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A Quality Cost Model to Determine Optimal Policies for Purchased Components

Summary: This study develops a technique for predicting purchasing quality costs and studying their behavior as random variables. The resulting model extends prior research that treats purchasing costs deterministically or not at all, thereby providing a valuable decision and planning tool for companies that are placing an increasing reliance on purchased components. The model was tested in the field at a small defense contractor. Test results suggest that purchasing costs can be reduced by using the model to select the lowest cost policy from a set of three alternatives.

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  • Topics: Cost of Quality
  • Keywords: Cost of quality (COQ),Procurement,Simulations,Random variables
  • Author: Arnheiter, Edward D.; Giglio, Richard J.
  • Journal: Quality Management Journal