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Chapter 15: Quality Costs and Productivity (Reporting Quality Cost…
Chapter 15: Quality Costs and Productivity
Measuring the Costs of Quality
Quality Defined
meets or exceeds customer expectations or standards.
defective product
is one that does not conform to specifications
Costs of Quality Defined
costs that exist because poor quality may or does
exist
Measuring Quality Costs
Observable quality costs
Hidden quality costs
Mulitplier Method
The Market Research Method
The Taguchi Quality Loss Function
Reporting Quality Cost Information
Quality Cost Reports
Quality Cost Function: Acceptable Quality View
optimal balance between
control costs and failure costs
Quality Cost Function: Zero-Defects View
Activity-Based Management and Optimal Quality Costs
Appraisal and failure activities and their associated costs are non-valueadded and should be eliminated
Prevention activities—performed efficiently—can
be classified as value-added and should be retained
Trend Analysis
Using Quality Cost Information
Scenario A: Strategic Pricing
Scenario B: New Product Analysis
Productivity: Measurement and Control
concerned with producing output efficiently, and it specifically
addresses the relationship of output and the inputs used to produce the output
Total productive efficiency
technical efficiency
for any mix of inputs that will produce a given output, no more of
any one input is used than necessary to produce the output
input trade-off efficiency.
given the mixes that satisfy the first condition, the least costly mix is chosen
Partial Productivity Measurement
Measuring productivity for one input at a time
Total Productivity Measurement
Measuring productivity for all inputs at once
Profile Productivity Measurement
Profit-Linked Productivity Measurement
Price-Recovery Component