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An assignment on cost of quality

Cost of Quality

The concept of quality costs is a means to quantify the total cost of quality-related efforts and deficiencies.

Benefits of Quality cost information:

Benefits for worker

The definite standard of working, Interchangeable assigned the responsibilities and authorization, Making clear for workers their place in the whole work of organization

Benefits for management

The growth of credibility of firm for investor, customer, The improvement of the information circulation in a firm, The establishment of the uniform principles of functioning inside the firm.

Types of Quality cost:

Types of quality

Maintenance of quality

Non-Maintenance of quality

Prevention cost

Appraisal cost

Internal failure cost

External failure cost

Prevention costs

Costs of activities that are specifically designed to prevent poor quality. like-

Quality planning Statistical process control Investment in quality-related information systems Quality training and workforce development

Appraisal costs

Costs of activities designed to find quality problems, such as code inspections and any type of testing.

Test and inspection of purchased materials Inspection Testing Setup for test or inspection Quality audits Field testing

Internal failure costs

Failure costs that arise before company supplies its product to the customer.

Scrap Rework Material procurement costs

External failure costs

Failure costs that arise after company supplies the product to the customer,

Complaints in warranty Product liability Product recall Loss of reputation

Quality of conformance:

Quality of conformance is the degree to which the design specifications are followed during manufacturing. Again, the greater the degree of conformance, the higher the level of quality of conformance.

the economic conformance level (ECL)

How to Distribute Quality Costs:

Thus, a company can reduce its total quality cost by Focusing its efforts on prevention and appraisal. The cost savings from reduced defects usually swamp the costs of the additional prevention and appraisal efforts.

Quality cost report

A quality cost report details the prevention costs, appraisal costs, and internal failure cost and external failure cost that arise from company's current level of defective products or services.

Quality cost report structure For .company

particulars For maintenance of cost Prevention Cost Appraisal Costs For non-maintenance of cost Year-1 ******* ******* % Year-2 ** ** ******* ******* % ** **

Internal Failure Costs External Failure Costs Total Quality Cost

******* ******* *******

** ** **

******* ******* *******

** ** **

Uses of Quality Cost Information (Report):

First -quality cost information helps managers see the financial significance of defects. Second -quality cost information helps managers identify the relative importance of the quality problems faced by the firm. Third- quality cost information helps managers see whether their quality costs are poorly distributed.

Limitations of Quality Cost Information (report):

Simply measuring and reporting quality costs does not solve quality problems. Problems can be solved by taking actions.

The most important quality costs lost sales arising from customers ill will is usually omitted from the quality cost report because it is difficult to estimate.

Total Quality Management

Total quality management (TQM) It means the continuous improvement of product and services which bears the following characteristics-

It focuses on serving customers Systematic problem solving using team approach It improves productivity be encouraging the use of science in decision making It discourages the counter productive defensive behavior

How to minimize Quality cost:

Quality can be represented by a cycle of corrective and preventative actions called a "Deming cycle":

Plan: define the goals to be reached and plan how to implement the actions "Do: implement the corrective actions "Check: verify that the set goals are achieved "Act: depending on the results that occurred in the previous step, take preventative measures.

Conclusion:

After considering every information and analysis we can come to this conclusion that the every renowned company concern about the quality cost.

The End

Query ?