IIBM Semester-II Exam papers: Quality Control

Examination Paper: Quality Management

IIBM Institute of Business Management 7

IIBM Institute of Business Management

Examination Paper MM.100

Quality Control

Section A: Objective Type (30 marks)

· This section consists of Multiple choices/Fill in the blanks & Short Answer type questions.

· Answer all the questions.

· Part One questions carries 1 mark each & Part Two questions carry 5 marks each.

Part One:

Multiple Choices:

1. A curve that shows the amount inspected by both the consumer and the producer for different

percent nonconforming values.

a. ASN curve

b. ATI curve

c. AOQ curve

d. None of the above

2. The producer’s risk is represented by the symbols:

a. Alpha

b. Beta

c. Gamma

d. None of the above

3. The International Committee of Weights and Measures revised the metric system in:

a. 1970

b. 1960

c. 1950

d. 1999

4. ASRS stands for……………………………………………………………………..

5. A recent survey of retail customers by the ……………………………………………..

6. A cause-and-effect diagram was developed by ………………………………………

7. Variables that exhibit gaps are called ………………………………

8. How many techniques used to discard data?

a. One

b. Two

c. Three

d. None of the above

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IIBM Institute of Business Management 8

9. Deviation charts are also called:

a. Difference chart

b. Nominal chart

c. Target chart

d. All of the above

10. Dodge-Romig Tables developed by:

a. H.F. Dodge

b. H.G. Romig

c. H.K. Fleming

d. Both (a) & (b)

Part Two:

1. Write short note on “Group Chart”.

2. What is “Measures of Dispersion”?

3. What is “Collection of Data”?

4. Write short note on “Binomial Probability Distribution”.

END OF SECTION A

Section B: Caselets (40 marks)

· This section consists of Caselets.

· Answer all the questions.

· Each Caselet carries 20 marks.

· Detailed information should form the part of your answer (Word limit 150 to 200 words).

Caselet 1

It is 7:00 a.m. and the siren sounds high at Kandivli (a suburb of North Mumbai) plant of Mahindra &

Mahindra’s (M&M) Tractor division, signaling the starting time of the morning shift. Hardly any

workers have turned up. Reporting late on duty is a norm for the workers here. Seldom does the

morning shift start before 7:30 a.m. During the day shift, it was an ominous scene to find workers

stretching out under the trees and relaxing during the working hours. The union leaders hung around

the factory without doing any work at all. A few days back, the workers in the night shift had beaten

up a milkman for creating a lot of noise in the week hours of the morning and thus, disturbing their

sleep during their working hours. Things were worse at the other plant of M&M in Nagpur. But this

was all in the 1980s. M&M has come a long way since then – it has won the most coveted Deming

prize for quality, and started a farming equipment assembling plant in the U.S.A. After the huge

success there, the company opened a second assembly plant and a distribution centre in Georgia.

Now, the company is in the process of establishing assembling units in Canada to locally produce and

market a range of low horsepower cab tractors with features such as AC heater (keeping in view the

cold weather conditions for the farmers there), personal stereo, and even a sun roof. It has also

acquired Jiangling Tractors in China, which it would use to develop low cost products suited to

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IIBM Institute of Business Management 9

plough deeper into the US farm equipment market. Now, the fourth largest tractor company in the

world, M&M, has four tractor plants in India (Mumbai, Nagpur, Rudrapur in Uttranchal, and Jaipur).

It has been maintaining its market leadership for the past two decades. During the late 1980s, the

company tried to apply TQM concepts such as quality circles without getting any success. M&M was

the market leader in the tractors segment at that time, but in view of the looming multinational threat

in the near future, its internal situation was very fragile. During 1990-94, the company started the use

of the statistical process control and tried to perform business process reengineering. Its journey

towards the Deeming prize was initiated in 1994, with the appointment of Prof. Yasutoshi Washio, a

Japanese expert, in the implementation of the Deeming guidelines. The same year, the company was

rechristened M&M Farm Equipment Sector (FES).

