Using Opportunity Costs to Determine the Cost of Quality: A Case Study in a Continuous-Process Industry
作者:
DIEGOA. SANDOVAL-CHÁVEZ,
MarioG. Beruvides,
期刊:
The Engineering Economist
(Taylor Available online 1998)
卷期:
Volume 43,
issue 2
页码: 107-124
ISSN:0013-791X
年代: 1998
DOI:10.1080/00137919808903192
出版商: Taylor & Francis Group
数据来源: Taylor
摘要:
We investigated the strategic and economic importance of the cost of quality (COQ) in a firm whose production process is continuous. An empirical model was built to express the COQ as a function of two main components: traditional prevention-appraisal-failure expenses (PAF model) and opportunity losses. Opportunity losses were broken down into three components: underutilization of installed capacity, inadequate material handling, and poor delivery service. We conducted the six-month study in a company along the U.S.-Mexican border. Results show that the COQ expressed as revenue loss is mainly explained by the opportunity component. Also, the COQ expressed as profit not earned is explained by the opportunity variable but in a smaller proportion. Each variable was analyzed and specific recommendations were provided.
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