Cost of Quality

Topics: PDCA, Quality control, W. Edwards Deming Pages: 11 (2490 words) Published: November 26, 2010
Chapter: 1
1. Background

1.1 Background:
Many companies that embark on a quality-improvement process have no idea of the potential for savings until they begin to accurately analyze the costs of (non)quality. They may estimate quality costs at about 5 percent of sales, scoff at those who remark that they may be as high as 10 percent, and are astounded when they find the costs at a level of 20 percent (or more) of sales. This number is not as uncommon as it may seem. The main aim of this term paper is to find out what cost of quality is its calcification estimation of optimum - level of product’s quality and finally how to prepare a quality cost report.

1.2 Purpose:
The purpose of our report is to understand what cost of quality is how we classify and report cost and how we can achieve the economic conformance level and finally find out about what Total Quality Management is and how we can achieve that.

1.3 Objective of the study:
The objectives of this study are-
• To fulfill the partial requirement of the course under the guidance of the coordinator. • Find out the importance and benefits of cost of quality • What are the types of cost of quality?

• To find out how to improve in cost of quality.
• To find out how to distribute cost of quality.
• How to prepare cost of quality report?
• Uses and limitation of quality cost information
• Finally how to minimize cost of quality.

1.4 Methodology of the study:
We are five members in our group. Information used to prepare this paper has been collected from the Secondary source. The secondary sources of information were collected from the internets and the course related books.

1.5 Limitation of the study:
We encountered some problems in the process of gathering information and data for this study. Like- • Lack of information about cost of quality

• Limitation of time was another factor

Chapter: 2
2. Introduction

2.1 Introduction:
The word "quality" is used more and more often in companies, whether in the food, industrial or services sectors, and the IT sector. In this report, the term "company" independently refers to any company, organization or association in the public or private sector. In the same way, the term "client" must be taken generally to mean "beneficiary" and the term "product" the provision of a material or immaterial (service) deliverable. Many concepts hide behind the term "quality". This report aims to define the main terms and understand the goals and types of implementing a quality cost.

2.2 Cost of Quality
The concept of quality costs is a means to quantify the total cost of quality-related efforts and deficiencies The total costs incurred on quality activities and issues and often split into prevention costs, appraisal costs, internal failure costs and external failure costs.

2.3 Importance of Cost of Quality
In these difficult times, many businesses have cut production and workforce to control costs. But what about quality? Customers still demand a quality product at a reasonable price. In this sense we can say that in our real life quality cost minimization and in which way quality cost can be improve that is the importance of quality cost. Cost of Quality ("COQ") can be used to identify the global optimum for a process, and monitor that process' progress towards its global optimum.  Global optimum is defined as the best possible outcome from all physically possible operating modes.

2.4 Uses and benefits of Quality cost information:
The benefits, which result from the quality management can
be divided on three areas:
Benefits for worker
• The definite standard of working,
• Interchangeable assigned the responsibilities and authorization, • Making clear for workers their place in the whole work of organization, •...
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