Cost of Quality it's categories, models and types.

Cost of Quality is the part of Quality Management System.

1. Mahatma Gandhi Vidhyamandir’s Pharmacy College, Panchavati Nashik. 422003 A seminar on Cost of Quality Presented by- Ms. Yogita Vijay Ahire Q.A.F. Y. M. Pharmacy Roll no- 34 Under the guidance of – HOD Mrs. H. R. Patil Department of Q.A

2. Vision :
“To be a centre of professional excellence by contributing honestly to the pharmacist moulding process.” Mission : Impart high quality education to graduates Contribute to all spheres of professional activities
Uphold human values and ethics
Nurture them into globally competent professionals

3. Content: Introduction History Categories of cost of quality Models of cost of quality Optimising cost Preventive cosy

4. Cost of Quality: The term “ COST OF QUALITY “has different meanings to different people. Some equate “Quality of cost” with the costs of poor quality (mainly the costs of finding and correcting defective work). Costs of quality or quality costs does not mean the use of expensive or very highly quality materials to manufacture a product The term refers to the costs that are incurred to prevent, detect and remove the defects from the products.

5. What is cost of Quality? It is the term that is widely used and widely misunderstood.
The “COST OF QUALITY” is not the price of creating a quality product or service. COQ is defined as methodology that allows an organization to determine the extent to which its resources are used for activities that prevent poor quality.
Cost of quality data show how profit is affected by quality. “Higher quality is less Expensive to produce than
lower quality” BY W.Edwards Deming.

6. Cost of quality = Cost of conformance + cost of non-conformance Cost of conformance : Cost incurred in ensuring that things are done right the first time. It is the cost of providing products or services as per the required standards. This can be termed as good amount spent. (Prevention & Appraisal costs) Cost of non-conformance: Cost incurred as a result of not doing things right the first time
It is the failure cost associated with process not being operated to the requirements. This can be termed as unnecessary attouint spent.( Internal & External failure costs)

7. It was Joseph Juran who first discussed the cost of quality analysis, In 1951 in the first editions of “Quality control handbook”. And it was Armand Feigenbaum who identified four quality cost categories in 1956 in “Total Quality Control in the Harvard Business Review.
The Quality Cost Committee was established by them ASQC in 1961. History:

8. Categories of cost of quality:

9. Cost of conformance Preventive cost- Prevention costs are associated with design, implementation, maintenance, and planning prior to actual operation, in order to avoid defects from happening. The emphasis is on the prevention of defects in order to reduce the probability of producing defective products.
Prevention activities lead to reduction of appraisal costs and both type of failures (internal and external).
The motto is “Prevention rather than appraisal”.
In the ideal situation, Prevention costs will be the largest portion of the Total Cost of Quality
Typically, prevention is less than 10% of Total COQ where it should be about 70%

10. Activities associate with Prevention cost: Market Research
Quality planning New product review
Tolerance analysis before design release.
Field Trials
Cost of research and developments
Cost of training Quality audits
Prevention of defects

11. 2. Appraisal cost Appraisal costs are spent to detect defects to assure conformance to quality standards.
It is the cost expenditure on inspection and testing.
Appraisal cost activities sums up to the “cost of checking if things are correct”. The appraisal costs are focused on the discovery of defects rather than prevention of defects
Appraisal Costs should be the second largest category, but should not exceed prevention costs

12. ACTIVITIES ASSOCIATED WITH APPRAISAL
COSTS Inspection/test of purchased material
In-process and final inspection/test
Product, process or service audits
Calibration of measuring and test equipment
Maintaining accuracy of testing equipment performed in terms of periodic calibration
Cost of non-destructive testing such as electric probes. X-rays, radiography etc.

13. Cost of Non- conformance Internal Failure Cost These are the failure costs occurring prior to delivery or shipment of the product, or the furnishing of a service, to the customer.
These are the costs that would disappear if no defect is found in the product before dispatching.

14. Activities associate with Internal cost Failure Cost of rework, scrap, Defectives, waste etc.
Cost of re-inspection, re-tests to verify the performance analysis.
Cost of 100% inspection. Changing processes, Modifying manufacturing or service processes to correct deficiencies
Lost production due to supplier materials and own material.

15. 2. External Failure cost These are the costs incurred after the product is dispatched to the consumer.
It may include the cost to the business of providing a bad service or product and this may also result into cancellation of order.
These costs also would disappear if there were no deficiencies

16. Activities Associated with External cost failure Warranty charges
Complaint adjustment
Returned material
Recalling of the product
Allowances

17. Models of cost of Quality

18. Optimising costs Quality cost reduction is achieved in following two stages: When prevention costs are increased to pay for the right kind of system engineering work in quality control, a reduction will occur in rejection A reduction in defective output will have a positive effect on appraisal cost because defect reduction means a reduced need for routine inspection and test activity.

19. Preventing cost of Quality: Prevention costs are associated with design, implementation, maintenance and planning prior to actual operation, in order to avoid defects from happening.
The emphasis is on the prevention of defects in order to reduce the probability of producing defective products.

20. The most widespread examples of quality costs associated with software products are: Training of the staff + requirements and usability analysis
Early prototyping fault-tolerant design
Defensive programming accurate specification and internal documentation
Evaluation of the reliability of the product

21. Reference: Narayana V and Sreenivasan , N.S. “Quality Management-Concepts and Tasks”. New Age International, 1996 Total Quality management by Dale. H. Besterfield Juran Quality Control Handbok 5 th edition www.businessballs.com

22. Thank you...