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  • Cost of Conformance: Prevention Costs

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    This document discusses the costs of quality, including the costs of conformance and nonconformance. It defines the costs of conformance as prevention costs like employee training and quality improvement projects, as well as appraisal costs like inspection, testing, and audits. Nonconformance costs include internal failure costs like scrap, rework, and downtime, as well as external failure costs such as lost orders, warranty claims, and liability suits. Several measures of quality are presented, relating the costs of nonconformance to total costs and net sales. Delivery time cycle is defined as the time between a customer order and receipt, including order lead time, production time, and delivery time.

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    This document discusses the costs of quality, including the costs of conformance and nonconformance. It defines the costs of conformance as prevention costs like employee training and quality improvement projects, as well as appraisal costs like inspection, testing, and audits. Nonconformance costs include internal failure costs like scrap, rework, and downtime, as well as external failure costs such as lost orders, warranty claims, and liability suits. Several measures of quality are presented, relating the costs of nonconformance to total costs and net sales. Delivery time cycle is defined as the time between a customer order and receipt, including order lead time, production time, and delivery time.

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    33 views7 pages

    Cost of Conformance: Prevention Costs

    Uploaded by

    danielsasikumar
    This document discusses the costs of quality, including the costs of conformance and nonconformance. It defines the costs of conformance as prevention costs like employee training and quality improvement projects, as well as appraisal costs like inspection, testing, and audits. Nonconformance costs include internal failure costs like scrap, rework, and downtime, as well as external failure costs such as lost orders, warranty claims, and liability suits. Several measures of quality are presented, relating the costs of nonconformance to total costs and net sales. Delivery time cycle is defined as the time between a customer order and receipt, including order lead time, production time, and delivery time.

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    of 7

    Chapter 13

    Cost of Conformance
    Prevention Costs
    Quality Training of Employees Design Development of
    Design Review quality equipment
    Quality Planning Activities Quality improvement projects
    Quality Engineering On-line statistical process control
    Preventative Maintenance

    Appraisal Costs
    Sample preparation Vendor audits and sample testing
    All inspection activities Maintenance of test equipment
    Setup for testing Quality audits
    Product simulation and Maintenance of equipment used
    development for quality enhancement

    Cost of Nonconformance
    Internal Failure Costs
    Scrap and rework Failure analysis
    Reinspection of rework Inventory control and scheduling
    Quality-related downtime costs
    Losses caused by vendor scrap Downgrading because of defects

    External Failure Costs


    Loss of goodwill and future Returned Goods
    orders Investigation of defects
    Warranty claims and adjustments Product recalls
    Customer complaint processing Product liability suits
    Customer service

    Measures of Quality
    Total Cost of Quality Cost of Nonconformance
    Net Sales Total Cost of Quality

    Cost of Conformance Cost of Nonconformance


    Total cost of Quality Net Sales

    Total Cost of Quality = Nonconformance Costs + Conformance Costs


    Delivery Time Cycle

    * This is the time that lapses between when the customer says "I want the product,"
    and when the customer actually receives the product.

    Purchase order lead time Time between when the customer places the order
    and when the company receives the order.

    Production time Time that it takes the company to produce the order.

    Delivery time Time between when the order is completed and


    when the customer receives the order.
    Man Hour Rate 150.00
    Machine Hour Rate 500.00
    Data Time
    Sl. No. Failures Collection Values Spent
    Source (min)
    Internal Failure Costs
    No of Reworks RWAN file
    Rework Time RWAN file
    Segregation Time RWAN file
    Re inspection Time RWAN file
    No of CRNs raised CRN file 4
    Time spent on Preparing & approving CRN 40
    No of Rework instructions prepared 4
    Time spent to prepare Rework instruction 240
    No of CAR
    Time Spent on Root cause analysis
    Time Spent on Preparing CAR
    M/c downtime due to quality issue
    Value of Scrapped parts Scrap Note
    Downgrading value due to defect

    External Failure Costs

    Free Replacements
    Travelling expenses to attend customer complaints
    Lodging expenses to attend customer complaints
    Fixed allowance to attend customer complaints
    Time spent on Root cause analysis
    Time spent on CAR
    Value of Sales Returns
    Date
    Date Part Name Qty Re Inspection Time Inspector Name

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