The Concept of Statistical Quality Control and Some Techniques Associated With It

The use of various statistical methods to maintain and monitor the quality of services and products is referred to as statistical quality control (Montgomery, 2013). There are various techniques used in statistical quality control like quality control charts and acceptance sampling. Acceptance sampling is also referred to as sampling inspection plan. This technique is used after production of goods or during the final stage of production. A sample is taken from the available products where it is studied to determine whether the product meets the expected standards or not. If the number of defective products is high, then the entire lot may be rejected. Quality control charts is another technique that uses a graphic presentation to demonstrate expected quality variations. A graph may be used to show how a particular process changes over time (Chorafas, 2013). Quality control charts are useful in controlling an ongoing process where problems can be found and be controlled as soon as they occur. Information drawn from the charts is usually authentic and very accurate.

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Decision making under conditions of uncertainty using expected monetary value.

The condition of uncertainty during decision making exist when the future environment is partially or fully unpredictable, and everything is in a flux state. In this condition, the decision maker is not able to determine all possible alternatives, consequences or possibility of those alternatives and risk associated with those alternatives (Roccioletti, 2016). Expected monetary value is used to make decisions when there is no complete information, or there is uncertainty. This statistical technique is used to quantify the risk and uncertainties thereby assisting the decision maker to determine contingency reserve through calculation. Therefore, this technique may be used to calculate the average outcomes when the future is unpredictable. If a certain company decided to launch a new product or service in the market. The company may want to know how the product may perform in the market. The market is usually very competitive so the company may conduct a pre-launch questionnaire that can help determine how the product or service may perform. If 85 out of 100 respondents promise that they would purchase the product if it were available in the market. This may be translated into a probability statement:

P (product successful) = (85/100) =0.85

This shows that the product or service to be launched has a promising performance which could yield good profit. Therefore, the expected monetary value would eventually help in deciding whether launching the product is a feasible idea or not.

References

Montgomery, D. C. (2013). Introduction to statistical quality control. Hoboken, NJ: Wiley.

Roccioletti, S. (2016). Backtesting Value at Risk and Expected Shortfall.

Chorafas, D. N. (2013). Quality control applications. London: Springer.