Student Learning Objective 2
Explain the fundamental definitions of total quality management and continuous improvement.
Learning Objective A
Examine the economics of poor quality.
Content
Quality is a term that most people inherently understand but have a difficult time explaining. This module provides an explanation of total quality, total quality management and the economics of poor quality.
Slide 1: Costs associated with Poor Quality
Figure 2.1: Factors to Consider when Quantifying the Costs of Poor Quality
- Traditional Costs
| Waste | Customer Returns |
| Rejects | Inspection |
| Testing | Recalls |
| Rework |
- Hidden Costs
| Excessive Overtime | Handling Complaints |
| Pricing Errors | Expediting |
| Billing Errors | System Costs |
| Excessive Turnover | Planning Delays |
| Premium Freight Costs | Late Paperwork |
| Development Cost of the Failed Product | Lack of Follow-up |
| Field Service Costs | Excess Inventory |
| Overdue Receivables | Customer Allowances |
| Unused Capacity |
Slide 2: SPC Productivity Example
Slide 3: 4 Categories of quality Costs
- Prevention,
- Appraisal costs,
- internal failure costs, and
- external failure costs
Slide 4: Prevention Costs
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Quality planning and engineering
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New product reviews
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Product/process design
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Process control
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Burn-in
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Training
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Quality data acquisition and analysis
Slide 5: Appraisal Costs
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Inspection and test of incoming material
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Product inspections and testing
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Materials and services consumed
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Maintaining accuracy of test equipment
Slide 6: Internal Failure Costs
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Scrap
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Rework
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Retest
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Failure analysis
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Downtime
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Yield losses
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Downgrading/off-specing
Slide 7: External Failure Costs
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Complaint Adjustment
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Returned Product/material
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Warranty charges
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Liability costs
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Indirect costs