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Article
Publication date: 5 June 2007

Collin Ramdeen, Jocelina Santos and Hyun Kyung Chatfield

The objective of this research is to apply the cost of quality (COQ) concepts in a hotel restaurant environment using the PAF (prevention, appraisal, and failure costs…

Abstract

Purpose

The objective of this research is to apply the cost of quality (COQ) concepts in a hotel restaurant environment using the PAF (prevention, appraisal, and failure costs) model. Then use the percentage of sales approach to evaluate the significance of the COQ measures in the PAF model.

Design/methodology/approach

This research involved reviewing available literature on the COQ framework. Then through the process of interviews and secondary data collection, an analysis of the COQ measures in the PAF model was accomplished.

Findings

While researchers suggested that the COQ should be 2 to 4 percent of sales, the actual findings were 12 to 16 percent over a two‐year period. These findings help the restaurant quality management team to reevaluate the quality of food and services, and provide justification for more investment in prevention activities.

Practical implications

The practical implication from this study was that an investment in prevention activities in the PAF model for the restaurant did lead to reduction in failure costs (internal and external) and appraisal costs.

Originality/value

This study demonstrates that the COQ measures used in the PAF model can improve the quality of food and services provided to the restaurant customers, and therefore, result in improvement in overall profitability.

Details

International Journal of Contemporary Hospitality Management, vol. 19 no. 4
Type: Research Article
ISSN: 0959-6119

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Article
Publication date: 5 September 2008

Seokjin Kim and Behnam Nakhai

The ideals of total quality view contradicts with the traditional prevention‐appraisal‐failure (PAF) model. The PAF model, based on the “higher quality‐higher cost”…

Abstract

Purpose

The ideals of total quality view contradicts with the traditional prevention‐appraisal‐failure (PAF) model. The PAF model, based on the “higher quality‐higher cost” notion, fails to explain the “higher quality‐lower cost” premise of total quality. The purpose of this study is to examine the behaviour of quality costs and investigate the two contradicting views.

Design/methodology/approach

Based on the literature, a generic descriptive model is developed to examine the dynamics of quality costs and quality level over time. Through illustrative examples, the behaviour of quality costs is demonstrated and relevant implications are highlighted.

Findings

The proposed model supports continuous improvement regardless of the effectiveness of the firm's quality improvement programs. When the quality improvement program is highly effective, the “higher quality‐lower cost” phenomenon is observed; whereas, in a less effective quality improvement program, the authors observe the “higher quality‐higher cost” phenomenon, which still calls for increased improvement effort necessary for quality sustainability.

Research limitations/implications

The proposed model explains well the dynamics of quality costs, however, it can be further enhanced by incorporating the dynamics of the effectiveness of the firm's quality improvement program and its relation to quality level and quality costs.

Practical implications

The proposed model is a useful tool especially for quality improvement planning and budgeting decisions.

Originality/value

Balancing between the two contradictory views of quality costs, this study provides a deeper understanding of the relationship of quality costs and quality level.

Details

International Journal of Quality & Reliability Management, vol. 25 no. 8
Type: Research Article
ISSN: 0265-671X

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Article
Publication date: 9 July 2020

Nassibeh Janatyan and Arash Shahin

In this study, an integrative approach of customer satisfaction and cost of quality has been proposed for the value analysis of products based on a cost–benefit ratio.

Abstract

Purpose

In this study, an integrative approach of customer satisfaction and cost of quality has been proposed for the value analysis of products based on a cost–benefit ratio.

Design/methodology/approach

For the integrative approach, Kano and prevention-appraisal-failure (PAF) models have been applied. By the proposed approach, the value of products can be analyzed according to customer viewpoints and cost of quality. Four products of a home appliance company have been used to examine the new approach.

Findings

Findings indicate the priorities of the studied products as stove, TV, fridge and washing machine, respectively. Such a set of prioritized products plays a strategic role in the competitive advantage of the studied company.

Research limitations/implications

In this study, the weights of the cost of quality items have been assumed as equal. Also, the costs of quality items were limited to the most important ones at the studied company. However, more cost of quality items might be considered in different case studies.

Originality/value

In this study, the Kano and PAF models have been considered simultaneously for product value analysis from the viewpoint of customers. In addition to the classic method of value analysis which is merely based on previous events, the proposed approach is typically proactive.

