The Power of Balance

Abstract:Pressure to lower costs in an increasingly competitive global marketplace is causing organizations to reconsider the importance of accounting for the cost of quality. Armand Feigenbaum noted that quality costs could be divided into four categories: preventative costs, appraisal cost, internal failure costs, and external failure costs. Lack of knowledge of the interrelationship among quality costs causes a failure to achieve expected results. A case study of a Chinese manufacturer illustrates the trade-off relationships among these categories of quality costs and the point of balance. The proposed approach can be used to take new situations into consideration and help firms respond to changes and adjust its quality control …

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