Performance Measurement and Process Management

Question 1

Conformance Costs

Answer 1

Include costs of prevention and costs of appraisal, which are financial measures of internal performance.

1. Prevention
2. Appraisal

Question 2

Nonconformance Costs

Answer 2

1. Internal failure costs - defective products are detected before shipment.
2. External failure costs - warranty costs, product liability costs, and loss of customer goodwill arise when problems occur after shipment

Question 3

Environmental Costs

Answer 3

External failure costs:

• Fines for nonadherence to environmental law
• Loss of customer goodwill

Question 4

Total Quality Management (TQM)

Answer 4

The continuous pursuit of quality in every aspect of organizational activities through a philosophy of doing it right the first time.

Question 5

What are the four perspectives of critical success factors?

Answer 5

1. Financial
2. Customer
3. Internal business process
4. Learning and growth

Question 6

Four prominent types of benchmarking

Answer 6

1. Competitive benchmarking
2. Process benchmarking
3. Strategic benchmarking
4. Internal benchmarking