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Article
Publication date: 1 April 2004

Vincent K. Omachonu, Sakesun Suthummanon and Norman G. Einspruch

This paper examines the components of quality cost (internal failure, external failure, appraisal cost, and prevention cost) in the context of two key manufacturing…

Abstract

This paper examines the components of quality cost (internal failure, external failure, appraisal cost, and prevention cost) in the context of two key manufacturing inputs, materials and machines; the concept is also explained for the company as a whole. The purpose of this research is to analyze the variables that impact quality in a manufacturing environment. There are three major findings in this research. First, there is an inverse relationship between appraisal cost plus prevention cost and failure cost. Second, the relationship between appraisal cost plus prevention cost and quality is positive. Finally, failure cost is negatively correlated with quality. This analysis also revealed a strong relationship between appraisal cost plus prevention cost and quality for material input, machine input, and the company. The results indicate that as the appraisal cost plus the prevention cost increases, quality improves and failure cost decreases.

Details

International Journal of Quality & Reliability Management, vol. 21 no. 3
Type: Research Article
ISSN: 0265-671X

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Article
Publication date: 17 September 2018

Rema Sawan, Jwen Fai Low and Andrea Schiffauerova

Material procurement constitutes a large share of the overall cost of construction projects. Understanding the factors influencing the cost of quality (COQ) in the…

Abstract

Purpose

Material procurement constitutes a large share of the overall cost of construction projects. Understanding the factors influencing the cost of quality (COQ) in the procurement process could help identify opportunities for lowering quality cost without compromising quality. The paper aims to discuss these issues.

Design/methodology/approach

In this paper, a COQ model for the construction material procurement process is developed using the traditional prevention–appraisal–failure (PAF) approach. Using data from a $4bn aluminum smelter construction project, the authors conducted a simulation of the COQ model to evaluate various quality assurance policies.

Findings

This paper confirms that raising the prevention cost leads to a drop in failure cost as well as COQ for the project studied. While the authors are unable to provide blanket recommendations as the results are derived from a single project case study, it does suggest that construction material procurement processes would benefit from a higher prevention expenditure. And for certain cases where the authors observe a deviation from the traditional Juran’s model of COQ – the high appraisal cost in the procurement process – reduction of appraisal expenditure may in fact be more beneficial than its increase.

Originality/value

The research results suggest that appraisal expenditure should be tailored to each purchase order in order to maximize the total benefits. Additionally, this paper presents the first COQ model developed for the construction material procurement process. Another unique feature of the model is its inclusion of supplier-side costs, which are excluded in the conventional COQ analysis.

Details

Engineering, Construction and Architectural Management, vol. 25 no. 8
Type: Research Article
ISSN: 0969-9988

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Article
Publication date: 1 April 1996

T.F. Burgess

Existing quality‐cost models have been criticized for their imprecision and inadequate theoretical justification. Attempts to remedy these deficiencies by using systems…

Abstract

Existing quality‐cost models have been criticized for their imprecision and inadequate theoretical justification. Attempts to remedy these deficiencies by using systems dynamics to build a generic model relating quality conformance levels to the quality‐cost categories of prevention, appraisal and failure (PAF). Outlines in depth the assumptions underlying the model’s structure and links model parameters to published empirical data. Explores the model’s sensitivities to changes in factors including different initial values of conformance quality. Determines the potential for improvements in quarterly and cumulative quality costs by changing the PAF cost levels.

Details

International Journal of Quality & Reliability Management, vol. 13 no. 3
Type: Research Article
ISSN: 0265-671X

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Article
Publication date: 3 October 2016

Markus Plewa, Gernot Kaiser and Evi Hartmann

The purpose of this paper is to provide empirical evidence for competing representations of the prevention-appraisal-failure model of quality cost.

Abstract

Purpose

The purpose of this paper is to provide empirical evidence for competing representations of the prevention-appraisal-failure model of quality cost.

Design/methodology/approach

The authors conduct regression analysis on a secondary data set to reveal relationships among total cost of quality, its components and overall quality performance.

Findings

Total cost of quality and its failure cost component are significantly lower at higher levels of quality, while the prevention and appraisal cost components are not observed to be significantly higher at higher levels of quality. The authors propose a modification to the modern representation of the prevention-appraisal-failure model.

