Quality Improvement under Budgetary and Life-Cycle Constraints

Abstract

Cost is a major driver in many, if not all, of the decisions that a firm must make. Thus, in determining a level of quality improvement (as measured by process capability), cost is a major consideration—especially for those firms that produce limited amounts of a particular product, have a product that is late in the product life cycle, or have budgetary constraints. This article addresses the question of how much should be spent on process improvement with respect to improvement in process capability. Using the Taguchi loss function, a cost/savings model is developed as a decision-making tool for firms with product life-cycle and budgetary constraints.

• process capability
• Taguchi loss function

Additional information

Notes on contributors

Brian D. Neureuther

Brian D. Neureuther is on assistant professor of operations management at Indiana State University, He received his doctorate in production and operations management from Texas Tech University, his master's of business administration degree from Wright State University in Dayton, Ohio, and his bachelor's degree in mathematics from SUNY Geneseo. His research interests include simulation, quality control, the Theory of Constraints, service operations management, and mathematical modeling. He is a member of the Production and Operations Management Society, the Institute for Operations Research and Management Science, and APICS. His work has been published in Decision Sciences, the Journal of Integrated Design and Process Science, and Effective Teaching. He can be reached by e-mail at [email protected].

George N. Kenyon

George N. Kenyon is a business planning manager at Hewlett-Packard Computers, Inc., in Houston, Texas. Previously he was a supply chain consultant with Chesapeake Decision Sciences, Inc. He received his bachelor's degree in technology from the University of Houston, his master's degree in management science from Florida Institute of Technology, and his doctorate in business administration from Texas Tech University. He has 15 years of experience in various aspects of engineering including systems testing, systems design, product design, and manufacturing. His assignments as a consultant have included scheduling and planning project; with Gulf States Steel, Inc., Miller Brewing Company, Westlake Polymers Corporation, Goodyear Tire and Rubber Company, and Phillips Chemical. He can be reached by e-mail at [email protected].