Initially, Prof. Washio was skeptical about the Indian companies and workers. He felt that the

Indian companies are more like the American companies, which feel that results are important. On the

other hand, for the Japanese, the process is more important. Moreover, he had serious doubts about

the attitude of the Indian workers with respect to teamwork – a Deeming prerequisite – as he felt that

Indian were individualistic. He has proved wrong by the M&M workers. In his own words, ‘The

Indians can be good team workers, much better than the young in Japan today and, in that sense,

perhaps, Deeming is better suited to Indian companies’. In the initial few years of interaction with the

management of FES, Washio found himself isolated due to disagreements on various fronts. Washio

had major difficulties in making most of the Indian companies understand the importance of

implementation over creating a perfect framework. In his own words, ‘Indians are very good with

framework and the big picture, but are poor with implementation. The kaizen is weak.’ Kaizen means

gradual, orderly, and continuous improvement in work processes. It took a while for Washio to make

the FES personnel understand that good kaizen hinges on implementation, so there is no need to

spend too much time creating a perfect framework. Once you start implementing these, the rest will

happen automatically. The FES created a team to implement the team to implementing the Deeming

guidelines. The team identified eleven key areas to be fulfilled:

1. Top management leadership and involvement

2. Creating and maintaining TQM frameworks

3. Quality assurance

4. Management system

5. Human resource development

6. Effective utilization of resources

7. Understanding TQM concepts and value

8. Use of scientific method

9. Organizational power

10. Relationship with stakeholders

11. Enabling the unique TQM activities

In addition, there is another Deming must-do: eliminate dependence on inspection to achieve quality

by building quality into the product in the first place. The system at FES earlier was that at the end of

the assembly process or at the customer’s place, there used to be a final inspection. If a product

showed serious flaws then, it was sent again to the shop floor. This wasted a lot of time and effort,

and it did not add to the improvement in the quality of the manufactured product. In order to change

this system, computers were installed on the shop floor for showing the standard operating procedure

(SOP) of a particular process to make the workers understand the various steps in a process. This

reduces the chances of human error and acts as a natural check. At the end of every complete process,

a check is performed by a trained worker, who also follows an SOP. Employee involvement is the

first step in ensuring the success of any quality initiative. At FES, the workers would dictate terms to

the shift supervisor by saying that they would not do different tasks on many machines. The

management took time to conceive them by giving them examples such as: if your wife can do

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IIBM Institute of Business Management 10

multiple tasks of cleaning the house, feeding the children, and washing the cloths, why can’t you do

the same? The workers were explained the multinational threats looming large. They were told that, if

they did not mend their ways, the company might shut down the factory, or even worse, a

multinational may take it over and would invariably lay off all the problem creating workers.

Examples of companies shut down in Mumbai due to the changed scenario were given. The entire

programme was termed ‘Ashwamedh’ and analogies were drawn from mythology and the current

competitive situation. This brought a complete transformation in the workforce that was now willing

to perform multiple tasks, double their productivity, and maintain shift discipline by reporting on

time. The workers were informed by the management about every difficulty faced by the company in

beating the competition in the market place. Some of the workers were sent with the marketing staff

to meet the farmers using the company’s product and facing problems. This was called ‘Operation

Hamla’. The workers came back chastised and sobered when they realized that a small mistake on the

shop floor could cost a farmer his season’s crop. The company even sent some of the union leaders

for short training courses in the USA and UK.

This sustained effort on part of the company has paid rich dividends. Costs are down by 15% and

the market share has risen by one percent to 27.3% (10% higher than its closest competitor), despite

an overall decline in the tractor demands. The break-even point for a new model of a tractor has

decreased to 30,000 -32,000 from the 54,000 tractors three years ago. The worker productivity levels

have increased by 100%. Tractor exports from the company have increased 100% over the past 10

years, with 70% to the USA alone. The quality of tractors has improved drastically with the number

of complaints per 1000 tractors dropping from 228 to 90. The rejection rate for components bought

from vendors, rejection and rework in machining, and rejection at final testing have all been brought

down to near zero levels. FES has introduced 15 new models in accordance with the requirements in

the international markets. The journey to world-class quality is not over yet. The company now aims

at matching the world benchmarks in productivity and quality to establish a cost leadership in the

Indian industry.

Questions:

1. If you were a part of the top management at M&M FES, how would you have involved the

workers in the Deming programme?

2. Do you think that M&M FES has a strategic quality management system in place?

Caselet 2

In 1965, a Yale University undergraduate student Frederick W. Smith wrote a term paper about the

passenger route systems used by most airfreight shippers, which he viewed as economically

inadequate. Smith wrote of the need for shippers to have a system designed specifically for airfreight

that could accommodate time sensitive shipments such as medicines, computer parts, and electronics.