Details

The TQM Journal, vol. 33 no. 1
Type: Research Article
ISSN: 1754-2731

Keywords

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Article
Publication date: 20 November 2017

Marcin Czajkowski

The purpose of this paper is to critically examine existing models for cost of quality. Having identified issues and limitations of historic models, develop and implement…

Abstract

Purpose

The purpose of this paper is to critically examine existing models for cost of quality. Having identified issues and limitations of historic models, develop and implement a novel, structured hybrid cost of quality model to identify and effectively manage cost of company’s product.

Design/methodology/approach

A theoretical framework is proposed based on an integration of three existing, historical cost of quality models into a structured hybrid model. Subsequently, an exploratory pilot case study in a manufacturing environment is described that illustrates the value of the model.

Findings

The paper manages to find how a hybrid model can help identify cost of quality more accurately than the traditional models. Thanks to the new model, the author shows how gaps between product’s theoretical and actual costs can be highlighted. This allows management to drive down cost of quality and improve business performance.

Research limitations/implications

The model would benefit from a company-wide implementation. The present study provides a starting point for further research in the international manufacturing sector.

Practical implications

The framework improves the knowledge of cost of quality by providing a new case study with full results and analysis from a UK-based manufacturing company. It provides a critical re-evaluation of available literature, including the most recent publications as far as practically possible within timescale available. The study shows the importance of comprehensive cost collection if companies are to have the right data needed to manage business excellence.

Originality/value

The paper presents a development of the first structured hybrid model for measuring cost of quality using the strongest points of main three approaches and addresses their limitations. It gives new arguments against allocation of some cost elements within BS 6143-2:1990, resulting in recommendations for further brainstorming of pros and cons of the suggestion.

Details

Measuring Business Excellence, vol. 21 no. 4
Type: Research Article
ISSN: 1368-3047

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Article
Publication date: 29 November 2018

Patricia Duarte, Jwen Fai Low and Andrea Schiffauerova

By developing a better understanding of costs associated with improving organizational quality and costs incurred by neglecting it, banks could devise more optimal…

Abstract

Purpose

By developing a better understanding of costs associated with improving organizational quality and costs incurred by neglecting it, banks could devise more optimal operational policies. The paper aims to discuss this issue.

Design/methodology/approach

This paper proposes a generic banking cost of quality (COQ) model developed from Colombian banking data. The model has been developed using the product performance approach, which is consistent with strategizing from a long-term and organization-wide perspective. The proposed COQ function is composed of prevention and appraisal categories, costs caused by events of operational risks and opportunity costs caused by events of credit risks measured though non-performing loans.

Findings

The model was validated using data obtained from three major Colombian banks. The significant theoretical contribution of this research stems from the development of a banking COQ model which represents a pioneer effort at quantifying quality costs in financial institutions.

Originality/value

This is a unique attempt at using a product performance approach in service industry and also a rare effort toward incorporating opportunity costs in COQ. Managerially, the proposed COQ model can be established as a holistic business strategy and can serve as a tool helping managers to evaluate the impact of quality management initiatives and to decide on trade-offs between quality level and quality costs.

Details

International Journal of Quality & Reliability Management, vol. 35 no. 10
Type: Research Article
ISSN: 0265-671X

Keywords

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Article
Publication date: 1 May 2009

Kerry Walsh and Jiju Antony

There are three main objectives of the research presented in this paper: to examine the challenges of using an electronic adverse incident recording and reporting system;…

Abstract

Purpose

There are three main objectives of the research presented in this paper: to examine the challenges of using an electronic adverse incident recording and reporting system; to assess the method of using a prevention appraisal and failure model; and to identify the benefits of using quality costs in conjunction with incident reporting systems.

Design/methodology/approach

Action diary, documentation and triangulation are used to obtain an understanding of the challenges and critical success factors in using quality costing within an adverse incident recording and reporting system.

Findings

The paper provides healthcare professionals with the critical success factors for developing quality costing into an electronic adverse incident recording and reporting system. This approach would provide clinicians, managers and directors with information on patient safety issues following the effective use of data from an electronic adverse incident reporting and recording system.

Originality/value

This paper makes an attempt of using a prevention, appraisal and failure model (PAF) within a quality‐costing framework in relation to improving patient safety within an electronic adverse incident reporting and recording system.

