1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
A Dynamic Model of Quality Costs and Benefits System for Design Quality
AK Bajpai PCT Willey
D of N icalEngineeri Dept of Mfg, Eng & Mfg
MMM Engineering Mi University of Nottingh
College of Gorakhpur - 273010 Nottingham, NG7 2RD, UK
India
Abstract
The importance of quality costs and benefits is sometimes not fully recognised by industrial
managers. Quality costs money. Industrial managers recognise this and tend to be afraid of spending
on quality. But quality also earns money. Industrial managers do not seem to be fully convinced of
this fact. Unfortunately, even the existing literature on the subject does not encourage investing for
higher quality. Most of the cost models about quality deal with quality improvement and the costs
associated in achieving the desired level of quality, but fail to incorporate the benefits of improved
quality.
In this work, an attempt has been made to develop a quality costs model which incorporates the
benefits. The quality cost elements have been drawn from various standards sources such as British
Standards and American Society for Quality Control publications on quality costs. The benefits from
investing for quality are taken from recently published case studies and reports as well as from our
own experiences. The elements of quality related activities of design department, such as design
standards, training design staff and test equipment are identified. The contribution of each individual
element, starting from estimation of losses due to poor design to prevention of poor design is isolated
and linked dynamically so that costs and benefits are demonstrated through time.
The quality costs and benefits model was developed using the System Dynamics Modelling approach
and simulated using the computer software package "Professional DYNAMO Plus". The simulated
results demonstrate the extent to which prevention investment is justified by future earnings.
It is felt that the model can be a significant addition to course material for training programmes of
industrial managers. It allows the user to explore the consequences of different quality management
policies such as the amount of investment and the nature of investment on the profit performance and
delay before profits are increased in an organisation. It is hoped that the model will serve as a useful
tool in the hands of decision-makers, encouraging them to invest more in prevention activities.
Change Management, page 1
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
A Dynamic Model of Quality Costs and Benefits System for Design
Quality
INTRODUCTION
The importance of quality costs and benefit its is imes not ised by industrial
and worse, it is di is itudes; d ined attitudes lead
to sub-optimal management policy sub-optimal policy leads to company to settle for mediocre
quality targets; in the end mediocre quality is the reputation of the company and affects directly
the demand of the customers for its product(s).
Quality costs money. Industrial managers recognise this and tend to be afraid of spending money
on achieving quality. This is because while costs are obvious enough, since accounts need to be
kept of them, the benefits and savings which arise from improving quality are elusive and are
never shown (Kaplan 1983), (Kaplan 1986), (Holusha 1986), (Park 1987). So, we can never
know how much more we could improve the benefits and save if we spent more on quality.
The well known model (figure 1), relating quality to prevention, appraisal, and failure costs, first
appeared, without any research or attributed sources, probably in Juran (1962). It has been
reproduced many time since, mostly in chapter one of quality text books, but also in the British
Standard on Quality Costs BS 6143 (BSI, 1981). Even if it had a factual basis, this model has
several major difficulties (Bajpai and Willey, 1989). First, there is no universal measure of
quality. BS 4778 (BSI, 1987) says: "Quality is the totality of features and characteristics that bear
upon its ability to satisfy stated or implied need". While "totality" may sound fine in principle, it
poses a conundrum. For a car, say, what is the "totality", fuel economy, reliability, safety,
comfort or the drag factor and others? They are all separate components of quality which, if
measured at all, have separate scales and different units. Only the customer decides "satisfy" and
there is on simple, realistic index of that to plot as the axis of a graph. So much for the
horizontal axis. The vertical axis of the model shows the costs of achieving a particular quality
level. However, recent surveys of industry indicate that in most industries quality costs are not
recorded and collected (Morrison 1984), (Abed and Dale 1987), (Kaplan 1984). Even if the
components of quality costs could be unearthed, they would only refer to one quality position and
we do know what the position is because we cannot measure it. This actually inhibits quality
improvement. A company cannot tell whether it would reduce or increase but according to the
model (figure 1), they could choose the wrong direction for change and quality costs increase!
