Quality costing in process industries through QCAS: a practical case

Abstract

The paper aims to describe a structured framework to implement, sustain and manage a quality-costing program in a process industry. After briefing about the advantages and disadvantages of various cost accounting approaches practiced by the industries, the authors described the need for attaching fuzziness to the notion of ‘quality’. The proposed approach is discussed with the help of a case from paper industry. After obtaining expert elicitation, the imprecise, vague, and complex information related to quality cost items (under four key cost segments, i.e. prevention [P], appraisal [A], Internal failure [IF], and external failure [EF]) is synthesized using well-established principles of fuzzy set theory. To help the management in successful implementation of quality cost accounting system (QCAS) five alternatives for each cost category were considered. By obtaining the priority values with respect to various alternatives the implementation program was revived. The comparative analysis carried out after collecting the information under PAF cost segments showed a progressive and significant change in quality costs.

Keywords:

• Fuzzy sets
• Quality costs
• Prevention
• Appraisal
• Failure costs