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• Quality


  • The characteristics of a product or service that bear on its ability to satisfy stated or implied needs
  • A product or service free of deficiencies
• Quality for Mercedes Benz


  • Quality of design - the degree to which quality characteristics are designed into the product
  • Involves designing quality characteristics into a product or service
• Dimensions of quality for manufactured products

  • Performance - The basic operating characteristics of a product
  • Features - The "extra" items added to the basic features
  • Reliability: The probability that a product will operate properly within an expected time frame
  • Conformance: The degree to which a product meets preestablished standards
  • Durability: The probability that a product will operate properly within an expected time frame
  • Serviceability: The ease of getting repairs, the speed of repairs, and the courtesy and competence of the repair person
  • Aesthetics: How a product looks, feels, sounds, smells, or tastes
  • Safety: Assurance that the customer will not suffer injury or harm from a product
• Dimensions of quality for services

  • Time and timeliness: How long must a customer wait for service, and is it completed on time?
  • Completeness: Is everything the customer asked for provided?
  • Courtesy: How are customers treated by employees?
  • Consistency: Is the same level of service provided to each customer each time?
  • Accessibility and convenience: How easy is it to obtain the service?
  • Accuracy: Is the service performed right every time?
  • Responsiveness: How well does the company react to unusual situations, which can happen frequently in a service company?
• Quality Management System (QMS)


  Strategy to achieve quality throughout the organization to make sure that products and services have the quality they have been designed for
• William Edwards Deming


  He developed courses during World War II to teach statistical quality-control techniques to engineers and executives of companies that were military suppliers; after the war he began teaching statistical quality control to Japanese companies, initiating their quality movement
• W. E. Deming's 14 Points


  • The 14 points developed by Deming for quality management
• Quality Tools


  • The various tools used in quality management
• Total Quality Management (TQM)


  A customer-oriented, leadership, strategic planning, employee responsibility, continuous improvement, cooperation, statistical methods, and training and education approach to quality management
• Total Quality Management (TQM) Principles

  • Quality can and must be managed
  • The customer defines quality, and customer satisfaction is the top goal; it is a requirement and is not negotiable
  • Management must be involved and provide leadership
  • Continuous quality improvement is "the" strategic goal, which requires planning and organization
  • Quality improvement is the responsibility of every employee; all employees must be trained and educated to achieve quality improvement
  • Quality problems are found in processes, and problems must be prevented, not solved
  • The quality standard is "no defects"
  • Quality must be measured; improvement requires the use of quality tools, and especially statistical process control
• Inventory Management


  The process of tracking stock levels and the movement of goods, whether it be delivering raw materials to manufacturers or fulfilling orders for finished products
• Inventory


  • A stock of items kept by an organization to meet internal or external customer demand
• Inventory Costs


  • Carrying costs
  • Ordering costs
  • Shortage costs
• Carrying Costs


  The costs of holding items in inventory
• Ordering Costs


  The costs associated with replenishing the stock of inventory being held
• Shortage Costs


  Also referred to as stockout costs, occur when customer demand cannot be met because of insufficient inventory
• Inventory Control Systems


  • Continuous (or fixed-order-quantity) system
  • Periodic (or fixed-time-period) system
• Continuous (or fixed-order-quantity) system


  A constant amount is ordered when inventory declines to a predetermined level
• Periodic Inventory Systems


  An order is placed for a variable amount after a fixed passage of time
• Facility


  A place where an organization or business operates
• Types of facilities


  • Heavy manufacturing facilities
  • Light-industry facilities
  • Retail and service facilities
• Heavy manufacturing facilities


  • Large, require a lot of space, and are expensive to construct
  • Perceived as cleaner plants
  • Smaller and usually less costly
• Facility location


  The process of identifying the best geographic location for a service or production facility
• Facility location


  • A critical and strategic decision which is responsible for smooth operations of an organization
• Conditions when the need for location selection may arise


  • When a business is newly started
  • When the existing business unit has outgrown its original facilities and expansion is not possible
  • When the volume of business or the extent of market necessitates the establishment of branches
  • When the lease expires and the landlord does not renew the lease
  • Other social or economic reasons
• Technology


  The application of scientific discoveries to the development and improvement of products and services and operations processes
• Technological innovation


  The discovery and development of new or improved products, services, or processes for producing or providing them
• Kinds of technology


  • Product and service technology
  • Process technology
  • Information technology
• Factors influencing facility location


  • Proximity to customers
  • Business climate
  • Quality of labour
  • Political risk
  • Government barriers
  • Environmental regulation
  • Host communities
  • Competitive advantage
  • Infrastructure
  • Supplier
• Location factor rating


  A method for identifying and weighting important location factors