Cost of Quality

Cost of Carrying out Companys quality functions

1. Market Research Costs of discovering the quality needs
of Customer.
2. Product Research and Development Costs of Creating a
product Concept which will meet these quality needs.
3. The design costs of translating the product concept into
information which permits planning for manufacture.
4. The cost of manufacturing planning.
5. Cost of inspection and test.
6. Cost of defect prevention.
7. Cost of Scrap, Quality failures
8. Cost of Quality Assurance
9. Field Service and other factors attributed to quality
improvement and maintenance.

Quality Function
1. Company Survival Income from sales
Fitness for use
2. Company Fns Concerned with Quality are
known as quality Fns.
3. Market Survey Determination of quality
needed by Customers.
4. Rand D Creation of product Concept
5. Design Product and material specifications.
6. Process Engineers Specify the processes,
machines and instruments capable of
producing the products with desired quality
and inspecting them.

Quality Function
7. Purchasing To buy materials and
Component of appropriate quality
8. Operators Training to use the process
and instruments to make the product as
per design.
9. Inspectors Product examination to
judge conference with design.
10. Consumers Experience of use
becomes basis for Redesign or product
improvement.

Value of Quality
Return direct or indirect gained by the
manufacturer due to mission of quality
Control.
1. Value inherent in design grade
2. Value inherent in conference to that design
Differences in grade may involve differences in
:
Life of the product
Extent of maint. Required
Appearance
Reliability
Interchangeability
Luxury Features
Factors of Safety Ease of Installation

Value of Quality
Value of Quality is to be assessed
considering various factors :
1.
The
saving
due
to
increased
Production.
2. Reduction in Scarp and rework Cost
3. Increased sales of good quality
product.
4. Indirect Factors :
a) Reputation of manufacturer
goodwill of manufacturer

and

GOLD IN THE - MINE

Total quality losses is termed as gold in the mine

IANGIBLE LOSSES :
Materials scrapped
Labour & Overhead on product scrappy
Discount on Second grade quality product.
Free replacement within gurantee period.
Downgrading of product
Returen materials prepared and processing
Labour, Materials and overhead necessary
to effect repairs on Salvageable products.

GOLD IN THE - MINE

Total quality losses is termed as Gold in the mine

INTANGIBLE LOSSES :
Scarp Mat.,Labour and burden of nonusable parts
Repairs Inside & Outside [ M & L of fixing
def. items returned ]
Service Admin. Cost of service to
customers.
Others delays, Stoppages and Loss of
Goodwill caused by defectives

ELEMENTS OF QUALITY COSTS

COST OF FAILURES :
Losses due to non-conforming parts and
assemblies
Delay & Stoppages caused by defectioves.
Customers goodwill
Loss in morale due to friction between
department.

ELEMENTS OF QUALITY COSTS

COST OF APPRAISAL : Cost of evaluating

Quality and of identifying and

segregating.

In Coming Inspecting Labour in

Sampling and Sorting.

100 percent Inspecting Direct labour of

Inspection and tests.
Spot check Inspection Indirect Labour
Outgoing Quality Rating Labour and
Costs.

ELEMENTS OF QUALITY COSTS

COST OF PREVENTION : Engg., Technical
and Sup. Costs of preventing recurring
defects
Quality Control Engineering
Engineering
Cost of investing, analysis and correction
of causes of by QC and Engg. Department.

QUALITY COST ASSESMENT

* PREVENTION :
1. Quality planning & process control
planning.
2. Quality planning by functions other
than quality control
3. Design and Development of quality
measurement and control equipment.
4. Quality training.
5. Other preventive expenses.

QUALITY COST ASSESMENT

* APPRAISAL :
1. Test of inspection of purchased
material.
2. Laboratory Acceptance Testing
3. Inspection of Testing
4. Checking Labour
5. Set up for Inspection of Test

QUALITY COST ASSESMENT

* APPRAISAL :
6. Test of inspection Materials Cost of
power of material.
7. Quality Audits
8. Outside Endorsement
9. Maintenance and Calibration of
inspection and test equipment
10. Review and test of inspection data.
11. Field Testing

FAILURES :
INTERNAL
1. Scrap
2. Rework & Repair
3. Material Procurement Cost
4. Trouble Shooting
5. Down- grading

FAILURES :
EXTERNAL
1. Expenditure for the adjustment
of Customer Compliments.
2. Product or Customer Service