Handbook of Statistics.Vol.07.Quality Control and Reliability.(NH,1988)(494s).pdf

Preface

This is the seventh volume in the series 'Handbook of Statistics' started by the

late Professor P. R. Krishnaiah to provide comprehensive reference books in

different areas of statistical theory and applications. Each volume is devoted to

a particular topic in statistics; the present one is on 'Quality Control and Relia-

bility', a modern branch of statistics dealing with the complex problems in the

production of goods and services, maintenance and repair, and management and

operations. The accent is on quality and reliability in all these aspects.

The leading chapter in the volume is written by W. Edwards Deming, a pioneer

in statistical quality control, who spearheaded the quality control movement in

Japan and helped the country in its rapid industrial development during the post

war period. He gives a 14-point program for the management to keep a country

in the ascending path of industrial development.

Two main areas of concern in practice are the reliability of the hardware and

of the process control software. The estimation of hardware reliability and its uses

is discussed under a variety of models for reliability by R.A. Johnson in

Chapter 3, M. Mazumdar in Chapter 4, L. F. Pan in Chapter 15, H. L. Harter

in Chapter 22, A. P. Basu in Chapter 23, and S. Iyengar and G. Patwardhan in

Chapter 24. The estimation of software reliability is considered by F. B. Bastani

and C. V. Ramamoorthy in Chapter 2 and T. A. Mazzuchi and N. D. Singpur-

walla in Chapter 5.

The main concepts and theory of reliability are discussed in Chapters 10, 12,

13, 14 and 21 by F. Proschan in collaboration with P. J. Boland, F. Guess, R. E.

Barlow, G. Mimmack, E. E1-Neweihi and J. Sethuraman.

Chapter 6 by N. R. Chaganty and K. Joag-dev, Chapter 7 by B. W. Woodruff

and A. H. Moore, Chapter 9 by S. S. Gupta and S. Panchapakesan, Chapter 11

by M.C. Bhattacharjee and Chapter 16 by W.J. Padgett deal with some

statistical inference problems arising in reliability theory.

Several aspects of quality control of manufactured goods are discussed in

Chapter 17 by F. B. Alt and N. D. Smith, in Chapter 18 by B. Hoadley, in

Chapter 20 by M. CsOrg6 and L. Horv6th and in Chapter 19 by P. R. Krishnaiah

and B. Q. Miao.

All the chapters are written by outstanding scholars in their fields of expertise

and I wish to thank all of them for their excellent contributions. Special thanks

are due to Elsevier Science Publishers B.V. (North-Holland) for their patience and

cooperation in bringing out this volume.

C. R. Rao

Contributors

F. B. Alt, Dept. of Management Science & Stat., University of Maryland, College

Park, MD 20742, USA (Ch. 17)

F. B. Bastani, Dept. of Computer Science, University of Houston, University Park,

Houston, TX 77004, USA (Ch. 2)

A. P. Basu, Dept. of Statistics, University of Missouri-Columbia, 328 Math. Science

Building, Columbia, MO 65201, USA (Ch. 23)

M. C. Bhattacharjee, Dept. of Mathematics, New Jersey Inst. of Technology, Newark,

NJ 07102, USA (Ch. 11)

H. W. Block, Dept. of Mathematics & Statistics, University of Pittsburgh, Pittsburgh,

PA 15260, USA (Ch. 8)

P. J. Boland, Dept. of Mathematics, University College, Belfield, Dublin 4, Ireland

(Ch. 10)

R. E. Barlow, Operations Research Center, University of California, Berkeley, CA

94720, USA (Ch. 13)

N. R. Chaganty, Math, Dept., Old Dominion University, Hampton Blvd., Norfolk, VA

23508, USA (Ch. 6)

M. CsOrg6, Dept. of Mathematics & Statistics, Carleton University, Ottawa, Ontario,

Canada K1S 5B6 (Ch. 20)

W. Edwards Deming, Consultant in Statistical Studies, 4924 Butterworth Place,

Washington, DC 20016, USA (Ch. 1)

F. M. Guess, Department of Statistics, University of South Carolina, Columbia,

South Carolina 29208, USA (Ch. 12)

S. Gupta, Dept. of Statistics, Math./Science Building, Purdue University, Lafayette,

IN 47907, USA (Ch. 9)

H. L. Harter, 32 S. Wright Ave., Dayton, OH 45403, USA (Ch. 22)

B. Hoadley, Bell Laboratories, HP 1A-250, HolmdeL NJ 07733, USA (Ch. 18)

L. Horvhth, Bolyai Institute, Szeged University, Aradi Vertanuk tere 1, H-6720

Szeged, Hungary (Ch. 20)

S. Iyengar, Dept. of Statistics, Carnegie Mellon University, Pittsburgh, PA 15213,

USA (Ch. 24)

K. Joag-dev, Dept. of Mathematics, University of Illinois at Urbana-Champaign,

Urbana, IL 61801, USA (Ch. 6)

R. A. Johnson, Dept. of Statistics, 1210 West Dayton Street, Madison, WI 53706,

USA (Oh. 3)

xiii

xiv

Contributors

M. Mazumdar, Dept. of Industrial Engineering, University of Pittsburgh, Benedum

Hall 1048, Pittsburgh, PA 15260, USA (Ch. 4)

T. A. Mazzuchi, c/o N. D. Singpurwalla, Operations Research & Statistics, Geo

Washington University, Washington, DC 20052, USA (Ch. 5)

B. Miao, Dept. of Math. & Stat., University of Pittsburgh, Pittsburgh, PA 15260,

USA (Ch. 19)

G. M. Mimmack, c/o F. Proschan, Statistics Department, Florida State University,

Tallahassee, FL 32306, USA (Ch. 14)