Again the vertical axis of the model (figure 1) is variously labelled as ‘costs' or ‘unit costs'. The
difference between these two is important for reasons associated with economy of scale. If a
company invests seriously in a quality improvement programme, then the costs of prevention
are spread over all its products. In addition, the results of improvement, as reflected in the
marketplace mean increased demand. So the Unit costs of prevention are spread over a larger
number of items. Yet the benefits are generated per item sold. The well-known graph does not
represent that fact.
GENERAL DESCRIPTION OF THE MODEL
Several case studies and reports on quality have shown that when manufacturing organizations
increase their ii on lated activities they gain higher benefits in future
(Blank and Solorzarno, 1978), \(Brisac et al, 1971), (Chauvel and Andre, 1985), (Denton, 1988),
(Issac, 1984), (Willium, 1985). The experiences of Deming (1986), Crosby (1979) and Oakland
(1989) also favour higher investment in the form of so called prevention-costs to increase for
future benefits.
Change Management page 2
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
Economic balance
+ Cost per unit, of seeduet ———
Prevention an
4
Measure of qualtly ——e
Uuatoy level}
Figure (Aner 8S 6143, 8S1 1981 )
PRE “
veritic
cote. BENEFITS
Figure 2
o
BENERIYS CUMULATIVE
BENEFITS
Figure 2
a
PREVCUTION
costs,
CUMULATI i,
BENEFITS
Figure 4
If higher i i d benefits to a company that must be shown in the
model. One penomenon is shown in figure.2. The positive sign at the head of the arrow
indi costs mean increasing benefits. The increase in incoming
benefits vill ead to an incre in cumulative benefits as shown in fig 3. However, the immediate
effect of it will the | of ive benefits (total reserve) as depicted in fig.4.
Change Management, page 3
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
The negative sign at the head of the arrow indicates that higher investment in the form of
Pp costs mean a of benefits.
PREVENTION
costs
ro)
)
BENEFITS
od |
CUMULATIVE
BENEFITS
Figure §
caui
Bnew dag peat, 00 alagran
revention costs and benefits
CO
CUMULATIVE
BENCEITS ()
BENCrITS PREVENTION|
costs
Figure 6 Flow diagram
showing prevention costs and benefits
Figure 5, which is formed by the combination of figs 2 to 4, is ly known as " I-loop"
diagram. It contains two loops. One is a positive loop having prevention costs, benefit ts and
cumulative benefits and the other is a negative loop between pi costs and
benefits.
These elements and logic are shown in the form of flow diagram using system Dynamics
(Forrester, 1964) conception of ‘level’ and ‘Rates’ in fig 6. The cumulative benefit is shown as a
level while prevention costs and benefits are depicted as rates. As explained above, there are two
loops, a positive loop linking benefits, i benefits and pi ‘ion costs and a negative
loop linking p ion costs and ive benefits. These two loops serves together as a
closed-loop feedback system. The concept developed and shown in figs 2 to 6 has been utilized
throughout the building of the quality costs and benefits model for design quality. However,
minor adjustments are made to suit the particular conditions.
Change Management page 4
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
DESIGN QUALITY
It has been stated and observed that some of the most costly problems with a | product are caused
by an in adeq design. Often probl in per and
servicing, commonly called " "quality problems", have root ‘causes in the design of the part or the
assembly. So the quality of design can be evaluated from following points:
qd) The manufacture's point of view: The fe is basically d that the
component could be made from standard taterials, from existing machines/machine tools
with minimum special tools and ‘ing
Some design features adversely influence productivity such as unnecessarily tight
tolerances or specifications which need special equipment for measurement but have little
impact on performance.
