operating

system and allow the organization to do the

following:1.) Purchase, produce, and ship in economic

lot sizes rather than in small jobs.

2.) Produce on a smooth, continuous basiseven if the demand for the finished product

or raw material fluctuates.

3.) Prevent major problems when forecasts of demand are in error or when unforeseen

slowdowns or stoppages in supply or

production occur.



Just-in-Time Inventory Control (JIT)

– was pioneered in Japan but has become

popular in the United States.

- Sometimes referred to as zero

inventory systems, stockless systems, or kanban systems. JIT is a philosophy for

production to ensure that the right items

arrive and leave as they are needed.



- Under JIT, organizations make smaller

and more frequent orders of raw materials.

- It is also called a demand pull system

because items are produced or ordered onlywhen they are needed by the next stage in

the production process.



Benefits of JIT System

1) Inventory levels are drastically lowered.

2)The time it takes products to go throughthe production facility is greatly reduced.

This enables the organization to be more

flexible and more responsive to changingcustomer demands.

3)Product/service quality is improved and

the cost of scrap is reduced becausedefective parts and services are discovered

earlier.



4) With smaller product batches, less space

is occupied by inventory and materials-

handling equipment. This also allowsemployees to work closer together, which

improves communication and teamwork.

In other words, by examining and solving

customer’s problems by supplying them with

exactly what they need, the company notonly improves its quality but also builds ties

to its customer base.



Tracking Inventory

A.) Bar-Code Technology

- Changed the way business track

inventory

- Bar coding has reduced errors in

tracking inventory

- Computer program recognizes the

information contained in the bar code and

automatically adds or subtracts the item

from inventory.



B.) Physical Inventory

- Involves counting the number of units

of inventory a company holds in stock.- Managers need to conduct physical

inventories because actual inventory is

often different from the level of inventorytracked.



Safety Stocks

– inventory maintained to accommodate

unexpected changes in demand and supplyand allow for variations in delivery time.

The optimal size of the safety stock isdetermined by the relative costs of an out-

of-stock item versus the costs of carrying the

additional inventory.

Quality & Inventory Control - Ppt

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