Chapter 19 Flashcards
What are the two Quality Questions
How good does a company product or service have to be
How can accountants help make quality decisions
Two Aspects of Quality
Design Quality - refers to how closely the characteristics of a product or device meets the needs and wants of customers
Conformance Quality - performance of a product or serve relative to its design and product specs
Four Categories of Quality Cost
Prevention, Appraisal, Internal Failure, External Failure Costs
Prevention Cost
Cost incurred to preclude the production of products that don’t conform to spec
Apprasial Cost
Cost incurred to detect which of the individual units of products don’t conform to specs
External Failure Cost
Cost incurred on defective products after they are shipped
Internal Failure Cost
Cost incurred on defective products before they are shipped. Scrap or rework
Time: A Competitive Tool
Companies view time as a driver of strategy
Managers need to measure time properly to manage it
two operational measure of time: customer response time and on-time performance
Customer Response Time
How quickly companies respond to customers demands for their product or service
On-Time Performance
Indicates how reliable companies meet their scheduled delivery dates. Mangers also measure the cause and cost of delays.
Weighing the Cost and Benefits of improving Quality
When faced with quality issue, managers should evaluate each alternative I.D. the relevant cost and benefits for each alternative
Ask: How total cost and total revenues will change under each alternative
4 Perspective of the Balanced Scorecard
Financial
Customer
Internal Bus. Process
Learning and Growth
Internal Bus. Process Measures
% of defective products manufactured
% of reworked products
of design and process
change made to improve
design quality or decrease COQ
Learning and Growth Measures
Experience and Qualifications of design engineers
Employee turnover ratio
Employee empowerment
Employee satisfaction and training
Customer Perspective Measures
on-time delivery rate
average delivery delays
% of products that fail soon after delivery
of customer complaints
of defective units shipped to customers as a % of total units shipped
% of highly satisfied customers
market share
customer preferences and satisfaction with a certain products
