1. Low Cost: providing low cost products and controlling costs across the board. 

2. Quality: providing high-quality products, focus is on product and process quality. 

3. Flexibility: providing a wide variety of products; how fast a firm can produce. 

4. Delivery: providing products reliably and quickly. 

5. Service: providing "value-added" service; how products are delivered and supported.

Variables: quality characteristics are measurable and are expressed on a numerical scale. Continuous metrics.

Attributes: quality characteristics classified as being either conforming or non-conforming. Characteristics which are countable. 

1. Nominal: when data variables are simple labels used to identify an ATTRIBUTE of the element. Numerical values NOT involved. 

2. Ordinal: when the data has properties of nominal data AND ranks the observations. 

3. Interval: when the data have properties of ordinal data AND a fixed unit of measurement. EX: temperature.

4. Ratio: when the data has properties of interval AND a natural zero exists. 

Nominal and ordinal are ATTRIBUTES while ratio and interval are VARIABLES.

Defect: a quality characteristic that does NOT meet certain standards. Nonconformity or blemish. 

Defective: an item that is deemed nonconforming.

Traditional Costs: scrap, rework, returns. 

Hidden Costs: time, inventory, meetings.

Opportunity Costs: lost sales, lost capacity, damaged reputation.

-Prevention Costs: incurred in planning, implementing and maintaining a quality system. They include costs associated with making the product right the first time. 

-Appraisal Costs: associated with measuring, evaluating or auditing components. Dealing with the inspection and test of incoming materials. 

-Internal Failure Costs: incurred when products, components, materials and service fail to meet quality requirements prior to the transfer of ownership to the customer. Include scrap and rework costs, labor and overhead.

-External Failure Costs: incurred when the product does not perform satisfactorily after ownership is transferred to the customer. Customer dissatisfaction.

Over time, we should minimize total quality costs by increasing prevention and appraisal while decreasing the failure cost.

The quality loss function is that as long as the production quality characteristic is within certain specification limits or tolerances, no loss is incurred. Outside these specifications, the loss takes form. 

It is not good enough to just be within spec, you must be on-target. Anytime you are not on-target, there is a cost associated. Desire to be on-target rather than within spec. lll

Six Sigma is DIFFERENT to different people. It can serve as a philosophy, methodology, and a metric. It represents a vision for improvement in a philisophical view. It believes that for EVERY bad outcome, there is a cost associated. 

-Six Sigma is the goal, only 3.4 defects per milion. 

-Highly disciplined process that focuses on developing and delivering near-perfect products consistently. 

-Achieves world class standards.

-Seen as a toolbox that contains a coherent set of tools. 

Six Sigma as a metric: meant that when the process is centered, the customer's specs are 6 standard deviations from the mean. 

Six Sigma as a methodology: provides for logical, sequential structure for driving process improvement. Road map for when and where to apply tools. 

Six Sigma as a philosophy: the pursuit for operational excellence. Provides vision, focus and direction for the company. 

3 Reasons:

1. Compounding nature of multiple processes

2. Process shifting

3. Multiple vendors

Recognize: the functional problems that link to internal or external customers' complaints. 

Define: the processes and problems that contribute to the functional problems. 

Lean manufacturing is about eliminating and driving-out waste. 

Six Sigma is about driving out methodology. 

1. Check Sheets

2. Pareto Diagrams

3. Flow Charts

4. Cause and Effect Diagrams

5. Histograms

6. Scatterplots

7. Control Charts

8. Process Maps

Helps prioritize problems by arranging them in decreasing order of importance. Help companies decide on the order in which they should address problems. 

Identifies the VITAL FEW form the TRIVIAL MANY. 

The relationship between two variables. Used as follow-ups to a cause-and-effect analysis to determing whether a stated cause truly does impact the quality characteristic. 

Helps decide to set a controllable variable to achieve a desired level of the output characteristics. 

   Distinguish special causes of variation from common causes of variation. 

Plots a selected quality characteristic. 

A flow-chart without inputs and outputs added to it so that we can attach cause and effect. 

Deals with random variables that can take on a finite or countably infinite number of values. 

-Number of defectives in a month's production. 

-Number of defects in a unit. 

-Number of machine breakdowns per month. 

-Number of employees absent in a quarterly period.

Continuous random variables may assume an infinite number of values over a finite or infinite range. 

EX: length of a part, diameter of a shape, thickness, oven temperature.