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IE5121 Quality planning and management Assignment I

Bharath Porchelvan A0103294 Maung Pwint Khine Soe A0033755

IE5121-Quality planning and Management


Given data: Product A Product B Product C

Prevention Cost Appraisal Cost Internal Failure Costs External Failure Costs Revenue Units Sold

$ $ $ $ $

5,698 37,676 1,19,107 1,33,168 81,65,000 71

1,569 10,384 60,876 12,625 17,50,000 14

1,908 9,206 63,523 15,755 8,40,000 14

Problem No: 1 The given data is substituted in the relations given below to compute the required terms Cost of Poor Quality= Total cost of quality = Internal Failure cost + External Failure cost Cost of Poor Quality + Appraisal cost + Prevention cost

The results are tabulated below:

Product A a) Cost of Poor Quality (COPQ) b) Total Cost of Quality (TQC) c) COPQ / TQC d) COPQ / Revenue e) Internal Failure / External Failure $ $ 2,52,275 2,95,649 0.85 0.03 0.89

Product B 73,501 85,454 0.86 0.04 4.82

Product C 79,278 90,392 0.88 0.09 4.03

Overall 4,05,054 4,71,495 0.86 0.04 1.51

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IE5121-Quality planning and Management


Problem No: 2

80.0 71.2 70.0 60.0 50.0 40.3 40.0 30.0 20.0 10.0 0.0 Product A Product B Product C 14.8 17.4 45.0 Internal failiure cost (as % of TQC) External Failure Costs (as % of TQC) 70.3

Emphasis on Product arresting of failure Cost External Failure cost constitutes more than 40% of the TQC Product A External Failure and also it is 1.1 times the Internal Failure cost. So emphasis must be on arresting External Failure Cost. Justification

Product B Internal Failure Product C

Internal failure cost constitutes more than 70% of the TQC which is also 4 times more than the External failure cost. So emphasis must be on arresting the internal failure costs co

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IE5121-Quality planning and Management


Problem No: 3 The causes for the Internal and External failure costs were subjected to 5 Why Analysis to identify the ways of reducing them. The results of the analysis are summarised below:

To reduce Internal failure costs For scrap and reworks Procurement of raw-materials from approved supplier Prevention of over emphasis on accuracy or quality. Products produced to meet customer expectation. Periodic calibration of the inspection instruments Feedback devices in machines to control variation during production Proper training of operator Scheduled and Preventive maintenance for machines Deployment of systems like AND-ON, KANBAN to ensure flow of correct information Information required for the entire job to be made available during all stages of operation For 100% sorting inspection Online or In-process inspection systems especially for mass production systems Turnkey sorting systems developed based on recent advancements like optical or laser or acoustic sorting. Sub-contracting or Outsourcing of the entire inspection process

For Lost Information

To reduce External failure costs Emphasis on prevention of errors rather than detection of defects in the final product Regular and surprise supplier inspection for raw materials and outsourced components Regulated Supply chain for customer servicing operations. Quality appraisal during manufacture and before despatch of products Use of modular tooling and POKA-YOKE types of systems Establishing the process capabilities of the machines used Design of robust process and products to accommodate variations in production.
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IE5121-Quality planning and Management


Implementing awareness about quality costs and the importance of Zero-defects by top management to the workforce by conducting related training programmes Ensuring Proper documentation before despatch of products Periodic internal or/and External quality audits

Problem No: 4 The quality improvement team should proceed in the following order of priority 1) Product B 2) Product A 3) Product C Justification: Revenue generated by every unit is the most important factor from the companys perspective and the COPQ / unit can be used as a Performance measure. Using the given data a performance matrix was constructed and is shown below [Assumption: There is an equal profit share available for all the products]

COPQ/unit Vs Revenue/Unit


COPQ / Unit



2000.0 1000.0 0.0 0 20000 40000 60000 80000 100000 120000 140000

Revenue / Unit

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IE5121-Quality planning and Management


Product B is more toward the right hand top corner which should be given top most priority followed by Product A and Product C. Since the revenue generated by each item of Product B is more, a small increase in the demand will make a substantial difference in the growth of the company. For Product B, the internal failure cost constitutes about 81% of the COPQ which implies that there is a lot of scope for improvement of the product within the company.

Quality improvement for Product B will help in gain of sales opportunities and better customer satisfaction.

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