Details

International Journal of Health Care Quality Assurance, vol. 22 no. 3
Type: Research Article
ISSN: 0952-6862

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Article
Publication date: 1 August 2004

Danupun Visawan and James Tannock

The study of quality economics for manufacturing has focussed mainly on investments and costs, rather than attempting to quantify the benefits of improved quality in the…

Abstract

The study of quality economics for manufacturing has focussed mainly on investments and costs, rather than attempting to quantify the benefits of improved quality in the market. This article presents an approach based on both costs and benefits. Systems dynamics‐based simulation has been employed with an optimisation technique, to identify quality spending levels which result in maximum overall profit. The simulation models are based on a Thai automotive manufacturer, which had employed Kaizen for many years, and hence this quality improvement approach was simulated. Two market conditions were modelled: fixed and variable‐price according to the market response to changes in quality level. Optimum profits were found at higher levels of quality spending than actual company spending. The paper examines the details of the optimum condition for the variable‐price market condition. Conclusions are drawn concerning quality improvement strategies and the potential effects of different market pricing conditions on optimum quality spending.

Details

International Journal of Quality & Reliability Management, vol. 21 no. 6
Type: Research Article
ISSN: 0265-671X

Keywords

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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

Keywords

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Article
Publication date: 1 April 2004

P.A. Cauchick Miguel and Silmar Pontel

Measuring quality costs is an essential step for achieving competitiveness because these costs are strongly related to the company's annual revenue. One of the most…

Abstract

Measuring quality costs is an essential step for achieving competitiveness because these costs are strongly related to the company's annual revenue. One of the most important categories of quality costs is that of external failure costs. The consequences of these failures are not only related to the costs incurred to the failure in the field, but also to customer appeasement Within this quality cost category there are the claims against warrant. The warranty, which is a contract between a manufacturer and the consumer, specifies that the manufacturer agrees to repair or replace the failed product within the predetermined warranty period. This paper deals with the assessment of external failures by presenting a case study on warranty costs. The findings demonstrated that warranty costs can be significant and their reduction very important. In the studied case, the assessment of warranty costs has proved to be feasible and effective.

Details

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

Keywords

Content available
Article
Publication date: 17 November 2020

Renata Biadacz

The purpose of the study is to examine the research problem that represents an attempt to approximate the importance of quality costing in managing a modern enterprise…

Abstract

Purpose

The purpose of the study is to examine the research problem that represents an attempt to approximate the importance of quality costing in managing a modern enterprise using the selected enterprises from small and medium-sized enterprises (SMEs) in Poland.

Design/methodology/approach

The primary goal of the research is a need to acquire knowledge about the use of quality cost accounts in enterprises operating in Poland. The research has been conducted in the SMEs of production and services. From October 2018 to December 2018, survey-based research was carried out in the selected SMEs of production and service in Poland. The targeted participants of the study are from the medium-sized enterprises, employing 50–250 people.

Findings

The pilot studies conducted in companies indicate that modern enterprises are focused on quality. Many enterprises declare to be continuously improving quality system and quality costing. However, generally, these are large companies that have implemented ISO standards, often part of international corporations. The survey result of the study shows that medium-sized enterprises still make little use of modern cost accounting variants. Based on the study, only 9.75% (39 enterprises) from a representative group of 400 companies from the sectors of manufacturing, services and production as well as service companies apply quality costing. Some of the other enterprises are only taking measures to implement quality cost accounting.

Research limitations/implications

The research has been conducted in randomly selected SMEs in the form of a questionnaire interview. In order to further analyze the construction of quality cost management (QCM) systems and the use of information from QCM by enterprises, case study method should be used more widely.

Practical implications

The results of the study provide useful help for companies that are quality-oriented and want to implement quality costing. The survey has been conducted in 400 enterprises, and the survey results of considered SMEs reveal the most important aspects of the application of quality costing.

Originality/value

The questionnaire used, the answers provided and the resulting conclusions fill the identified research gap. In the author's opinion, findings of research are relevant and useful, not only for accounting practice but also for theory. They show that although TQM and quality costing have been very popular in the literature since the 1990s, the degree of application of quality costing in practice (except for large, often international companies) is too low. So, the suitability of QCM in managing a modern enterprise from the SMEs should be promoted.

Details

The TQM Journal, vol. 33 no. 7
Type: Research Article
ISSN: 1754-2731

Keywords

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