...Cost of Quality Costs of Quality 1. The “cost of quality” is not the price of creating a quality product or service. It is the cost of not creating a quality product or service. Every time work is redone, the cost of quality increases. Examples include 1. The reworking of a manufactured item 2. The retesting of an assembly 3. The rebuilding of a tool 4. The correction of a bank statement 5. The reworking of a service, such as the reprocessing of a loan operation or the replacement of a food order in a restaurant In short, any cost that would not have been expended if quality were perfect contributes to the cost of quality. Quality costs are the total of the costs incurred by 6. Investing in the prevention of nonconformance to requirements 7. Appraising a product or service for conformance to requirements 8. Failing to meet requirements Prevention Costs: The costs of all activities specifically designed to prevent poor quality in products or services. Examples include the costs of 9. New product review 10. Quality planning 11. Supplier capability surveys 12. Process capability evaluations 13. Quality improvement team meetings 14. Quality improvement projects 15. Quality education and training Appraisal Costs: The costs associated with measuring, evaluating, or auditing products or services to ensure conformance...
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...TOTAL QUALITY MANAGEMENT RAPELANG MAKHETHA BCom 3 Finance Contents Contents Introduction ............................................................................................................................................ 2 1.1 What is quality .................................................................................................................................. 2 1.2 Dimensions of quality ....................................................................................................................... 2 2. Business Process Reengineering Cycle ................................................................................................ 4 3. Cost of quality ..................................................................................................................................... 6 Introduction TQM is an enhancement to traditional way of doing business. It is the art of managing the whole to achieve excellence. It is defined both a philosophy and a set of guiding principles that represent the foundation of a continuously improving organization. It is the application of quantitative methods of human resources to improve all the processes within an organization and exceed customer needs now and in the future. Question 1 – 1.1 What is quality 1.1 (According to Steve Jobs late CEO of apple inc. 2010 ) Quality is the degree to which a commodity meets the expectations of the customer and even goes beyond the quality of similar commodities in the...
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...Memo To: Management Committee From: Student, Vice President Controller Date: June 6, 2012 Subject: Maintain Current Business Process vs. Modify Internal Business Process Dear Professor, As per your request, attached is the report that we have prepared, outlining the course of action Clearwater Small Appliances management team should adopt in designing and planning for the operation, given the opportunities and constraints faced at present. This report gives a complete analysis of the situation and different alternatives available, followed by a final recommendation using our criteria. Please let us know should you have any questions or require further clarifications on this report. Yours truly, Student, Vice President Controller of Clearwater Small Appliances Introduction and Problem Statement Clearwater is a small appliance manufacturer that has been in existence for approximately 50 years. The company produces a large spectrum of small household appliances such as coffee makers, toaster ovens, microwaves and irons. Recent changes to the retailing industry by “power retailers” have required Clearwater to alter its way of doing business. The board of directors have developed a new strategy to become a profitable supplier to “power retailers” but do not have the means to monitor and evaluate the success or failure of the strategy. Issues 1. Clearwater is suffering from declining sales. Category retailers have become powerful...
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...management Strategic role of operations Operations management is an essential key business function that overlaps with the other business functions such as marketing, finance and human resources management. Strategic means ‘affecting all key business areas’; that is, the strategic role of operations management involves operations managers contributing to the strategic plan of the business. Some of the different costs in the operations function include; input costs, labour costs, processing costs, inventory costs and quality management costs. Cost leadership involves aiming to have the lowest costs or to be the most price-competitive in the market. A key aspect to cost leadership is that although trading with the lowest cost, the overall business should still be profitable. One aspect of cost leadership arises from a business creating economies of scale. Economies of scale refers to cost advantages that can be created as a result of an increase in scale of business operations. Typically the cost savings come from being able to purchase lower cost per unit and from efficiencies created through improved use of technology and machinery. Goods/services differentiation is a key strategy applied by operations managers. Product differentiation means distinguishing products in some way from its competitors. Ways a product could be differentiated include: varying the actual product features, varying product quality, varying any improved features, varying the amount of time spent on a service...
