Prevention Cost in Quality

Costing

Ita Akyuna NightisabhaS4307076

Abstract

Improving quality is considered by many to be the best way to enhance customer satisfaction, reduce manufacturing costs and to increase productivity. Because the main language of

corporate management was money, and costs were the heart of its life cycle, there emerge the concept of studying

of costs that related with quality. The core problem of improving quality is no more defect. A defect is causing

some costs which classified as a prevention cost, appraisal cost, internal failure cost and external failure cost. Even

though there is a difference on the characteristic and dissemination of quality cost, most experts agreed that management should focus on preventing a defection, because a small investment for the prevention could significantly reduce an appraising and failure cost.

Keywords : improving quality, cost of quality, prevention cost.

What’s Quality?

Quality is how the recipient of the product or service views it: before buying, upon delivery, and after the delivery-and use the product

Quality Costing

Quality cost is a noun which signifies a cost that is found to be related to quality in some way. Quality costing is method of measuring quality cost to simulate quality improvement

Quality Cost are Classified to :

1-Internal Failure Costs. These are costs of deficiencies discovered before delivery which

are associated with the failure (nonconformities) to meet explicit requirements or implicit needs of external or internal customers.

2-External Failure Costs. These are costs that would disappear if no deficiencies existed.

These are costs associated with deficiencies that are found after product is received by the customer.Also included are lost opportunities for sales revenue.

3-Appraisal Costs. These are the costs incurred to determine the degree of

conformance to quality requirements. 4-Prevention Costs. These are costs incurred to keep failure and appraisal costs to a

minimum. The Total Cost Of Quality is the sum of the 4 categories

above.

Prevention Cost

Related to the activity of any hindrance in production or process approaches, quality planning, quality functions deployment and complete quality

Prevention Cost Contd..

Prevention is designed to keep errorsfrom accuring in the process in the

firstplace. That’s Quality AssuranceInspection is designed to keep product errors from reaching the customer

Appraisal Cost

Evaluating a product/service at sequential stages to determine its acceptability.

Appraisal cost cannot be avoided unless a full control is achieved.

It includes all costs incurred in conducting appraisal of a product to determine compliance to the requirement.

Appraisal Cost Contd..

Design reviews are part prevention and part appraisal. To the degree that you are looking for errors in the proposed design itself when you do the review, you’re doing an appraisal. To the degree that you’re looking for ways to strengthen the design, you’re doing prevention

Failure Costs

Internal Failure Costs that arise before your company supplies its product to the customer

External Failure Costs that arise after your company supplies its product to

the customer

Benefits of measuring cost of quality

Higher productivityLess reworkLess hassleLess wasteGreater customer satisfactionImproved corporate image

Final Word

Prevention is cheaper than inspection

Wasted materials, rework costs and potensial lost of customer are all avoided

Thank you

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