1. RISK MANAGEMENT Topic:Managing Quality Risk through control
chart NewGate India Hyderabad, Andhra Pradesh- 500038 Website:
www.newgate.in Email: [email protected] Slideshare URL : 1
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2. Is Risk a symbol of danger or symbol of opportunityAnswer:
Both
3. Risk ManagementRiskUncertainty of outcomeTerminologiesPure
Risk- Always leads to lossSpeculative Risk- May Result in loss or
GainStatic Risk- Results in lossDynamic Risk- May Result in loss or
GainAcceptable RiskNon Acceptable Risk
4. Control Charts for Variables
5. Types of Risks1. Material Risk- Building,Plant &
Machinery, Furniture,Fixtures,fittings,Stocks.2. Consequential
Risk- Loss of production,Loss of profit,Loss of market,Good will.3.
Social Risk4. Legal Risk- Product liability,Public liability.5.
Political Risk- Subsidies,Sanctions etc.
6. Best Practice Risk Management Framework for Risk Management
can be benchmarked in terms of: Policies Methodologies Resources
6
7. Risk Evaluation Arrange them in order of priority Provide
information for deciding the most appropriate way of handling.
Ranking risks according to : 1. Frequency of loss 2. Potential
severity of loss.
8. Risk Analysis Risk and Human behavior looks into psychology
of risk. How others look at the risk? How they behave in the face
of risk? How they behave in groups? Perception of Risk.
9. Risk analysis is to be carried out with properperception of
risk of risk and cost involved inAnalysis.Not to stick to one
methodUnderstand company and industryShould be financially
reasonableAccurate record keepingAmount of imagination of
required
10. Risk Reduction / Loss Prevention1. Reduce probability of
loss and its severity.2. Most important for PM process.3. Risk
Reduction / Prevention can be from Loss preventionEnsuring
SafetyFire protection / DetectionEnvironmental protection
11. Variation It is the measure of deviation from mean/average
value Variation may be quite large or very small. If variation is
very small, it may appear that items are identical, but precision
instruments will show differences.
12. Categories of variation Within-piece variation One portion
of surface is rougher than another portion. A piece-to-piece
variation Variation among pieces produced at the same time.
Time-to-time variation Service given early would be different from
that given later in the day.
13. Source of variation Equipment Tool wear, machine vibration,
Material Raw material quality Environment Temperature, pressure,
humadity Operator Operator performs- physical & emotional
14. Control Chart Viewpoint Variation due to Common or chance
causes Assignable causes Control chart may be used to discover
assignable causes
15. Run chart - without any upper/lower limits
Specification/tolerance limits Control limits - statistical
16. Control chart functions Control charts are powerful aids to
understanding the performance of a process over time. Noise Input
Output PROCESS Whats causing variability?
17. Control charts identifyvariation Chance causes - common
cause inherent to the process or random and not controllable if
only common cause present, the process is considered stable or in
control Assignable causes - special cause variation due to outside
influences if present, the process is out of control
18. Types of Data Continuous data Product characteristic that
can be measured Length, size, weight, height, time, velocity
Discrete data Product characteristic evaluated with a discrete
choice Good/bad, yes/no
19. Control chart for variables Variables are the measurable
characteristics of a product or service. Measurement data is taken
and arrayed on charts.
20. Control charts for 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. S2 chart In this chart, the sample
variances are plotted in order to control the variability of a
variable.