(2) The “User's point of view: The user's view is mainly a concern for "fitness for use" or "to
serve intended purpose". Durability and reliability of a product are other important
concerns of the user. Apart from these he/she also expects that, in the case of failure,
the product can be repaired/serviced at a reasonable cost without unreasonable delays.
In addition to the manufacturer and user, the purchase department is also affected by the design
of the product particularly when there are large numbers of components to be procured from
outside suppliers and assembled into the final product during the manufacturing cycle. The
purchasing department is basically concerned with procuring material at reasonable costs and with
reliable delivery. These aims can be achieved more readily if the product is made up from
standard materials, standard p and
Inad doption of these iderations in product design will result in more scrap, more
rework and excess wastage resulting in higher manufacturing costs, higher quality costs and higher
warranty, replacement, maintenance, and servicing costs. All these lose customer goodwill, which
in turn leads to loss of prospective customers.
An improved design, incorporating the needs of manufacturers, purchasers and users, can be
developed if the design staff is adequately trained and provided with necessary requirement, such
as design standards and test equipment. Thus, for the purpose of the quality costs and benefits
model, three elements have been in identified:
(1) Design standards
(2) Training design staff and
(3) Test Equipment
DESIGN STANDARDS
Design dard not jlable to design and development staff. The cost of
buying and using xi this bkank line appropriate design standards as very small comparey with
other capital expendi in the pany but dards play a significant role in improving the
quality of manufactured products and in the reducing procurement costs.
In fig. 7 the causal loops show the increasing the costs of design standards mean reduction in
cumulative benefits from design standards (CBDS). In simple terms it means a debit from ‘design
standards’ account. This is represented by negative signs at the head of the arrow. The other
effect of this investment is the increase in benefits which is shown by positive sign at the head of
the arrow at the benefits from design standards (BDS). These incoming benefits increase the
CBDS. This enables the company to invest more for the same cause which in turn enhances the
benefits.
Change Management, page 5
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
61
STALCARDS
oy ES
(3)
BENEFITS FROM
DESIGN STANDARDS,
(60S)
od
CUMULATIVE
BENEFITS FROM
CESIGN
“TAnIARLS, ay
Figure 7 Cavssi 1064 “me
iB PS for
design standards FLOS Fans
STANDARDS:
FREDS:
~~
CUMULATIVE BENEFITS
FROM DESIGN
STANDARDS
(cups)
LUCEITS,
FROM
bESIGN
STANDARDS
Fre
Coney
Figure @ Flow diagram for design standards.
Figure 8 shows the flow diagram for design dards. Based on the d losses due to design
quality (ELDQ) and with the help of factor of losses due to design standards (ELIDS), the
estimation of losses due to inadequate design standards (ELIDS) is made. This is used for
determination of the amount for design standards (ADS) depending upon factor for the amount
for design standards (FADS), that when invested known as cost of design standards (CDS).
On the other hand, an initial amount for the p of design dards has been all d,
from cumulative quality benefits from prevention in design (CQBPD), depending upon the factor
for design standards (FRFDS), known as cumulative benefits from design standards (CBDS).
That was all about the costs side, now coming to benefits aspect. The flow-diagram shows that all
benefits from (using) design standards (BDS) come after a first order delay D1, and all the benefits
are expected to emerge within a certain time span shown as averaging time for design standards
Change Management page 6
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
(ATDS). These benefits ought to increase, as an independent positive impact factor is
incorporated in the model. Consequently the total funds for design standards goes up and so the
cumulative benefits from design standards (CBDS).
TRAINING DESIGN STAFF
It has been ack ledged in the | that i and blies are
designed by those desi who are not ad d d and trained “fot the job. Their
concepts may quite out-of date. They may be pre in the latest know-how (and know-why!)
of ing materials and ‘ing p These p need up to
date their knowledge through a programme of training. Training costs money. Cost will be
incurred in:
- identifying training needs
- carrying out training
- keeping records of training
The costs incurred in training design staff may be considered as quality prevention costs. The
benefits of training can be achieved in the form of "quality design" of products which lead to:
- Ease in manufacturing. This means saving in the form of less scrap, less rework and less
wastages will ap]
- Satisfied user. This should lead to an increased demand for products.