Practical implications

In manufacturing, ever higher levels of quality are associated with significantly lower quality cost.

Originality/value

Using a large, unique data set for secondary analysis, combined with employing a high-level measure for overall quality performance, the authors provide evidence for the aggregate explanatory power of prevalent representations of the prevention-appraisal-failure cost of quality model.

Details

International Journal of Quality & Reliability Management, vol. 33 no. 9
Type: Research Article
ISSN: 0265-671X

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Article
Publication date: 31 July 2009

Behdad Kiani, Hadi Shirouyehzad, Fahime Khoshsaligheh Bafti and Hamidreza Fouladgar

The purpose of this paper is to propose a model for analysing the influence of costs of quality.

Abstract

Purpose

The purpose of this paper is to propose a model for analysing the influence of costs of quality.

Design/methodology/approach

A model is designed by using a causal loop diagram and is analysed through a system dynamics approach. The model simulation is prepared by Vensim software.

Findings

Prevention and appraisal costs are the two effective cost factors. The model represented in this paper reveals that prevention costs have the most effect on total cost of quality and especially external failure costs. Hence, in order to achieve the customer expected quality level, prevention and appraisal costs should be considered.

Research limitations/implications

Calculating and measuring non‐conformance costs is very difficult in organizations and some errors and mistakes may happen.

Practical implications

A system dynamics approach can analyse and measure the amount of prevention cost effects on cost of quality in different organizations.

Originality/value

The proposed methodology demonstrates the use of an innovative approach in developing a cost of quality concept and constructing a practical framework for system dynamics in a real case.

Details

International Journal of Quality & Reliability Management, vol. 26 no. 7
Type: Research Article
ISSN: 0265-671X

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Article
Publication date: 1 June 1996

S. Thomas Foster

Reports the results of a case study which undertook to examine the relationship between conformance and quality‐related costs. The controversial Lundvall‐Juran economic…

Abstract

Reports the results of a case study which undertook to examine the relationship between conformance and quality‐related costs. The controversial Lundvall‐Juran economic quality level (EQL) model has been criticized by various authors due to its acceptance of imperfect quality. While persuasive, this emotional aversion to imperfection does not provide a convincing critique of the EQL model. However, the EQL remains widely used in practice. Argues that several assumptions of the EQL model should be questioned including monotonicity, continuity, the positive relationship between prevention/appraisal costs and conformance, the negative relationship between failure costs and conformance, and the combining of costs. Further, the EQL model illustrates a single contingent relationship between quality costs and conformance. Provides several alternative cases of the relationship between quality costs and conformance. The results are then reported and the underlying relationships of the EQL model tested. The results showed that prevention and appraisal costs were positively and significantly associated with conformance. Failure costs were also positively and significantly related to conformance. These results provided support for a contingency view of quality‐related costs.

Details

International Journal of Quality & Reliability Management, vol. 13 no. 4
Type: Research Article
ISSN: 0265-671X

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Article
Publication date: 14 March 2008

Djoko Setijono and Jens J. Dahlgaard

The purpose of the paper is to present a proactive quality costs measurement methodology, which describes the value of quality improvements and the implication of this…

Abstract

Purpose

The purpose of the paper is to present a proactive quality costs measurement methodology, which describes the value of quality improvements and the implication of this value on customers' perception regarding the value of the product.

Design/methodology/approach

By describing the perceived customer value in a dynamic term, it becomes possible to derive an analytical model that recognizes the implication of a company's efforts to improve design quality and conformance quality on product value as perceived by the customers. Quality costs as a performance indicator of improved design quality and conformance quality (as the results of prevention and appraisal activities) can be expressed in terms of value (i.e. a trade‐off between benefits and sacrifices), where the benefits of the improvement include higher product quality and reduction of failure costs. The sacrifices include the costs to perform improvement activities (i.e. prevention and appraisal costs). Expressing quality costs in this way thus establishes a link between a producer's efforts to improve quality and the way customers perceive the value of the product. The developed methodology of proactive quality cost measurement has been applied for collecting, measuring, and reporting quality costs in a Swedish wood‐flooring manufacturing company.

