Quality Tradeoff Curve

Posted in Operations and Supply Chain Terms, Total Reads: 3258
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Definition: Quality Tradeoff Curve

There are certain costs associated with preventing the occurrence of defects and those incurred after delivering the defective products. The combined cost is known as cost of quality. The components of cost of quality are :-

1) Scrap and  rework cost

2) Cost of defects –It includes warrant costs,  client relationship costs , liability cost, cost of returns, goodwill etc

3) Preventive cost- It includes training costs ,quality up gradation costs etc .

4) Detecting costs – These include all the activity costs associated in detecting defects in material before shipment.

Example:

Cost 1, Cost 3, Cost 4 increase with the level of inspection meanwhile costs of defects go down with the number of units . The point of intersection of the two costs gives us the cost of quality. Therefore an optimal inspection level is maintained at this cost of quality.


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