TQM7-1 - Economics of Quality Krannert School of Management...

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Krannert School of Management / TQM / Professor Plante Economics of Quality Economics of Quality
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Krannert School of Management / TQM / Professor Plante Economics of Quality: TCE Statistics 1994 Economics of Quality: TCE Statistics 1994 TV Units Sold 5 million Estimated Revenues $2.5 billion (5 x $500 per set) Estimated Earnings $125 million (5% of Sales)
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Krannert School of Management / TQM / Professor Plante Cost of Quality Failures Cost of Quality Failures
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Krannert School of Management / TQM / Professor Plante ICEBERG PHENOMENON ICEBERG PHENOMENON Direct/Measured Costs: Direct/Measured Costs: Scrap/Rework Scrap/Rework Service Calls Service Calls Warranties/Concessions Warranties/Concessions Indirect/Hidden Costs: Indirect/Hidden Costs: Excess Inventory Excess Inventory Overtime Overtime Reputation/Image Reputation/Image Total Costs = 6 to 50 times Measured Costs Total Costs = 6 to 50 times Measured Costs
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Krannert School of Management / TQM / Professor Plante Cost of Quality Failures
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