The concept of trade-offs is a basic principle in economics that arises from the idea that resources are scarce. As a general principle, trade-off analysis shows that for a given set of resources and technology, to obtain more of a desirable outcome of a system, less of another desirable outcome is obtained (Stoorvogel et al., 2004a). Although there can be win–win outcomes in two dimensions, even such a win–win must come at the expense of some other desired attribute. This concept is based on the principle that each activity has a cost within the logistics operation and that it can be traded off against another logistics activity. Three Levels of Trade-offs including: Intra-functional trade-off which looks at Transportation vs. Inventory; Inter-functional trade-off which considers logistics vs. marketing and Inter-organizational trade-off that considers cost balance among supply chain partners In today’s highly competitive markets, manufacturers must provide high quality products to survive and remain profitable. Manufacturers can achieve higher levels of quality by changing their manufacturing process and/or by product inspection where a multitude of different strategies are often adopted. Each option has its own cost implications that must also be taken into account. By reconciling the competing objectives of quality maximization and cost minimization, a cost of quality approach serves as a useful framework for comparing available manufacturing process and inspection alternatives. Still, any rigorous comparison requires both a metric as well as a profound understanding of cost of quality tradeoff. The cost of quality tradeoffs in manufacturing process and inspection strategy selection are examined through a probabilistic cost of quality model explored analytically using a sample set of fundamental inspection strategies (reinspect rejects, reinspect accepts and single inspection) and applied to the case of electric vehicle battery pack assembly. From an expected value point of view a series of parametric sensitivity analyses reveal that complex tradeoffs between manufacturing process, inspection, internal- and external failure costs determine the optimal manufacturing process and inspection strategy combination. In general, reinspect rejects minimizes internal failure costs, reinspect accepts minimizes external failure costs and single inspection lies in between while minimizing inspection costs. This thesis illustrates the fact that results are scenario specific and depend on product cost-, manufacturing process- and available inspection method attributes. It is also observed that manufacturing process improvement often coincides with a need to change inspection strategy choice, thereby indicating that manufacturing process and inspection strategy selection should not be performed independently of each other. In manufacturing industries, the general term “quality” refers to what quality management literature divides into the two complementary categories of quality of design and quality of conformance. Whereas quality of design focuses on how the product design meets consumer requirements, quality of conformance is concerned with whether the quality produced and provided to the consumer meets the intended design. Both quality levers act jointly to determine the quality perceived by the consumer. Yet while quality of design is an integral part of product quality, it only has a minor impact on the tradeoffs between manufacturing processes and inspection strategies- the subject of this thesis- and is therefore best held constant. On the other hand, quality of conformance plays a central role in manufacturing process and inspection strategy selection. All manufacturing processes are imperfect and have an associated non-conformance rate. Manufacturers seeking to achieve higher quality of conformance have a wide range of options to choose from. These can be divided into two categories; improving produced quality of...
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