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10a Cost of Quality JIT TQM ISO
10a Cost of Quality JIT TQM ISO
AKUNTANSI MANAJEMEN
DOSEN : MELDONA, MM
Cost of Quality
Prevention Appraisal
Activities that seek to Activities for inspecting
prevent defects in the inputs and attributes of
products or services individual units of
being produced. product and service.
•Certifying Suppliers •Inspecting Materials
•Designing for •Inspecting Machines
Manufacturability •Inspecting Processes
•Quality Training •Statistical Process
•Quality Evaluations Control
•Process Improvements •Sampling and Testing
7-5
It is easier to
COQ is not
MEASURE the
required to be
COQ in
reported in the
organizations
financial
that use ABC
statements.
and ABM.
Cost of Quality
gon
2004
Failure Costs
• Those costs incurred because poor quality
products do exist
• Can be further divided into sub-categories of:
– Internal failure costs
– External failure costs
Cost of Quality
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2004
Repair Costs
• Those costs incurred if poor quality products
receive further processing
• If this occurs then the previous processing is
wasted cost
• Why would you do this?
Cost of Quality
gon
2004
Appraisal Costs
• Those costs incurred because poor quality
products might exist
• If these costs are necessary then the process
is flawed and management is guilty
• Why would you permit this?
Cost of Quality
gon
2004
Prevention Costs
• Those costs incurred because poor quality
products can exist and
• Those costs incurred because management
is committed to prevent poor quality products
from happening
• Why would you not do this?
Cost of Quality
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2004
Prevention Costs
Benefit
Appraisal Costs
Cost of Quality
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Cost of Quality
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Cost of Quality
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Cost of Quality
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Assign Responsibility
• Make individuals at all levels responsible for
collecting quality cost data:
– If quality cost data is required then make
it the responsibility of the person who
creates the cost to collect the data
• If no one is responsible no one will bother
Cost of Quality
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Cost of Quality
gon
2004
Useful Quality Cost Knowledge
Cost of Quality
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Management is Responsible
Cost of Quality
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“Cost of quality is …
the expense of noncomformance
–
the cost of doing things wrong.”
Crosby, P. 1979, Quality is Free, McGraw-Hill, Toronto
Cost of Quality
7-22
European
Japan Community
7-23
Managing Time in a
Competitive Environment
We need to
reduce . . .
Process efficiency
The ability to transform inputs into outputs at
lowest cost.
Production processes
Result directly in the production of products or
services provided to external customers.
Business process
Support or enable production processes.
7-25
Measuring Results: Process
Efficiency
Low cycle
time
High High
quality productivity
High
throughput
7-26
Measuring Productivity
Total cost of
Total Factor Value of Goods
= ÷ Providing Goods
Productivity & Services
& Services
Total
Average Good Units
= Processing ÷
Cycle Time Produced
Time
7-28
Measuring Throughput
Efficiency
A measure of the amount of time spent adding
value compared to the total cycle time.
Total
Throughput Value-added
= ÷ Processing
Ratio Time
Time
7-29
Measures of Capacity
Process It is possible
Capacity for “capacity
A measure of Practica demand” to
exceed
a process’s
ability to
transform
l practical
capacity.
resources
into valued
Capacit
products and
services. y
7-30
Measures of Capacity
Traditional “Push”
Manufacturing - Example
Computer Manufacturer
1. 2. Flexible
Commitment Capacity.
to quality.
3. Reliable
Supplier
4. Smooth Relations.
Productio
n Flow.
5. Well- 6. Reduced
trained cycle and
workforce. response
times.
7-36
Which is
more
important?
7-37
Therefore,
quality is
“free”.
7-38
W. Edwards Deming
Quality can be and
proposed that improving
should be improved
quality reduces cost and
continuously.
improves profitability.
Revenues
Total Revenues & Costs
Max Profit
Cost
Max Quality
Quality
7-39
Cost
Total Revenues & Costs
Revenues
Max Profit
Optimum Quality
Quality
7-40
90
80
70
60
A graphical display of the 50
40
frequency distribution of 30
20
attributes. 10
0
Mon. Tues Wed. Thur. Fri.
7-41
100
80
60
A graph showing trends 40
20
in variation over time. 0
.
es
i.
.
on
ur
ed
Fr
Tu
Th
W
M
7-42
100
80
60
40 Notice
A run chart
that this
withprocess
upper
20
0 andseems
lower to
control
be outlimits.
of
control on Fridays.
.
es
i.
.
on
ur
ed
Fr
Tu
Th
W
M
7-43
Diagnostic Information
Cause-and- Scatter
Effect Diagrams Diagrams
Cause-and-Effect Diagrams
Other
Wrong Trucks
directions Flat Tire
from customer Breakdown
Defect =
Late
Ice Deliveries
Rain or Too slow
Road snow
Don’t know
Work Poorly the route
Trained
Road Drivers Sometimes called “fishbone”
Conditions
or Ishikawa diagrams
7-45
Scatter Diagrams
50
40
30
20 This pattern indicates
10 a causal relationship.
0
0 5 10 15 20
Freq. of Incorrect Info
7-46
Flowcharts
Taking Phone Orders
A graphical Prepare Invoice in
duplicate.
Gather customer
information
Update perp.
Inventory
symbols are used to
records.
Initial SI1 and inventory
attach to items. records.
Pareto Charts
A histogram of causes of errors or errors arranged in
order of frequency or size. Helps in prioritizing
actions to address problems.
80
70
60
50
40
30
20
10
0
Late Delivery Defective Incorrect Bill Backorders Wrong Item
Produce
7-48
Customer Satisfaction
Uh, Boss?
My luggage
was Just-in-
Time, but I
wasn’t!