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...Topic One: Operations Students Learn to: Examine contemporary business issues to: * Discuss the balance between cost and quality in operations strategy Cost and quality are two performance objectives of a business. Cost and quality generally oppose each other as performance objectives as for a business to achieve quality this will generally cost money and then increase costs. * Examine the impact of globalisation on operations strategy * Identify the breadth of government policies that affect operations management * Explain why corporate social responsibility is a key concern in operations management Investigate aspects of business using hypothetical situations and actual business case studies to: * Describe the features of operations management for businesses in a tertiary industry * Assess the relationship between operations and the other key business function in two actual businesses * Explain how operations strategy van help a business sustain its competitive advantage * Recommend possible operations strategies for one hypothetical business Students Learn About Role of operations management * Strategic role of operations management – cost leadership, good/service differentiation A businesses competitive advantage refers to the features implemented by a business that create an advantage over its competitors. A business can make long-term (strategic), medium term (), or short term () decisions. Efficiency refers to achieving...
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...Business Studies Notes Role of operations management Effective operations management adds value to a business by: • Increasing productivity • Reducing costs • Improving quality - This achieves a strategic competitive advantage through lower costs and/or differentiated goods. - Role of the operations manager will require skills such as communication, decision-making, delegating and complex problem solving. Strategic role of operations management - A strategic decision affects the business in the long-term - Strategic goals improve productivity, efficiency and quality of outputs - Long-term decisions will cover three broad areas: • Planning production and delivery • Controls to manage quality • Improving operations o Cost leadership - Business aims to be the lowest cost manufacturer within its industry - Products are basic, fewer features, lower quality and low cost packaging - Small profit-margin, high volume of sales - Low costs can be achieved through: • Outsourcing • Economies of scale in production and distribution • Access to cheaper raw materials • Inventing an innovative method of production - Achieving cost leadership would allow the business to be an above average performer with healthy sales and profits - Benefits of cost leadership can be maintained through effective marketing, finance and human resources strategies - Disadvantages: • Competitors can use the same strategy • Consumer preferences change and the market for a ‘low-cost...
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...Management Re: Cost of Quality Cost of Quality in Manufacturing I will explain in the following the three types of costs there are when making quality decisions in our manufacturing site in regards to the cost associated in making quality products. 1. Internal failure cost - This is the cost found on defects before it is delivered to the internal or external customer. 1.1. External failure cost – This is the cost associated for defects found after they are delivered to the internal or external customer. 2. Appraisal costs – This is the cost associated in maintaining a quality standard or program. 3. Prevention costs – This is the cost associated with keeping both appraisal cost and internal/external cost to the lowest level. A great example of internal/external cost would be the impact to our internal customer in dollar terms of the quality defect, I.E machine downtime because of a bad part damaging a machine. A great example of appraisal cost would be a inspection process we maintain to ensure quality product for our external customers and the cost of the people doing the inspection. A great example of prevention costs would be in the wages we pay to the engineering team for ensuring a quality designed product. Now I will evaluate the three types of cost considering the tradeoffs within our manufacturing plant. Internal failure cost is high for failures due to the disruption that occurs to our downstream customers. You have to have quality product to...
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...manufacturing processes * Developing strategies to gain a sustainable competitive advantage. | The strategic role of managementA strategic decision is one that affects the business in the long term. The strategic goals areto improve: * productivity * efficiency * quality of outputsTherefore, all strategic decisions will focus on lower costs to an industry benchmark through efficiency and producing a good or service that is different to and competitive against rivals in the market. There are 3 types of strategies that are commonly used by businesses to gain and maintain a competitive advantage. These are: * cost leadership * product differentiation * market segmentationcost leadershipA cost leadership strategy is where a business aims to be the lowest cost manufacturer within its industry. The products are the basic, no-frills type with fewer features, perhaps lower quality and using low-cost packaging. Low costs can be achieved through: * economies of scale in production and distribution, * access to cheaper raw materials * exclusive access to a large source of low cost inputs * Distributing the product using dealers who work with lower profit margins.The issues that operation mangers need to be aware are: * Competitors can use the same strategy and can achieve even lower costs * The business’s product is not perceived by customers to be equal to its competitors because competitors offer better technology, features and service. * Developments in...
