 Hello friends, I am S.R. Doolange working as an associate professor in the department of mechanical engineering at Vanchana Institute of Technology, Sholapur. In this video, we will discuss on cost of quality or we can say cost of poor quality. Learning outcome At the end of this session, student will be able to apply and analyze the cost associated with quality while manufacturing. Contents Introduction Components of cost of quality Two kinds of cost References Introduction Definition of cost of quality Methodology that allows an organization to determine its resources Which are used for activities that prevent poor quality That appraise the quality of the organization's product or service And that result from internal and external failures Now in this definition, there are four keywords One is prevention Second is appraisal Third is internal and external failure So having such information allows an organization to determine the potential savings to be gained by implementing process improvements So these are the components of cost of quality So these are divided into four One is prevention cost Second is internal failure cost Third is appraisal cost Fourth is external failure cost Now what is prevention cost? So it is a cost to prevent or avoid quality problems So there are certain costs which comes under prevention For example, quality planning So quality planning is the planning of the production before it has to be manufactured So under that, market research, product development, inspection plan Which is related with the quality planning Documenting Manuals and procedures in order to achieve the quality Process control To control the process by making use of statistical tools And to control the variability in the process Quality assurance Assurance of quality in work, in process Investigation of the quality during the raw material to the product stage And training the manpower in order to get a good quality Second is appraisal cost So this is the cost of measuring and monitoring activities related to quality So in this, quality audit System, whether it is performing correctly or incorrectly It has to be audited The supplier is supplying the material So the supplier rating is to be done through the assessment and the approval Inspection and the test That is, inspecting equipment should be maintained at high level of calibration Maintenance and calibration of the machines is also important Third is internal failure cost Encouraged to immediate defects discovered before the product is delivered So this is on the production floor So the defects which are coming out of the production is to be avoided on the shop floor during the process So first is waste Waste is a result of poor planning Unnecessarily movement or the work Errors which are caused in the process Failure analysis that is the cause of internal product failure Scrap is which cannot be repaired Then rework where the more work is necessary in order to get a product External failure cost Encouraged to immediate defects discovered after the product is delivered Means the product is now with the customer So here repairs and servicing Warranty claims, complaints and returns So this is related with the customer Now the customer is paying the money And if the product is not suitable Then reputation of the firm will deteriorate Now for a moment think which cost is positive cost And which cost is dangerous cost In my opinion the positive cost is Prevention cost Because it prevents the cost required in order to get the good quality And which cost is dangerous cost Now the reputation of the firm is dependent on the external failure cost So if the product is written by the customer Then that is very dangerous So this cost is called as dangerous cost Now these are the components of cost of quality If suppose the appraisal cost increases What will happen? It produces lot of defects External failure cost increases what will happen? Producing lots of defect Internal failure cost increases it producing lot of defect Now to consider the cost of quality We must have to concentrate on these three costs One is appraisal cost Second is external failure cost And third is internal failure cost So this should be kept minimum In order to come to a product Wherein the products are within the specifications Now there are two kinds of cost One is visible and another is hidden Now certain costs are visible As we have seen in the prevention cost In the internal failure cost In the appraisal cost The certain costs are visible And certain costs are hidden costs Actually the hidden costs are more As compared to the visible cost So in order to get a high quality product We must have to concentrate on this hidden cost So what are these hidden costs? Engineering changes in order So if suppose you change the design frequently Then that results in a high cost If the cycle time is high or long Then it results in high cost Time value of money So production should be done with a minimum time Or the optimum time Long setups If the setups are more Then the cost associated with that will be more Working capital required will be high If suppose we keep more inventory If we lose the customer loyalty In that case it will Be having an impact on the organization reputation Excessive material handling Or the planning or the order Also leads to the high cost Access inventory which is kept in the store Or just in time Is the technology which is used In order to overcome this excess inventory Late delivery If the product is delivered lately to the customer So it is a loss of reputation for the firm Loss sales These sales which are lost due to these hidden costs Are more There are certain visible costs One is the rejection Second is the warranty Third is the inspection Fourth is the scrap And fifth is the rework Rejection leads to the high cost of the product Because the manufacturing cost increases So warranty claim by the customer Is the bad reputation for the company Inspection cost must be optimum So to get the optimum inspection cost Generally acceptance sampling is used Instead of 100% inspection The scrap must be avoided Because the scrap is negative for every organization Rework should be minimum Because sometimes it may happen that Rework is essential It has to be kept minimum So it is necessary to have A minimization of the visible As well as the hidden cost So this is about the cost of quality And these are the references