A. H. Moore, AFIT/ENC, Wright-Patterson AFB, OH 45433, USA (Ch. 7)

E. E1-Neweihi, Dept. of Math., Stat. & Comp. Sci., University of Illinois, Chicago,

IL 60680, USA (Ch. 21)

W. J. Padgett, Math. & Stat. Department, University of South Carolina, Columbia,

SC 29208, USA (Ch. 16)

G. Patwardhan, Dept. of Mathematics, Pennsylvania State University at Altoona,

Altoona, PA 16603, USA (Ch. 24)

S. Panchapakesan, Mathematics Department, Southern Illinois University, Carbon-

dale, IL 62901, USA (Ch. 9)

L. F. Pau, 7 Route de Drize, CH 1227 Carouge, Switzerland (Ch. 15)

F. Proschan, Statistics Department, Florida State University, Tallahassee, FL 32306,

USA (Ch. 10, 12, 13, 14, 21)

C. V. Ramamoorthy, Dept. of Electrical Engineering & Comp. Sci., University of

California at Berkeley, Berkeley, CA 94720, USA (Ch. 2)

T. H. Savits, Dept. of Mathematics & Statistics, University of Pittsburgh, Pittsburgh,

PA 15260, USA (Ch. 8)

J. Sethuraman, Dept. of Statistics, Florida State University, Tallahassee, FL 32306,

USA (Ch. 22)

N. D. Singpurwalla, Operations Research & Statistics, George Washington Uni-

versity, Washington, DC 20052, USA (Ch. 5)

N. D. Smith, Dept. of Management Sci. & Stat., University of Maryland, College

Park, MD 20742, USA (Ch. 17)

B. Woodruff, Directorate of Mathematical & Inf. Service, AFOSR/NM, Bolling Air

Force Base, DC 20332, USA (Ch. 17)

P. R. Krishnaiah and C. R. Rao, eds., Handbook of Statistics, Vol. 7

Transformation of Westem Style of Management*

W. Edwards Deming

1. The crisis of Western industry

The decline of Western industry, which began in 1968 and 1969, a victim of

competition, has reached little by little a stage that can only be characterized as

a crisis. The decline is caused by Western style of management, and it will

continue until the cause is corrected. In fact, the decline may be ready for a nose

dive. Some companies will die a natural death, victims of Charles Darwin's

inexhorable law of survival of the fittest. In others, there will be awakening and

conversion of management.

What happened? American industry knew nothing but expansion from 1950 till

around 1968. American goods had the market. Then, one by one, many American

companies awakened to the reality of competition from Japan.

Little by little, one by one, the manufacture of parts and materials moves out

of the Western world into Japan, Korea, Taiwan, and now Brazil, for reasons of

quality and price. More business is carded on now between the U. S. and the

Pacific Basin than across the Atlantic Ocean.

A sudden crisis like Pearl Harbor brings everybody out in full force, ready for

action, even if they have no idea what to do. But a crisis that creeps in catches

its victims asleep.

2. A declining market exposes weaknesses

Management in an expanding market is fairly easy. It is difficult to lose when

business simply drops into the basket. But when competition presses into the

market, knowledge and skill are required for survival. Excuses ran out. By 1969,

the comptroller and the legal department began to take charge for survival, fight-

ing a defensive war, backs to the wall. The comptroller does his best, using only

visible figures, trying to hold the company in the black, unaware of the importance

* Parts of this Chapter are extracts fromthe author's book Out of the Crisis (Center for Advanced

Engineering Study, Massachusetts Institute of Technology, 1985).

w. Edwards Deming

for management of figures that are unknown and unknowable. The legal depart-

ment fights off creditors and predators that are on the lookout for an attractive

takeover. Unfortunately, management by the comptroller and the legal department

only brings further decline.

3. Forces that feed the decline

The decline is accelerated by the aim of management to boost the quarterly

dividend, and to maximize the price of the company's stock. Quick returns,

whether by acquisition, or by divestiture, or by paper profits or by creative

accounting, are self-defeating. The effect in the long run erodes investment and

ends up as just the opposite to what is intended.

A far better plan is to protect investment by plans and methods by which to

improve product and service, accepting the inevitable decrease in costs that accom-

pany improvement of quality and service, thus reversing the decline, capturing the

market with better quality and lower price. As a result, the company stays in

business and provides jobs and more jobs.

For years, price tag and not total cost of use governed the purchase of materials

and equipment.

Numerical goals and M.B.O. have made their contribution to the decline. A

numerical goal outside the capability of a system can be achieved only by impair-

ment or destruction of some other part of the company. Work standards more

than double costs of production. Worse than that, they rob people of their pride

of workmanship. Quotas of production are guarantee of poor quality. Exhorta-

tions are directed at the wrong people. They should be directed at the manage-

ment, not at the workers.

Other forces are still more destructive.

(1) Lack of constancy of purpose to plan product and service that will have

a market and keep the company in business, and provide jobs.

(2) Emphasis on short-term profits: short-term thinking (just the opposite from

constancy of purpose to stay in business), fed by fear of unfriendly takeover, and

by push from bankers and owners for dividends.

(3) Personal review system, or evaluation of performance, merit rating, annual

review, or annual appraisal, by whatever name, for people in management, the

effects of which are devastating.

(4) Mobility of management; job hopping from one company to another.

(5) Use of visible figures only for management, with little or no consideration

of figures that are unknown or unknowable.

Peculiar to industry in the Unites States:

(6) Excessive medical costs.

(7) Excessive costs of liability.*

*Eugene L. Grant, interviewin the journal Quality, Chicago,March 1984.

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