Lesson 6 Flashcards
outline the changes in quality costs related to the product life cycle
Prevention costs occur early in the product life cycle during design or manufacturing. These costs are usually much less than ones which occur later in life cycle (warranty & repair costs). Appraisal costs and internal costs occur throughout the mfg process whilst the largest costs, external failure costs occur after the product has been delivered to the customer.
apply balanced scorecard concepts to the analysis of quality.
MEASURE - DESCRIPTION - INTERNAL/EXTERNAL
Percentage of employees who participate in quality
improvement activities - Measures the number of staff actively pursuing quality improvement efforts -Internal
Quality improvement training hours - Number of training hours spent on quality improvement training -Internal
Percentage of best practice processes -Measures the percentage of processes within the company that are categorized -as a best practice - Internal
Inspection hours - Number of hours spent inspecting
products for defective units -Internal
Rework rate - Number of units reworked of total units - Internal
Defect rate - Number of total defective units - Internal
Yield - Measures the number of good units from a batch of production - Internal
Number of returns - Number of returned products in a given period over total sold - External
Average repair time - Measures the number of labour hours used to repair defective products -External
Customer satisfaction - Satisfaction survey to help assess
impact of quality on repeat sales -External
analyze quality control problems using three methods
Control Chart
Pareto Diagram
Cause & Effect Diagram
- analyze the benefits of using both financial and nonfinancial measures of quality
Costs of design quality refer to costs incurred to prevent or arising from low quality design. Many of these costs are difficult to measure precisely and most orgs do not measure the financial costs of design quality
Most orgs monitor both financial & non-financial measures of internal quality. Financial measures are prevention costs, appraisal costs, internal failure costs. Non-financial measures are defect rates, avg repair time, rework rate, # of defects analysed, # of design & process changes made. Non fin measures are informative when trends are examined over time.
learning & growth non financial measures of quality - ee turnover rate, ee empowerment ratio, ee satisfaction rate, ee training rate. These measures provide the best information when mgrs. study trends and relationships
Advantages of financial costs of quality are:
- focuses attention on how costly poor qlty can be
- useful way to compare quality improvement programms and set priorities for achieving max cost reduction
- serve as common denominator for evaluating tradeoffs among prevention and failure costs
Advantages of Non-fin measures
- easy to quantify & understand
- direct attention to physical processes & focus attention on precise problems in need of improvement
- provide immediate feedback on if improvement efforts succeeded
- useful indicators of long-run performance.
theory of constraints
The theory of constraints can help an organization de-bottleneck an operation and increase
throughput. Companies often try to improve production process efficiency without clearly
identifying the key constraints that are limiting throughput. For example, increasing the
capacity of a specific machine is only effective if this machine is constraining the number of
units a company can make in a given period. By identifying the constraint that limits output, a
company can increase the capacity of the constraining factor.
The other benefit of identifying constraints is that the company will be made aware of the
time that is required in each production process for each of the products they produce. Using
this information will allow the company to choose the mix of products that will maximize
profitability. If different products require different amounts of a constraining resource, a
company will want to maximize the production of the product that returns the highest
profitability per constraining resource (e.g., per machine hour) as long as demand for the
product exists.
