cost management TI case

The cost of quality in a manufacturing process and environment are many as you are aware. But the 3 primary costs that we should review on a more regular basis to assure we are creating the most cost effective and quality products are the following: Appraisal, Prevention and Failure, and failure costs should be looked at as internal failure and external failure.

Product production comes with many types of costs. Four of the most common costs are prevention costs, appraisal costs, internal failure costs and external failure costs. These four costs are called quality costs and are costs that all businesses that produce products will pay. The amount of money that will go to each cost is dependent on the amount spent on the other costs. In other words, an increase in one type of cost can result in a decrease in another. Businesses need to understand the nature of each cost in order to understand for which cost to budget.

Given the highly competitive nature of today’s markets we as a company must provide high quality products to survive. Quality itself has become a major competitive factor and in many ways is a contributing factor in success or failure. The intent of this memo is to identify, explain and evaluate the three types of cost associated with quality.

Cost minimisation however, cannot be pursued without attention to quality - there must be a balance between the two

Question 2. 2. (TCO G) Explain the concept of the cost of quality model and then link your explanation to how quality can be defined by organizations. What are some advantages and disadvantages of the cost of quality model? This answer must be in your own words—significant cut and paste from the text or other sources is not acceptable.  (Points : 30)

An important aspect for our consideration includes the costs of quality. Considering our product is not affected by place, income, sex, race, age, or any environmental concern, the profit margins should be considered higher. However, it is crucial to recognize three costs of quality to ensure our product achieves the highest profit margins with little room for the unexpected.

to financial issues or threats of losing future contracts. Quality control has been an essential

Some of the problems arise from the intrinsic nature of product riskdecisions and also the perform of tort liability, whereas others couldderive from individuals’ cognitive limitations and inability tothink properly regarding equalisation risk and price. so it mightbe each incorrect and an oversimplification responsible all theills on the tort liability system. That system functions fairlywell for several forms of accidents, like personal motorvehicle accidents. However, tort liability falls short with respect to products. (Viscusi, 2012)

Customers expect safe and strong products, sold to an affordable and suitable selling price, otherwise they will refuse to buy it. The aim of big companies is to fulfil and exceed customers’ expectations and offer them quality products.

Yasin and Alavi (1999) conducted a quantitative study to determine if Total Quality Management (TQM) can produce quality improvement

A key premise in quality improvement is that you cannot improve a process until you fully understand it. When improvements in quality are achieved, teams should continue to strive for further improvements with the same problem or maybe address the other opportunities that have been identified.

The system of quality is prevention: This is why management must take the concept of prevention very seriously because it reduces defects and it lowers cost. This absolute state that appraisal, checking and inspection is an expensive and unreliable way of getting quality. Prevention can be achieved if during production process opportunities for error are identified. Prevention can also be achieved using statistical quality control method. Crosby (1995).

Our company should make sure that manufacturers deliver products with the highest design specification, in order to be order-winner quality conformance, by delivering products with no defects (Hill and Hill, 2012). Furthermore, improvements in quality lead to a decrease in cost for the company. According to (Evans, 1997) higher quality products lead to a decrease in costs for the company through higher productivity: ‘improvements in quality leads to lower cost because of less re-work, fewer mistakes, fewer delays and snags’ (Evans 1997, P.55).

Service quality represents a fundamental aspect of delivery, which strongly influences consumer satisfaction and, as a result, loyalty. In today’s global market a customer’s service expectation has to be met and exceeded eventually in order to retain customers as well as achieve success. Perceived quality of a product or a service is becoming one of the major competitive factors in the business world and has led to the innovation of the ‘Quality Era’ (Peeler, 1996). In simple words, the comparison of customer expectations with service performance is service quality. On the other hand, customer satisfaction is defined as a pleasurable fulfilment response toward a good, service, benefit, or reward (Oliver, 1997). Both of these

Implementation of excellent quality comes with a cost. The company must decide if it is really worth compromising the quality for revenue. If the quality costs exceeds the expected revenue of the company then the company must abandon implementing quality control mechanism. If otherwise, the quality would contribute to the product value and hence the revenue.