Date of Award

2005

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

College of Technology

Abstract

Companies can lose money because they fail to use significant opportunities to improve their costs of quality. Most cost accounting data are not revealed to the public and are rarely exchanged among businesses, and there is no known study testing the effect of organization size, i.e., small and medium enterprises (SMEs) and large organizations, on quality costs. The study identified important factors and measures contributing to a successful quality cost program implementation and developed an empirically based model for quality costs in the manufacturing environment. The study used the Quality Cost Model, or PAF (prevention, appraisal, and failure costs) model as the theoretical foundation for the research design. A Delphi technique was used in developing a survey instrument. The American Society for Quality (ASQ) and Quality Progress journal helped in announcement of the online questionnaire to manufacturing and quality professionals, resulting in 63 respondents. ANOVA One-Way and Seven Quality Tools were used in data analysis and interpretation. The results indicated that there were no significant differences in prevention, appraisal, and internal failure costs between SMEs and large organizations, but there were external failure costs differences. The findings also suggested that the total quality costs were an average 2.5-5% of sales revenues or 7-10% of manufacturing expenses. The failure costs were about 70-80% of quality costs; SMEs had a high percentage of internal failure costs and large organizations had a high percentage of external failure costs . The prevention and appraisal cost percentages were about the same and varied little among businesses. In addition, the primary factors that aided the success of a quality cost program were management support, effective application and system, cooperation from other departments, and understanding the concepts of the cost of quality. It was recommended that further study may explore the nature of the factor analysis and methods of controlling internal and external failure costs.

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