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Cost of quality: Evaluating cost-quality trade-offs for inspection strategies of manufacturing processes

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  • Farooq, Muhammad Arsalan
  • Kirchain, Randolph
  • Novoa, Henriqueta
  • Araujo, Antonio

Abstract

Cost-quality trade-offs are required when manufacturing industries seek to minimize cost and maximize product quality or reliability. We report a challenging cost-quality tradeoff problem for a consumer goods industry where both cost and quality are modeled together. First we present a 10-step systems engineering methodology for quality improvement of manufacturing systems and comprehensively discuss the cost of quality step. The methodology investigates in detail inspection strategies of the manufacturing systems by exploring four alternative strategies. Key elements in this investigation consists of modeling the appraisal costs that involve costs to detect a non-conformed unit through inspection or testing, and failure costs that involve costs of rework, scrap, warranty claims and loss of goodwill and sales. Among the main findings of the research is that optimum inspection strategy can be achieved by modeling the cost savings from each strategy and plotting against non-conforming rates shipped to the customer and additional external failure premium.

Suggested Citation

  • Farooq, Muhammad Arsalan & Kirchain, Randolph & Novoa, Henriqueta & Araujo, Antonio, 2017. "Cost of quality: Evaluating cost-quality trade-offs for inspection strategies of manufacturing processes," International Journal of Production Economics, Elsevier, vol. 188(C), pages 156-166.
    • Handle: RePEc:eee:proeco:v:188:y:2017:i:c:p:156-166
    DOI: 10.1016/j.ijpe.2017.03.019
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    References listed on IDEAS

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    1. Wu, Chien-Wei, 2012. "An efficient inspection scheme for variables based on Taguchi capability index," European Journal of Operational Research, Elsevier, vol. 223(1), pages 116-122.
    2. Chen, Jianwei & Li, Kim-Hung & Lam, Yeh, 2007. "Bayesian single and double variable sampling plans for the Weibull distribution with censoring," European Journal of Operational Research, Elsevier, vol. 177(2), pages 1062-1073, March.
    3. Pursglove, A. B. & Dale, B. G., 1995. "Developing a quality costing system: Key features and outcomes," Omega, Elsevier, vol. 23(5), pages 567-575, October.
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    Cited by:

    1. Hauck, Zsuzsanna & Rabta, Boualem & Reiner, Gerald, 2021. "Joint quality and pricing decisions in lot sizing models with defective items," International Journal of Production Economics, Elsevier, vol. 241(C).
    2. Choi, Yunsik & Delise, Lisa A. & Lee, Brandon W. & Neely, Jerry, 2021. "Effective staffing of projects for reconciling conflict between cost efficiency and quality," International Journal of Production Economics, Elsevier, vol. 234(C).
    3. Qian, Cheng & Anderson, Edward, 2020. "Buyer’s optimal information revelation strategy in procurement auctions," European Journal of Operational Research, Elsevier, vol. 283(3), pages 1011-1025.

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