Cost of Quality

Looking Ahead

In this Individual Assignment, you will develop a cost of quality profile for your organisation or an organisation with which you are familiar.

After reviewing the Key Concept Overview, you should now be aware that the cost of quality can be broken down into the following categories:

Prevention costs
Appraisal costs
Internal failure costs
External failure costs

The costs of quality profile changes as an organisation improves its quality culture with an emphasis on the prevention of quality problems. In this Individual Assignment, you will present an in-depth analysis based on the cost of quality categories of your organisation's (or an organisation with which you are familiar) quality cost profile.

To prepare for this Assignment:

1.Read the Oakland textbook chapter found in this week's Learning Resources.
2.Search for additional source materials, including business reports, annual reports, market data and other metrics such as Global Market Information Database (GMID) reports, Datamonitor or Business Source Premier.
4.Identify the sources of costs of quality for your organisation or an organisation with which you are familiar.

In your final report (due in Week 3) you will complete the following:
Write a report (maximum 1,000 words) that identifies the annual costs of quality for your organisation or an organisation with which you are familiar.
The report should identify all the activities, equipment, personnel etc. that contribute towards the organisation's annual total cost of quality.
You should attempt to determine the annual cost for each of these activities. Some of these costs may need to be estimated; be sure to explain how you arrived at the estimation. For example, for personnel, you could use an average annual wage for everyone in your organisation. Similarly, if you know that the amount of scrap materials was £3,908 in February, you could take this as an average for each month and multiply it by 12 to get the annual quality cost for scrap materials.
Once these costs have been identified, they should be categorised into one of the four quality cost categories (i.e. appraisal, prevention, internal failure or external failure). Total annual costs for each of the four cost categories should be calculated, as well as the total annual cost of quality for the organisation (i.e. the costs of all four categories combined).
Finally, comment on your results, judge and justify the level of quality development in your organisation based on this cost of quality analysis and briefly suggest how the cost of quality can be reduced for your organisation.