21. Control chart components Centerline shows where the process
average is centered or the central tendency of the data Upper
control limit (UCL) and Lower control limit (LCL) describes the
process spread
22. The Control Chart MethodX bar Control Chart:UCL = XDmean +
A2 x RmeanLCL = XDmean - A2 x RmeanCL = XDmean R Control Chart: UCL
= D4 x Rmean LCL = D3 x Rmean CL = Rmean Capability Study: PCR =
(USL - LSL)/(6s); where s = Rmean /d2
23. Control Chart Examples UCL Variations Nominal LCL Sample
number
24. Determine trial centerline The centerline should be the
population mean, Since it is unknown, we use X Double bar, or the
grand average of the subgroup averages. m X i X i 1 m
25. UCL & LCL calculation UCL X 3LCL X 3 standard
deviation
26. Determining an alternative value forthe standard deviation
m R i R i 1 m UCL X A 2 R LCL X A 2 R
28. Calculation From Table above: Sigma X-bar = 50.09 Sigma R =
1.15 m = 10 Thus; X-Double bar = 50.09/10 = 5.009 cm R-bar =
1.15/10 = 0.115 cmNote: The control limits are only preliminary
with 10 samples.It is desirable to have at least 25 samples.
37. Revise the chartsIn certain cases, control limits are
revisedbecause: 1. out-of-control points were included in the
calculation of the control limits. 2. the process is in-control but
the within subgroup variation significantly improves.
38. The Normal Distribution = Standard deviation Mean -3 -2 -1
+1 +2 +3 68.26% 95.44%LSL USL 99.74% -3 +3 CL
39. 34.13% of data lie between and 1 above the mean (). 34.13%
between and 1 below the mean. Approximately two-thirds (68.28 %)
within 1 of the mean. 13.59% of the data lie between one and two
standard deviations Finally, almost all of the data (99.74%) are
within 3 of the mean.
40. Normal Distribution Review Define the 3-sigma limits for
sample means as follows: 3 3(0.05) Upper Limit 5.01 5.077 n 5 3
3(0.05) Lower Limit 5.01 4.943 n 5 What is the probability that the
sample means will lie outside 3-sigma limits? Note that the 3-sigma
limits for sample means are different from natural tolerances which
are at 3
41. Common Causes
42. Process Out of Control The term out of control is a change
in the process due to an assignable cause. When a point (subgroup
value) falls outside its control limits, the process is out of
control.
43. Assignable Causes Average (a) Mean Grams
44. Assignable Causes Average (b) Spread Grams
45. Assignable Causes Average (c) Shape Grams
46. Improvement
47. Chart zones Based on our knowledge of the normal curve, a
control chart exhibits a state of control when: Two thirds of all
points are near the center value. The points appear to float back
and forth across the centerline. The points are balanced on both
sides of the centerline. No points beyond the control limits. No
patterns or trends.
48. What Is Six Sigma?Sigma is a letter Degree of variation; in
the Greek Level of performance in terms of defects; Alphabet
Statistical measurement of process capability; Benchmark for
comparison; Process improvement methodology; It is a Goal; Strategy
for change; A commitment to customers to achieve an acceptable
level of performance 48
49. Six Sigma Definitions Business Definition A break through
strategy to significantly improve customer satisfaction and
shareholder value by reducing variability in every aspect of
business. Technical Definition A statistical term signifying 3.4
defects per million opportunities. 49
50. Sigma Defects Per Million Rate ofLevel Opportunities
Improveme nt 1 690,000 2 308,000 2 times 3 66,800 5 times 4 6,210
11 times 5 230 27 times 6 3.4 68 times 50
51. Six Sigma Project MethodologyProject Phases Define Measure
Analyze Improve Control Identify, Collect data Analyze data,
Improvement Establish evaluate and on size of the establish and
strategy standards to select projects selected confirm the Develop
ideas maintain for problem, vital few to remove root process;
improvement identify key determinants causes Design the Set goals
customer of the Design and controls, Form teams. requirements,
performance. carry out implement and Determine key Validate
experiments, monitor. product and hypothesis Optimize the Evaluate
process process. financial characteristic. Final solutions impact
of the project 51
52. Learning Outcome1. Risk can fixed only when it is
scalable2. More than one form of risk can be present in a project3.
100% assurance on risk control can be guranteed4. Reduction in Risk
automatically enhances the quality of product
53. PSGIM, Coimbatore E-procurement system of Honeywell &
Vedanta BENCHMARK 2 0 1 1 Questions Please ???? 53 Fri 25 Feb