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...Operations Extended Response How does an understanding of the influences on operations contribute to business success? The success of every business depends on adapting itself to the environment within which it functions. A thorough understanding of the operational influences on a business is critical to ensuring the business is flexible, and can adapt to changing market circumstances. Without continually updated knowledge of the operational influences which consists of globalisation, technology, legal regulation, government policies, environmental sustainability, quality expectations and cost-based competition, the success of the business is questionable. The success of a business can be measured through indicators such as strategic goals, market share, profitability, growth, efficiency, quality of output, business competitiveness/image, meeting the changing needs of customers and their contribution to the wellbeing of society. Globalisation An understanding of globalisation gives a business a direction for growth, and enables the business to identify the areas for growth and expansion of their activities. For example Google is an effective innovator that develops and distributes high quality, distinctive ideas that are transformed into products that are sold globally. They have utilised globalisation so as to mass produce innovative products at low cost. This has been essential to Google’s position as a market leader. The knowledge to harness globalisation...
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...Quality Management includes the process in which determines the quality policies, objectives, and responsibilities performed so that the project will satisfy the needs for which it was undertaken. Implementation of the policies and procedures within the project’s context will ensure that the project and product requirements are met and validated (PMI, pg 227). It is also the ability to plan and control quality and performs quality assurance. If you include these processes in your Project Quality Management process, your will improve the quality of your current and future projects. The first process of Project Quality Management understands the scope and deliverables of the project. In order to give high quality to your customer or stakeholders, you must know their expectation of the service or product. The basic approach of quality management is compatible with ISO International Organization for Standardization quality standards. Every project should deliver quality to which a set of inherent characteristics fulfill requirements with a grade as a design intent assigned to deliverables having the same functional use but different technical characteristics. The project team will need to apply appropriate levels of accuracy and precision for use in the quality management plan. Applying ISO compatibility to quality management, you will need to take the approaches below: • Customer satisfaction –Customers expectations are met (PMI, pg 229). • Prevention over inspection...
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...will be addressing will be cost. Cost is the first thing a business starts with how much. As preventive maintenance relates to a company’s goals. The first thing that the program brings to the table is that it gives a business the ability to us the available maintenance resources for maximum benefit. Problems like this comes in a huge way from reducing the number of failures a company makes which helps keeps low cost minimization in which the big picture is what the company wants. In the coast breakdown, preventive maintenance program is what helps a business save money and is much better than reactive maintenance that is when you fit it when it breaks and results are in a high repair budget, in my opinion. In my long time in a business which maintenance is a very bug part there are four different maintenance program that companies use reactive, preventive, and productive all of these programs result cost in their own way. Each of the different forms effects costs in their own way proactive is when you monitor and correct the failure at the source. Predictive is when you repair based on the conditions of the equipment. Reactive is when it breaks you fix it .Finally, the end, there is preventive maintenance that usually is a planned repair. The breakdown should show that preventive maintenance has the largest impact on the cost, in the big picture. The second main point I will be touching on is down time and how it will greatly effects a business without a preventive maintenance...
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...Question 1 How quality should is defined at this restaurant? ANSWER: Quality is the term used by the customer to describe their general satisfaction with a service or product. Customers, internal or external, are satisfied when their expectations regarding a service or product have been met or exceeded. Quality at Joses restaurant should be defined by service, value, reliability of the experience and overall customers’ satisfaction. The quality of a product is defined as whether it fulfills its stated specifications. Customer satisfaction should be at the top priority for the restaurant. Customer satisfaction is the measurement of a product or service that meets or exceeds customer’s expectations. Therefore, the restaurant should focus on its customers’ needs and requirements, and strive to exceed their expectations. The factors that affect the quality of the service are conformance to specification, value, fitness for use, support and even psychological standard impression. Food should be delivered and served as to be what is promised on the menu. Also, the food should be cooked and prepared properly, to be fresh, clean, and to have exactly the ingredients and flavors that are ordered. Service staff should be neatly dressed and greet customers with a smile; personnel should be experienced and trained to accommodate the customer. Atmosphere is another important area of quality. At Jose’s, keeping with the Mexican themed decor creates the atmosphere for the Mexican prepared...