In August 1971, following a stint in the military, Smith bought controlling interest in Arkansas. While

operating his new firm, Smith identified the tremendous difficulty in getting packages and other

airfreight delivered within 1 – 2 days. This dilemma motivated him to do the necessary research for

resolving the inefficient distribution system. Thus, the idea for Federal Express was born – a company

that revolutionized global business practices and now defines speed and reliability. Federal Express

was so named due to the patriotic meaning associated with the word ‘federal’, which suggested an

interest in nationwide economic activity. At that time, Smith hoped to obtain a contract with the

Federal Reserve Bank and, although the proposal was denied, he believed the name was a particularly

good one for attracting public attention and maintaining name recognition.

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IIBM Institute of Business Management 11

Company Growth

Though the company did not show a profit until July 1975, it soon became the premier carrier of

high-priority goods in the marketplace and the standard setter for the industry it established. In the

mid-1970s, Federal Express took a leading role in lobbying for air cargo deregulation that finally

came in 1977. These changes allowed Federal Express to use larger aircraft (such as Boeing 727s and

McDonnell-Douglas DC-10s) and spurred the company’s rapid growth. Today FedEx express has the

world’s largest all-cargo air fleet, including McDonnell-Douglas MD-11s and Airbus A-300s and A-

310s. The planes have a total daily lift capacity of more than 26.5 million pounds. In a 24-hour

period, the fleet travels nearly 500,000 miles while its couriers log 2.5 million miles a day- the

equivalent of 100 trips around the earth. The company entered its maturing phase in the first half of

the 1980s. Federal Express was well established. Competitors were trying to catch up with a company

whose growth rate was compounding at about 40% annually. In the fiscal year 1983, Federal Express

reported $1 billion in revenues, making American business history as the first company to reach that

financial hallmark inside 10 years of start-up without mergers or acquisitions.

Overseas Expansion

Following the first several international acquisitions, intercontinental operations began in 1984 with

service to Europe and Asia. The following year, FedEx marked its first regularly scheduled flight to

Europe. In 1988, the company initiated direct-scheduled cargo service to Japan. The acquisition of

Tiger International, Inc. occurred in February 1989. With the integration of the Flying Tigers network

on 7 August 1989, the company became the world’s largest full-service, All-cargo Airline, Included

in the acquisition were route to 21 countries, a fleet of Boeing 747 and 727 aircraft, facilities

throughout the world, and Tigers’ expertise in international airfreight. Federal Express obtained

authority to serve China through a 1995 acquisition from evergreen International Airlines. Under this

authority, Federal Express became the sole US-based, All-cargo carrier with aviation rights to the

world’s most populous nation. Since then, the company’s global reach has continued to expand,

resulting in an unsurpassed worldwide network. FedEx Express today delivers to customers in more

than 210 countries.

Evolving Identify

The first evolution of the company’s corporate identify came in 1994 when Federal Express officially

adopted ‘FedEx’ as its primary brand, taking a cue from its customers, who frequently referred to the

company by the shortened name. By that time, customers used the term as a verb, meaning, ‘to send

an overnight shipment’. It did not take long for the meaning to catch on, and today it is common

terminology to ‘FedEx’ a package. The second evolution came in 2000 when the company was

renamed ‘FedEx Express’ to reflect its position in the overall FedEx Corporation portfolio of services.

This also signified the expanding breadth of FedEx Express – specific service offerings as well as a

FedEx that was no longer just overnight delivery.

FedEx Firsts

Throughout its existence, FedEx has amassed an impressive list of ‘firsts’, most notably for leading

the industry in introducing new services for customers. Federal Express originated the Overnight

Letter and was

· the first transportation company dedicated to overnight package delivery,

· the first to offer next-day delivery by 10:30 a.m.,

· the first to offer Saturday delivery,

· the first express company to offer time define service for freight, and

· the first in the industry with money-back guarantees and free proof of performance – services that

now extend to its worldwide network.

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IIBM Institute of Business Management 12

Being a ‘first’ company resulted in many firsts for awards and honors, too. In 1990, Federal Express

became the first company to win the Malcolm Baldrige National Quality Award in the service

Category. It also received ISO 9001 registration for all of its worldwide operations in 1994, making in

the first global express transportation company to receive simultaneous system-wide certification.

Today, FedEx Express is the largest operating company in the FedEx family, handling about 3.2

million packages and documents every business day.