Findings

Transforming quality cost measurements into value provides a better explanation regarding the effect of prevention and appraisal activities on the quality improvement indicators. Thus, the value of quality improvements is a measure of return on quality improvements (ROQI), which indicates whether the quality improvement efforts gave higher, fair, or lower return.

Originality/value

This paper develops and discusses a model of customer value by accommodating its relative nature, and presents a proactive way of measuring quality costs (i.e. value‐oriented and customer‐oriented).

Details

International Journal of Quality & Reliability Management, vol. 25 no. 3
Type: Research Article
ISSN: 0265-671X

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Article
Publication date: 3 June 2019

Sebastian Sturm, Gernot Kaiser and Evi Hartmann

The dynamics of quality performance and quality cost are gaining renewed interest in quality management literature. Using large sample secondary data, the purpose of this…

Abstract

Purpose

The dynamics of quality performance and quality cost are gaining renewed interest in quality management literature. Using large sample secondary data, the purpose of this paper is to build up empirical evidence for increasing quality performance in manufacturing in the long-run. The authors then examine whether it is possible to reduce internal and external failure cost over time without increasing prevention and appraisal expenditures in return. Finally, a scale effect in reducing quality cost is measured to clarify the long-run dynamics between quality cost and quality performance.

Design/methodology/approach

The authors conduct statistical analysis on a large sample secondary data set to reveal relationships between total cost of quality, its components and overall quality performance.

Findings

Significantly higher quality performance and lower quality cost are observed in the long-run. Quality costs grow less than half as fast as sales volume, pointing to a significant scale effect in quality cost reduction.

Practical implications

Businesses can use these implications for targeting failure costs and budgeting appraisal and prevention costs. Based on company-specific historical learning behavior through prevention and appraisal activities, an increasingly reliable prognosis of failure cost shall be possible.

Originality/value

For the first time, quality performance and cost dynamics are assessed using a secondary data set with more than 400 observations. A scale effect for quality cost reduction is measured. The results are of great importance to quality management practice and research.

Details

International Journal of Quality & Reliability Management, vol. 36 no. 8
Type: Research Article
ISSN: 0265-671X

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Article
Publication date: 17 April 2007

Yumin Liu

A COQ model plays an important role in the total quality cost survey. Based on the methodology of continuous quality improvement, a dynamic COQ model for different quality…

Abstract

A COQ model plays an important role in the total quality cost survey. Based on the methodology of continuous quality improvement, a dynamic COQ model for different quality level is developed in this paper. A quality level is defined by Six Sigma level that can be measured by two indicators. The relationships among the four major quality costs are analyzed. Finally, the curves of total quality costs for different quality level are presented.

Details

Asian Journal on Quality, vol. 8 no. 1
Type: Research Article
ISSN: 1598-2688

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Article
Publication date: 23 August 2011

Arvind Chopra and Dixit Garg

The purpose of this paper is to find out the behavior patterns of different quality cost categories to enable us to take the right decisions in allocating resources for…

Abstract

Purpose

The purpose of this paper is to find out the behavior patterns of different quality cost categories to enable us to take the right decisions in allocating resources for reducing quality costs.

Design/methodology/approach

Costs of quality, existing in a small‐scale industry in India, in the financial year 2006‐2007, were found out. At the start of the financial year 2007‐2008 a quality cost program was implemented in that organization and more resources were allocated for prevention and appraisal cost activities. Subsequently, the costs of quality related to the financial year 2007‐2008 and 2008‐2009 were found out. Based on the quality cost data of three years, co‐relation co‐efficient between the different quality cost categories were calculated.

Findings

The co‐relation co‐efficient between different quality cost categories suggest that by increasing the efforts towards prevention and appraisal activities, costs of non conformance decrease. Furthermore, there exists positive co‐relation within costs of conformance and between costs of non conformance.

Orginality/value

In the competitive modern world, small scale organizations have limited resources. They do not have funds to hire consultants. So, the behaviour patterns of quality cost categories help these organizations to allocate precious resources more effectively and result in the reduction of quality costs thereby improving profitability.

Details

The TQM Journal, vol. 23 no. 5
Type: Research Article
ISSN: 1754-2731

Keywords

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