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... Unit Number: Unit 34: Operations Management in BusinessAssessor/Tutor : Nicholas Kelly | Registration Number : GCD 3389Learners Name: Kondwani MandeInternal Verifier (s) : Tracey Gallagher | | | Contents OPERATION MANAGEMENT IN LARGE BUSINESS 3 McDonald’s 3 Business Model 3 Mission Statement 4 Vision 4 SWOT Analysis 4 Learning Outcome 1: Understand the nature and the importance of Operations Management 8 1.1 The importance of operational management 8 Examples of operations management in McDonald’s 9 1.2 Assess the operations management in terms of production of goods and services safety, on time, low cost, quality and within the law 11 Production of goods and services safely 11 Production of goods and services on time 12 Low cost 12 Quality and within the law 13 1.3 Significance of links between operation management and strategic planning 14 1.4 Operations management system diagram 17 2.1 The impact of “Three E’s” (Economy, Efficiency and Effectiveness) make on operations management 18 Economy 18 Efficiency 18 Effectiveness 19 2.2 Identify any measure adopted for cost minimization and quality maximization 19 Measures for cost minimization and quality maximization 21 2.3 Evaluation of the significance of the five performance objectives 22 Learning Outcome 3: Understand how to organise a typical production process 25 3.1 How linear programming can assist to make operations management more effective...
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...Chapter - 1 Concept of Quality and TQM Dr. Shyamal Gomes “Quality is not an art, it is a habit” - Aristotle Introduction: Till 300 years ago, people used the power of their own muscles, animals or the force of wind and flowing water to do all works. With the invention of the ‘steam engine’ they got a powerful method of running their machines. This provided a tremendous boost to Industry. Goods started getting produced in larger quantities using machines. This led to the beginning of the factory system. The significant change from handmade goods to machine-made goods, which began in Britain in 18th century, is known as the Industrial Revolution. Why it was called Revolution? Because of the large scale changes it brought about our economy, society and culture. IR soon spread to other nation like Germany, France, Portugal. As these countries became industrialised, they needed two things: 1. Raw materials for manufacturing and 2. New markets to sell the goods they made. They found both raw materials as well as new markets to sell their goods in the nonindustrialised countries of Asia and Africa. So they started annexing to meet the needs of their new factories. Soon they became jealous of each other, and wanted their own empires to grow. They started fighting among themselves. This finally led to a great war in which several nations of the world were involved. It came to be known as World War- I (August 1914-1918). Millions of soldiers and other people were killed or wounded...
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...COLLEGE Programme: AAPBS LEVEL-5- Certificate in Business Mgmt Studies. Unit: Operations Management in Business Unit code: M- QCF level: 5 Credit Value: 15 Tutor: Sabrina Akbar Email- Sabrina.akbar@londonchurchillcollege.co.uk Date Set: 08/02/2012 Learner’s name and statement of authenticity Learner’s Name: …………….. Learner’s ID: Date handed-in: I certify that the work submitted for this assignment is my own. Where the work of others has been used to support my work then credit has been acknowledged. Signature: ……………………. Date: …………… 1. Introduction: Operations management is concerned about overseeing, redesigning and designing business operation in service or production of goods, efficient use of resources and effectively meeting of customer requirements. Operations management also cover the process which converts inputs into outputs like inputting raw materials or energy and labor and getting goods and services. It considers the utilization, development and acquisition of resources that organizations need to deliver services and goods their customers want. The works and jobs responsibility of operation management starts from strategic planning and ends at operational and technical levels. Operation management use various technology and ideas to reduce production and operating cost and increase productivity, improve customer services, increase product quality and improve flexibility to fulfill customer demands...
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