Cost of Quality Assessment

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    Calculate the total cost of quality by combining inspection appraisal costs and the external failure costs from missed defects.

    NOTEAbout This Model
    ## Calculate the total cost of quality by combining inspection appraisal costs and the external failure costs from missed defects. This model estimates **Total Quality Cost** based on uncertain inputs: Defect Rate, Inspection Effectiveness, Cost Of Poor Quality Per Defect, Cost Of Inspection Per Unit. Fixed values: Production Volume. Run the simulation to see the distribution of possible outcomes.
    CONSTANTProduction Volume
    10000
    Total units produced in the period.
    production_volume
    VARIABLEDefect Rate
    beta(2, 18.9)
    Typical manufacturing defect rates range from 1% to 10%.
    defect_rate
    VARIABLEInspection Effectiveness
    beta(14.9, 5.1)
    Probability that a defect is caught by the current inspection protocol.
    inspection_effectiveness
    VARIABLECost Of Inspection Per Unit
    triangular(0.5, 2.75, 5)
    Incremental cost to inspect a single unit.
    cost_of_inspection_per_unit
    VARIABLECost Of Poor Quality Per Defect
    triangular(100, 550, 1000)
    Financial impact of a defect reaching a customer including returns and reputation.
    cost_of_poor_quality_per_defect
    FORMULATotal Defects
    production_volume * defect_rate
    Number of defective units produced.
    total_defects
    FORMULAEscaped Defects
    total_defects * (1 - inspection_effectiveness)
    Defects missed by inspection and reaching the customer (external failure).
    escaped_defects
    FORMULATotal Quality Cost
    (production_volume * cost_of_inspection_per_unit) + (escaped_defects * cost_of_poor_quality_per_defect)
    Sum of inspection costs (appraisal) and costs from failed units reaching the customer (external failure cost).
    total_quality_cost
    OUTPUTTotal Quality Cost
    total_quality_cost
    Total cost of quality combining prevention, appraisal, and failure costs. An optimal quality program minimizes total cost—not just defects. Higher inspection spend should reduce failure costs.

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