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MGT510 - Total Quality Management - Lecture Handout 39

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Statistical Process Control (SPC) for Continual Quality Improvement


In a total quality setting, consistency and predictability are important. When a process runs consistently, efforts can begin to improve it by reducing process variations, of which there are two kinds:

  • Common-cause variation is the result of the sum of numerous small sources of natural variation that are always part of the process.
  • Special-cause variation is the result of factors that are not part of the process and that occur only in special circumstances, such as a shipment of faulty raw material or the involvement of anew, untrained operator.

The performance of a process that operates consistently can be recorded and plotted on a control chart such as the one in Figure below. The sources of the variation in this figure that fall within the control limits are likely to be common causes. The sources of variation in this figure that fall outside the control limits are likely to be special-causes sources. In making decisions about the process in question, it is important to separate common and special causes of variation.

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MGT520 - International Business - Lecture Handout 27

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Economic Rationales for Government Intervention:


There is probably no more effective pressure group than the unemployed, because no other group has the time and incentive to picket or write letters in volume to government representatives. By limiting imported goods, consumers are forced to consume more goods produced domestically. This helps boost domestic employment. However, placing restrictions on imports normally results in retaliatory tariffs by other countries. In such instances, domestic jobs related to exports may be lost. Even if import restrictions do increase domestic employment, there will still be costs to some people in the domestic society in the form of higher prices or higher taxes.

Infant Industry Argument:

The infant industry argument holds that a government should guarantee an emerging industry a large share of the domestic market until it becomes efficient enough to compete against imports. However, governments have a hard time identifying which industries merit protection. Furthermore, protection for any particular industry means higher costs for local consumers, which can reduce the profitability of other domestic industries.

Read more: MGT520 - International Business - Lecture Handout 27