Cost of Quality (CoQ) Analysis: A Detailed Thesis

Tacettin İKİZ · December 29, 2024, 01:01:27 PM

Cost of Quality (CoQ) Analysis: A Detailed Thesis

Abstract
The "Cost of Quality" (CoQ) is a framework for measuring the total cost associated with achieving and maintaining product or service quality. This thesis provides a comprehensive breakdown of CoQ, dividing it into "Cost of Good Quality" and "Cost of Poor Quality." The analysis uses real-world data to explore how investments in quality can reduce failure costs and improve overall efficiency. This thesis concludes with actionable recommendations for optimizing CoQ in organizations.

Introduction
Cost of Quality (CoQ) is an essential concept in quality management. It includes all costs associated with preventing, detecting, and correcting defective work. The CoQ model categorizes costs into four groups:
- Prevention Costs
- Appraisal Costs
- Internal Failure Costs
- External Failure Costs

This thesis explores each category, supported by real-world data, to highlight the implications of CoQ on organizational performance and customer satisfaction.

CoQ Tree: Framework Explanation
1. Cost of Good Quality
Prevention Costs
- Investments in quality systems to prevent defects from occurring.
- Examples include Advanced Product Quality Planning (APQP), Failure Mode and Effects Analysis (FMEA), Process Capability Studies, and Training.

Appraisal Costs
- Costs incurred to ensure quality standards are met.
- Examples include Incoming Inspection, In-Process Inspection, Calibration of Tools, and Final Product Audits.

2. Cost of Poor Quality
Internal Failure Costs
- Costs arising from defects found before delivery to the customer.
- Examples include Rework, Scrap, Downtime due to Equipment Failures, and Machine Breakdowns.

External Failure Costs
- Costs arising from defects discovered after the product has reached the customer.
- Examples include Warranty Claims, Product Recalls, Legal Fees, and Negative Public Relations.

Real Data Analysis
1. Prevention Costs
- Quality Training: INR 10,000
- Quality Planning: INR 15,000
- Supplier Qualification: INR 5,000
- Design Validation: INR 20,000
- Total: INR 75,000 (27% of Total Cost)

Root Causes of High Prevention Costs:
- Lack of standardized training procedures.
- Insufficient vetting of suppliers.
- Reactive approaches to quality improvement.

2. Appraisal Costs
- Inspection: INR 20,000
- Testing: INR 15,000
- Quality Audits: INR 5,000
- Calibration of Tools: INR 5,000
- Total: INR 45,000 (16% of Total Cost)

Root Causes of High Appraisal Costs:
- Inadequate inspection procedures.
- Outdated testing equipment.
- Infrequent audits.

3. Internal Failure Costs
- Rework: INR 25,000
- Scrap: INR 30,000
- Downtime: INR 30,000
- Machine Breakdowns: INR 15,000
- Total: INR 100,000 (36% of Total Cost)

Root Causes of Internal Failures:
- Ineffective process controls.
- Poor maintenance scheduling.
- Equipment malfunction and aging infrastructure.

4. External Failure Costs
- Warranty Claims: INR 15,000
- Product Recalls: INR 15,000
- Legal Fees: INR 15,000
- Loss of Market Share: INR 20,000
- Total: INR 55,000 (20% of Total Cost)

Root Causes of External Failures:
- Poor customer experiences.
- Lack of compliance with regulations.
- Negative brand reputation due to poor quality.

Conclusion
The analysis demonstrates that investing in "Cost of Good Quality" activities such as prevention and appraisal can significantly reduce "Cost of Poor Quality." Organizations should focus on quality training, robust inspections, and proactive maintenance to minimize failure costs effectively. Future studies could focus on predictive tools for optimizing quality systems.

References
1. Juran, J.M. (1998). Quality Control Handbook.
2. Crosby, P.B. (1979). Quality Is Free.
3. Deming, W.E. (1982). Out of the Crisis.

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Cost of Quality (CoQ) Analysis: A Detailed Thesis

Tacettin İKİZ