- Ease in purchasing: As it is always to buy iP rather to
arranging nonstandard parts.
Figure 9 shows the causal loops for training design staff. The figure explains that the increasing
the cost of training design staff (CTDS) reduces cumulative benefits from training design staff
(CBTDS). This is shown as a negative sign at the head of the arrow that links cost of training
design staff to the cumulative benefits from training design staff. On the other hand, the
investment for training brings benefits which are listed above. These benefits ultimately increase
benefits bling the pany to invest more in training design staff. This
relationship is shown with arrows with positive signs.
The figure 10 shows the flow diagram for training design staff. The diagram show that a part of
losses in estimated losses due to design quality (ELDQ) which are attributed to inadequate training
of design staff (ELITDS) with the help of a factor of losses due to training design staff (FLTDS).
To recover the losses an allocation is made known as cumulative benefits from training design
staff according to a factor known as for training design staff (FRFTDS). On the basis of ELITDS
an amount for training design staff (AMITDS) to be invested for training design staff, is
determined using a factor called factor for amount for training design staff (FATDS).
As training takes quite some time before a person is ready to show the impact of training that he
had taken, a third order (D3) is there between investment is to be made and benefits to emerge.
The figure also shows the period during which all the benefits of the training are expected to
emerge (ie. averaging time for training design staff) (ATTDS) and the positive impact factor.
The incoming benefits from TDS, increase cumulative benefits from training design staff.
Change Management, page 7
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
Costs Gr
TRAINING
Blots iat
(CIbS)
()
(+)
BENEFITS FROM TRAINING
DESIGN STAFF
«BTDS)
mo)
CUMULATIVE
BENEFIIS FROM “*
TRAINING DESIGN
Figure © Causal locps for ‘CB10S)
fl
training design staff.
J FATOS
From,
Eta |
FRETDS
CUMULATIVE BENEFITS
FROM TRAINING DESIGN
Ft start
«cpTos)
BLNEF ITS ‘COSTS,
OF
trom
Loup
ERamine TRAINING
DLSIGN
i TDs.
Figure 10 Flow diagram
fe
training design staff. or
TEST EQUIPMENT
Lack of sufficient test equipment is another cause identified for
prototype can not be fully tested for lack of sufficient test equi
performance and increases repairs and warranty costs.
poor product quality. Sometimes
This causes probl in
Figure 11 shows the costs and benefits relationship in the form of causal loops. It shows that the
increasing the costs of test equipment (CTE) means a reduction in the cumulative benefits from
test equipment (CBTE). This is shown as a negative sign at the head of the arrow that links CTE
and CBTE. However, the i for test i has t ial effects which are shown
as benefits from having test equipment (BTE) available in the diagram. These benefits ultimately
increase CBTE, so the companies can invest more in test equipment. This concept is represented
by arrows with positive signs at their heads.
Change Management page 8
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
LUSTs OF
ust tourette
(ares
BENEFITS FROM
TEST EQUIPMENT
«BTED
CUMULATIVE BENEFITS
FROM TEST EQIPMENT t+}
ACBTE)
Figure 11 Caveal loops for re
test equipment.
FLUTE
ESTIMATED
TEST
LOSSES DUL TO
froma! ADEQUATE EQUIPMENT
Hes TEST EQIPMENT (ATED
: (ELUTED
bREe
CUMULATIVE BENLEITS
FRC TEST EOIPEENT
(ceTe)
BENEFITS
FROM
From
ceuPo
thot
EOIPMENT
(BIC)
Figure 12 Flow diagram for
test equipment.
