Kroehling, Hugh E.; Petersek, Lawrence R. (1986, ASQC) AT&T Technologies, Richmond, VA
The extraction of meaningful quality cost numbers in an accounting system that measures its cost on the basis of asset flow is difficult at best. The problem is compounded when a system is desired which will collect data on a regular basis and apportion costs according to standard designations of Prevention, Appraisal, and Nonconformance. The purpose of this investigation is to determine if a method of measuring costs in such a manufacturing environment can be developed that will consistently provide useful numbers without requiring an army of bean counters or a significant change in the present accounting system. In addition, the system must allow for sensitivity analysis so that results of changes in the manufacturing environment can be tracked through changes in costs of quality.At the outset, some costs will be easily extracted while others will be difficult to even estimate. The sensitivity of each "pocket" of quality dollars must be examined to see if it is worth the effort to reach for it. Some areas will require too much effort to get information and som will require such gross estimates as to remove sensitivity to change. It is hoped that results of this effort will lead to a method that will capture at least 85 percent of quality costs using current available accounting and manufacturing data.The initial assumption in a study of the cost of quality is that every cost accounted for in operating has some portion that is present because of quality (or unquality). Every item of labor, material, and overhead is examined when reported to accounting and some means of extracting the cost of quality is considered.