return homework reliability solve problems: chapter 10 - 6, 10 cost of quality solve problems:...
TRANSCRIPT
Return homework Reliability Solve problems:
Chapter 10 - 6, 10
Cost of Quality Solve problems:
Chapter 12 - 7
Discuss final exam
Week 15 Assignment• Complete final exam• Present exam results
Week 14AgendaAgenda
Question:Question: What are costs of quality? Task: Create your list of quality costs and
share with the class.
What is the relationship between quality and productivity?
Cost of Quality
Cost of Quality
Cost of QualityCost of QualityCost of QualityCost of Quality
Chapter Eleven
Cost of Quality
Quality costQuality cost
A quality cost is considered to be any cost that the company would not have incurred if the quality of the product or service were perfect.
Cost of Quality
Quality costsQuality costs
Total quality costs are the sum of prevention costs, appraisal costs, and internal and external failure costs.
Cost of Quality
Quality costs increase over Quality costs increase over timetime
Failu
re C
ost
s
Time when failure found
Prevention Costs
Failure found during design phase
Failure found at onset of manufacture
Failure found at final inspection
Failure found at installation
Field repair costs
Failure found by customer
Liability costs
Cost of Quality
ReprocessingReprocessing
RejectsRejectsCustomer returnsCustomer returns
Warranty expensesWarranty expenses
Lost salesLost sales
Overtime to correct errorsOvertime to correct errors
Extra inventoryExtra inventory
Premium freight costsPremium freight costs Extra process capacityExtra process capacity
Loss of goodwillLoss of goodwill
Process downtimeProcess downtime
DelaysDelays
Extra inventoryExtra inventory
Hidden Costs of Poor Hidden Costs of Poor QualityQuality
Cost of Quality
TQM Element Financial Measure Non-financial Measure
Customersatisfaction
External failure cost.Field service expense.
Results of customersatisfaction survey.On-time delivery.Number of customercomplaints.
Internal performance
Appraisal cost.Internal failure cost.Prevention cost.
Defect ratesYieldsLead timesIdle capacityUnscheduled machinedowntime
Balanced Score CardBalanced Score Card
Traditional ModelTraditional Model
Cost of appraisalplus prevention
Failure costs
Total quality costs
Quality of conformance0% 100%
Co
st p
er g
oo
du
nit
of
pro
du
ct
Emerging COQ ModelEmerging COQ Model
Cost of appraisalplus prevention
Failure costs
Total quality costs
Quality of conformance0% 100%
Co
st p
er g
oo
du
nit
of
pro
du
ct
COQ as motivatorCOQ as motivator Companies under TQM do not focus on
quality cost minimization. Quality improvement projects tend to
focus on zero defects or defect reduction to the six-sigma level.
The 1-10-100 RuleThe 1-10-100 Rule
$
$
$
$
$
1
10
100
Prevention
Correction
Failure
COQ ThemeCOQ Theme Costs are not incurred or allocated, but
rather caused. Cost information does not solve quality
problems, nor does it suggest specific solutions.
Problems are solved by tracing the cause of a quality deficiency.