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    Cost of Quality

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    Aileen Alindeg
    The document discusses the costs of quality, which are the costs incurred by an organization to prevent poor quality, find issues, and fix failures. It describes three types of quality costs: prevention costs to avoid defects, appraisal costs for checking quality, and failure costs from fixing issues. Prevention costs like training reduce other costs. The goal is to minimize total quality costs by focusing on prevention and reducing failures.

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    Cost of Quality

    Uploaded by

    Aileen Alindeg
    32 views15 pages
    The document discusses the costs of quality, which are the costs incurred by an organization to prevent poor quality, find issues, and fix failures. It describes three types of quality costs: prevention costs to avoid defects, appraisal costs for checking quality, and failure costs from fixing issues. Prevention costs like training reduce other costs. The goal is to minimize total quality costs by focusing on prevention and reducing failures.

    Original Description:

    Discussion

    Original Title

    TQMCOQ

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    The document discusses the costs of quality, which are the costs incurred by an organization to prevent poor quality, find issues, and fix failures. It describes three types of quality costs: prevention costs to avoid defects, appraisal costs for checking quality, and failure costs from fixing issues. Prevention costs like training reduce other costs. The goal is to minimize total quality costs by focusing on prevention and reducing failures.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    32 views15 pages

    Cost of Quality

    Uploaded by

    Aileen Alindeg
    The document discusses the costs of quality, which are the costs incurred by an organization to prevent poor quality, find issues, and fix failures. It describes three types of quality costs: prevention costs to avoid defects, appraisal costs for checking quality, and failure costs from fixing issues. Prevention costs like training reduce other costs. The goal is to minimize total quality costs by focusing on prevention and reducing failures.

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    COST OF QUALITY

    COST OF QUALITY

    Is the sum of costs incurred by an organization in


    preventing poor quality.

    The purpose of TQM is to satisfy customers in the


    most economical way. This means reducing
    expenditure by eliminating wastes through
    systematic quality management approach.
    PAF Model 3 Types of
    Quality Costs
    1. Prevention Costs

    2. Appraisal Costs

    3. Failure Costs
    Prevention Costs

    Are the planned costs incurred by an organization to


    ensure that there are no defects in any of the stages
    like design, development, production and delivery of
    the product or service.
    Costs that are incurred to reduce inspection and
    failure costs.
    Examples are education and training of employees,
    process improvement, process control, market
    research, field testing, preventive maintenance,
    instruments calibration, audits, etc.
    Appraisal Costs

    Are incurred in verifying, checking or evaluating a


    product or service at various stages during
    manufacturing or delivery.

    They are incurred due to the lack of confidence in


    the quality of the product or service due to incoming
    material or to the process.

    Includes inspection, product audit, supplier


    evaluation, etc.
    Failure Costs

    Incurred by an organization because the product or


    service did not meet the expected requirements and
    the product had to be fixed or replaced or the service
    had to be repeated.

    Are incurred to the failure of the organization to


    control defects.

    Defective products lead to loss of reputation and


    customer loyalty.
    Classification of Failure Costs

    A. Internal failure costs takes place before the


    product is delivered to the customers and are due to
    defective processes
    Rejected material supplied by the vendor
    Rejected pieces of sub-assemblies
    Rejected products at final inspection
    Scrap on account of poor workmanship
    Overtime due to non-conforming products
    Classification of Failure Costs

    B. External failure costs takes place after delivery of


    the product to the customers
    Warranty costs
    Replacement of products
    Costs incurred to travel to customer site for repair
    Cost of returned products
    Cost of handling customer complaints
    Cost of customer follow up and field service
    Reducing Prevention Costs

    Prevention costs are necessary costs

    Prevention costs can be reduced if an organization


    uses a quality manual containing policies and
    procedures which all employees must strictly adhere
    to
    Progressive Reduction of
    Appraisal Costs
    Initial inspection is necessary to gain confidence.

    Example: 100% inspection if an employee is new or


    there is a new supplier of materials. Later on,
    inspection can be done on a sampling basis only.
    Progressive Reduction of
    Appraisal Costs
    Initial inspection is necessary to gain confidence.

    Example: 100% inspection if an employee is new or


    there is a new supplier of materials. Later on,
    inspection can be done on a sampling basis only.
    Reduction of Failure Costs

    Delivery of a product with defects is a total waste.

    Doing it right the first time and every time will


    reduce, if not totally eliminate failure costs.

    A proper system should system on all processes


    should be used.
    Hidden Costs

    Costs which cannot be identified immediately.

    Examples are lost reputation costs and customer


    dissatisfaction costs.

    Hidden costs can only be eliminated if external


    failures are eliminated.
    Jurans Model of Optimum
    Quality
    COQ Poor Quality vs. Good
    Quality

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