Page 157 - The Handbook for Quality Management a Complete Guide to Operational Excellence

144 I n t e g r a t e d P l a n n i n g O r g a n i z a t i o n a l A s s e s s m e n t 145

Scrap Commonly
rework measured
warranty failure
costs
True
Engineering time failure
management time costs
shop and field downtime Hidden
increased inventory failure
decreased capacity costs
delivery problems
lost orders

Figure 8.2 Hidden cost of quality and the multiplier effect (Campanella, 1990, by
permission).

Total cost

Optimum quality level

Cost

Failure cost Prevention cost

Quality level Perfect quality
Figure 8.3 Classical model of optimum quality costs (Juran, 1988, by
permission).

costs is at a minimum. Efforts to improve quality to better than the opti­
mum level will result in increasing the total quality costs.
Juran acknowledged that in many cases the classical model of opti­
mum quality costs is flawed. It is common to find that quality levels can
be economically improved to literal perfection. For example, millions of
stampings may be produced virtually error free from a well­designed and
well­constructed stamping die. The classical model created a mind­set
that perfection was not cost effective. The new model of optimum quality
cost incorporates the possibility of zero defects and is shown in Fig. 8.4.

08_Pyzdek_Ch08_p137-150.indd 144 11/9/12 5:10 PM