The figure 12 represents flow diagram for test equipment. It shows that a part of losses in
estimated losses due to design quality (ELDQ) are attributed to inadequate test equipment. The
estimation of losses due to test in made in with the factor of
losses due to test equipment (ELTE). In order to recover the losses an allocation is made called
cumulative benefits from test equipment (CBTE) according to a factor for test equipment
(FRFTE). On the basis of estimated losses due to inadequate test equipment an amount for test
equipment (ATE), to be invested for test equipment, is worked out, using a factor for allocation
for test equipment (FATE) and known as costs of test equipment (CTE).
Change Management, page 9
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
Further, to incorporate the time delay in: planning decision, finance, procurement action,
an of the a first order delay has been introduced between
investment made and benefits occur. The positive impact factor ensures the benefits and
averaging time, as usual shows the period during which most of the benefits will emerge. Finally,
the incoming benefits will raise the cumulative benefits for equipment ie. funds for further test
equipment.
DESIGN DEPARTMENT
brsion
aianeians
oo. 2
oy BENEFITS FROM
besien _——
co
CUMULATIVE
ay
BEENEFITS FROM
Dshiee St aMnanns
OH 8 ern
wert
scons 1 NN en
DESIGN
= ed
“ DESIGN (OBPD)
BENEFITS FROM ‘sh
Cos13 OF
TEST EQUIPMENT
we cere o
DENEFITS FROM
TEST EQUIPMENT
«wre
oy
CueMAt ive
GENEETS Fhe,
TEST EoIprent
(CBT?
COMLATIVE QUALITY
URHEFITS FROM Pie VENTION IN
Uebion Gaile
co
The causal loop diagram for the design department is shown in figure 13. This is made up by
combining causal loops for design standards, training design staff and test equipment. The figure
shows the quality costs prevention.in design is the sum of the costs of design standards, training
design staff and test equipment. Similarly the quality benefits from prevention in design are the
sum of the benefits arising from design standards, training design staff, and test equipment. These
benefits raise the cumulative benefits ie. total budget for the design department.
In figure 14 the complete structure of design (department i is depicted using System Dynamics
symbols. This is drawn by the flow d for design dards, training design staff
and test equipment, as shown earlier. The losses due to design quality are estimated (ELDQ), as a
fraction of the losses in sales benefits (ELSB) with the help of a factor called loss factor for
Change Management page 10
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
FIVE BERLE
NANNING OF SLC.
pacvention
Figure 14 Flow diagram for
design department.
Change Management, page 11
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
design quality (FLDQ). These estimated losses in design quality are further attributed to individual
elements within the department, ie. design standards (FLIDS) training of design staff (FLITDS),
and test equipment (FLITE). At the time, an initial allocation for the improvement of design
quality is made and called cumulative quality benefits from prevention in design (CQBPD).
Cumulative quality benefits from prevention in design are worked out as a fraction of the
cumulative quality benefits in sales (CQBS), depending upon a factor called: factor for design’
(FRFDES). From the cumulative quality benefits from prevention in design berther allocation are
made to individual quality elements ie. for design standards CBDS, for training design staff
CBTDS, and for test equipment CBTE. Further, as explained in figure 13, the quality costs of
prevention in design is the sum of the costs of design standards, training design staff and test
equipment, and similarly the quality benefits of prevention is the sum of benefits from design
standards, training of design staff and test equipment.
EQUATIONS OF THE MODEL
For developing equations of the model on DYNAMO (Pugh-Robert 1986) format the cost is
considered as rate and shown in rate equation. For example the cost of training design staff is
expressed as:
CTDS KL = PULSE (ATDS.K,DITDS,FITDS,IITDS)*(1/DT)
Where,
CTDS : Costs for training design staff
ATDS Amount for training design staff
DITDS ‘ Duration of investment for training design staff
FITDS ze First time investment for training design staff
IITDS Z Interval between investment for training design staff
This investment, as experience shows, result benefits that termed here as benefits from training
design staff, and again expressed using rate equation.
