Analysing the Cost Factors on Total Cost of Quality:A System Dynamics Approach

There have been many efforts in measuring quality costs both in theoretical and empirical researches. Many companies use the cost of quality as vital part in considering what is needed to achieve the customers expected quality level. As each cost factors affects the other, a systematic approach is needed to recognize both the effects of factors on each other and quality level of products (services). System dynamics is an appropriate approach which can analyse the factors within the system. The proposed methodology demonstrates the use of an innovative approach in developing cost of quality concept and constructing a practical framework for system dynamics in a real case. Prevention and appraisal costs are the two effective cost factors. The model represented in this paper reveals that prevention costs have the most effect on total cost of quality and especially external failure costs. The model simulation is prepared by Vensim Software.

Keywords:

Cost of quality (COQ) , System dynamics (SD) , Causal loop diagram (CLD) , Cost factors