People-Service-Profit

Federal Express’s ‘people-service-profit’ philosophy guides management policies and actions. The

company has a well-developed and thoroughly deployed management evaluation system called SFA

(survey/feedback/action), which involves a survey of employees, analysis of each work group’s

results by the work group’s manager, and a discussion between the manager and the work group to

develop written action plans for the manager to improve and become more effective. Data from the

SFA process are aggregated at all levels of the organization for use in policymaking. Training of

front-line personnel is a responsibility of managers and ‘recurrency training’ is a widely used

instrument for improvement. Teams regularly assess training needs and a worldwide staff of training

professionals devices programs to address those needs. To aid these efforts, Federal Express has

developed an interactive video system for employee instruction.

An internal television network, accessible throughout the company, also serves as an important

avenue for employee education. Consistently included in listings of the best US companies to work

for, Federal Express has a ‘no lay-off’ philosophy, and its ‘guaranteed fair treatment procedure’ for

handling employee grievances is used as a model by firms in many industries. Employees can

participate in a program to qualify front-line workers for management positions. In addition, Federal

Express has a well-developed recognition program for team and individual contributions to company

performance. Over the last five years, at least 91% of the employees responded that they were ‘proud

to work for Federal Express’.

Service Quality Indicators

To spur progress toward its ultimate target of 100% customer satisfaction, Federal Express recently

replaced its old measure of quality performance-percent of on-time deliveries – with a 12 component

index that comprehensively describes how customers view its performance. Each item in the service

quality indicator (SQI) is weighted to reflect how significantly it affects the overall customer

satisfaction. Performance data are gathered with the company’s advanced computer and tracking

systems, including the Super Tracker, a hand-held computer used for scanning a shipment’s bar code

every time a package changes hands between pick-up and delivery. Rapid analysis of data from the

firm’s far-flung operations yields daily SQI reports transmitted to workers at all Federal Express sites.

The management meets daily to discuss the previous day’s performance and tracks weekly, monthly,

and annual trends. Analysis of data contained in the company’s more than 30 major database assist

the quality action teams (QATs) in locating the root causes of problems that surface in SQI reviews.

Extensive customer and internal data are used by cross-functional teams involved in the company’s

new product introduction process. To reach its aggressive quality goals, the company has set up one

cross-functional team for each service component in the SQI. A senior executive heads each team and

assures the involvement of front line employees, support personnel, and managers from all parts of

the corporation when needed. Two of these corporate-wide teams have a network of over 1,000

employees working on improvements. The SQI measurements are directly linked to the corporate

planning process, which begins with the CEO and the COO and an executive planning committee.

Service quality indicators from the basis on which corporative executives are evaluated. Individual

performance objectives are established and monitored. Executives’ bonuses rest upon the

performance of the whole corporation in meeting performance improvement goals. In the annual

employee survey, if employees do not rate management leadership at least as high as they rated them

the year before, no executive receives a year-end bonus. Employees are encouraged to be innovative

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IIBM Institute of Business Management 13

and to make decisions that advance quality goals. Federal Express provides employees with the

information and technology they need to continuously improve their performance. An example is the

digitally assisted dispatch system (DADS), which communicates to some 30,000 couriers through

screens in their vans. The system enables quick response to pick-up and delivery dispatches and

allows couriers to manage their time and routes with high efficiency. Since 1987, overall customer

satisfaction with Federal Express’s domestic service has averaged better than 95%, and its

international service has rated a satisfaction score of about 94%. In an independently conducted

survey of air-express industry customers, 53% gave Federal Express a perfect score, as compared

with 39% for the next-best competitor. The company has received 195 of nearly 600 businesses and

organizations have visited its facilities.

Questions:

1. What lessons can Indian companies take from FedEx?

2. What are the factors that have gone against India and why did FedEx not start its operations here?

END OF SECTION B

Section C: Practical Problems (30 marks)

· This section consists of Practical Problems.

· Answer all the questions.

· Each question carries 15 marks.

1. An electrician testing the incoming the voltage for a residential house obtains 5 readings: 115,

113, 121, 115, and 116. What is the average?

2. A single sampling plan is desired with a consumer’s risk of 0.10 of accepting 3.0%

nonconforming product and a producer’s risk of 0.05 of not accepting 0.7% nonconforming

product. Select the plan with the lowest sample size.

END OF SECTION C

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