BTDS,KL = DELAY 3 (CTDS.KL,ATDS)*IMFTDS
Where,
BIDS : Benefits from training design staff
CTDS ‘ Costs for training design staff
ATTDS : Averaging time for training design staff
IMFTDS £ Impact factor for training design staff
There benefits ultimately increase the cumulative benefits which is shown below in form of level
equation:
CBTDS.K = CBTDS.J + (BTDS.JK - TDS.JK)* (1/DT)
Where,
CBTDS : Cumulative Benefits from training design staff
BTDS t Benefits from training design staff
CTDS “i Costs of training design staff
The complete listing of the model equations is beyond the scope of this paper. But, the same is
given in Bajpai (1990). The interested readers can get the model listing by writing to the author.
TEST RUN OF THE MODEL
The test run establishing the behaviour of the model under a set of conditions, that ought to be
the environment under current economic and industrial setup is shown in forthcoming section.
The model behaviour is displayed & d in section. The incorporation of
benefits of improved quality’ against a time scale can be seen as a major achievement in this
research work.
Change Management page 12
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
DESIGN STANDARDS
monn BMG, ,8
TORTIE
2a -_
Fy.
a A!
eat i
oh
Hi fl ;
i
alg,
TIRE wean
Figure 15 Test run for estimated 1 1e to inadequate
eaign standards (ELIDS). Denefite fron design scanesras
(aps unulative benefits from design standards (CBDS).
Fig. 15 shows the effect of investment in design standards. The time is shown along X axis while
costs and benefits are along Y axis. The figure shows that estimated losses due to inadequate
design dards (ELIDS) are i The i for providing adequate
design standards was made after three years from the start, shown as costs of design standards,
results a reduction in cumulative benefits from design standards (CBDS), appears as a depression in
CBDS curve, immediate after the investment was made. The effect of investment appears after a
period of one year as shown by benefits from cumulative benefits design standards (BDS). These
benefits start after the lapse of one year, soon reaches to their peak values and there after
gradually reduces. However the incoming benefits increasing.
TRAINING DESIGN STAFF
(0, 88.)
a ste HDS
NG ~ COTDS(-Lee., 300.)
3. — ~ CHS. 8 3b.)
TIME cveany
Figura 16 Test run for estimated losses due to inadequal
training dosign state (ELtTDs), costs of training Roe
Tepe (GroshMetetite tron eratpiag sqaign state (Brae)
Training is a time consuming process, whether it is for top middle or
for perator. As explained in the previous case, the losses due to inadequate training of design
Change Management, page 13
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
staff are estimated and suitable amount is investened for the training design staff. This
investment forms a substantial part of the training budget for design staff. When an investment
is made from this budget, there will be decrease is it (as shown by a dip ie. CBTDS curve fig 16).
The investment for training is made for one year period and the benefits of training are shown as
the BTDS curve, which occur after a considerable amount of delay. The BTDS curve shows that
the benefits from training started to occur after initial delay of three year period. The figure 16
shows that the benefits from training started to occur after an initial delay period of 3 years,
gradually they rise to their peak and then slowly decrease as no further investment were made
there after. This can be taken as a need for further training or re-training. The cumulative
benefits, however, keeps on increasing. The figure also shows estimated losses due to inadequate
training.
TEST EQUIPMENT
—— HTH, 4.) BIE, £8.)
Q——- = He, 8) + CBTE(=4B,, 158.)
ast i
Estimated losses (€), Costs (87%
Benelts (2/ear), Cumblative bene!
my 8, 18, B
TINE ean)
igure 17 test run for axtinated tosses
a fue to tnag
s rode ieatts (ELITE), costs of test equipment (CTE! Js ben benefits
equipment (Bis). and cumulative benetiea tro
ee ee ute tative Benefite fron rest
Figure 17 shows the costs and benefits curve for test equipment. The curve ELITE one word
only the estimated losses due to inad test A for cost of test
equipment (CTE) is shown by a triangle CTE is the third year. The cumulative benefits rise as
the benefits form the use of test equipment (BTE) emerge. When the equipment is new the
benefits are expected to be maximum, however as the equipment ages the other costs such as
spare parts exp and hence the net benefits slowed down. So the
CBTE curve starts to flatten as time passes. This may necessitate another investment in test
equipment.
