Cost of Quality

Signify the costs incurred with the efforts taken to prevent the occurrence of defects. Prevention Costs imply the following:

• Developing a quality management system and the associated quality planning documents
• Establishing product specifications, new product development based on that, and testing
• Proper employee quality awareness and training and supplier evaluation
• An analysis of the quality audit and quality improvement program

Represent the costs incurred with inspected tests and performed checks to determine whether the particular requirements are met. Appraisal costs can include the following:

• Inspections and tests of incoming material and products, finished product acceptance, test equipment purchase, and maintenance
• Inspection and test documentation and employees’ wages
• An analysis of the inspection and test results
• Supplier assessments

Describe the costs incurred to rectify all the nonconformities found before the product supply to the recipient. Internal failure is determined by the following:

• Heaps of scrap
• Costs of reprocessing and repeating the tests
• Performing product remedy, rework and repair operations
• Product downgrading costs and costs associated with failure analysis
• Machine breakdown due to inappropriate maintenance and trash due to inadequately designed processes

Depict the costs incurred to correct all the nonconformities found after the product supply to the recipient. External failure costs indicate the following:

• Customer complaints and product or material returns
• Damages due to poor packaging and penalties for delays in deliveries
• Providing service and repair costs
• Incorrect sales orders and incomplete BOMs
• Warranty claims

The Taguchi Quality Loss Function (QLF) is a statistical function, proposed by the Japanese quality expert Genichi Taguchi, which states that the quality loss function is used to estimate costs when the product or process characteristics are switched from the target value. This is represented by the following equation:

L= k(y-T) ^2 where L= Quality loss

y = the actual size of the product

T = Target value

k = Proportionality constant.

This is also known as parameter design, which is a selection of a parameter level to make the process robust against environmental changes with the smallest variation.