DESIGN DEPARTMENT
The combined effect of investment in design department is shown in the fig 18. As the
investment for design standards training design staff, and test equipment are made at the same
time (during the third year) all three costs curves overlap to from QCPD. The base of QCPD
represents one year duration ie. duration of investment. The benefits from design standards and
test equipment can be seen in fourth year in the form of a small notch in QBPD curve. The later
portion on the benefit curve incorporates the benefits from training of design staff. Which starts
only after sixteen year. The cumulative quality benefits from prevention remains unchanged, till
investment is made in third year. However, after a short decrease in the fourth year the CQBD
curve ly rises due to quality benefits of prevention in design.
Change Management page 14
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
———— 08,4.) eee COBPD(-209, , 688.)
hi — - Bee,
13,
sta.
28, Y
5, oe \
Costs (tear. Benetis (C/Yea!) and cvimulane bunts (£)
TIE cveary
Figure 18 Test sun for quality costs of prevention in Design
(OCPD), quality benefits from prevention in Design (BPD)
and cumulative quality benefits from prevention in Design
(coseD)
CONCLUSION
The work is an attempt in the direction towards development of a model which incorporates
benefits of improved quality. In this, design quality dards, training
design staff and test equipment have been identifi ied and linked ajeanielly so that costs and
benefits are demonstrated through time. The model presented here probably first of its kind in
which the benefits of improved quality are i d against a time scale. It is felt that model
can be a significant addition to course material for training p of industrial It
allows the users to explore the consequences of different quality management policies. Such as
amount and nature of investment on profit performance. It is also hoped that the model will
serve as a useful tool in hand of decision makers encouraging them to invest more for design
standards training design staff, and test equipment, in order to improve design quality and capture
the benefits.
REFERENCES
qd) Abed, M.H. and Date, B.G. 1987; An Attempt to Identify Quality Related Costs in
Textile Manufacturing Quality, A 13 (2): 41 - 45.
(2) Bajpai A.K., and Willey P.C.T. 1989. Questions about Quality Costs. International
Journal of Quality and Reliability Management 6: 9 - 17.
(3) Bajpai. A-K. 1990. Computer Simulation of Quality Costs and Benefits: A System
Dynamics Modeling Approach. _ Department of P
of N
‘ing and Py
(4) Blank. L., ad Solorzarno.J. 1978 Using Quality Costs Analysis for Management
; Improvement. Industrial Engineering 10: 46 - 51.
(5) Brisac, A., Oistrach G., and Yanezo 1979 Quality Costs Date in Three Spanish
Automotive Companies. Quality 4:99 - 104.
(6) BSI, 1981. BS: 6143 Guide to the Determination of Quality Related Costs, British
Standards Institution, London.
(7) BSI, 1987. BS: 4778 part 1 Quality Vocabulary International Term. British Standards
Institution, London.
Change Management, page 15
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
(8)
(9)
(10)
ay
(12)
(3)
(14)
(15)
(16)
a7)
(18)
(19)
(20)
1)
(22)
(3)
Chauvel, A.M, and Andre Y.A. 1985 Quality Costs Better Prevent Than Cure Quality
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Crosby P.B. 1979. ‘Quality is free. McGraw Hill. New York.
Deming W.E. 1986, Out of Crisis, CASE, MIT Press Massachusetts.
Denton, D.K. and Kowalski T.P. 1988. Measuring Non Confermance Costs Reduced
Menufacturer's Cost of Quality in Product by & 200,000. Industrial Engineering 8: 36 -
Forrester J.W. 1964. Industrial Dynamics, MIT Press, Massachusetts.
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