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GMS 401 Lecture Notes - Quality Costs, Quality Management, Industrial Revolution

Global Management Studies
Course Code
GMS 401
Kirk Bailey

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Chapter 9
1. List and briefly explain the dimensions of product and service quality
Product Qualitythe dimensions of product quality include:
1. performancemain characteristics or function of the product
2. aestheticsappearance, feel, smell, taste
3. special featuresextra characteristics or secondary functions
4. safetyreduction or elimination of risk of injury or harm
5. reliabilityconsistency of performance
6. durabilitythe useful life of the product or service
7. perceived qualitysubjective evaluation of quality (e.g. reputation,
8. service after salewarrantees, maintenance, and handling of
Service Qualitythe dimensions of service quality include:
1. tangiblesthe physical appearance of facilities, equipment, personnel,
and communication materials
2. conveniencethe availability and accessibility of the service
3. reliabilitythe ability to perform a service dependably, consistently,
and accurately
4. responsivenessthe willingness of service providers to help
customers in unusual situations and to deal with problems
5. timethe speed with which service is delivered
6. assurancethe knowledge exhibited by personnel who come into
contact with a customer and their ability to convey trust and
7. courtesythe way customers are treated by employees who come into
contact with them
2. Explain the terms quality of design and quality of conformance
Quality of designrefers to the characteristics specified for a product or service
For example, many different models of automobiles are on the market
today. They differ in size, appearance, roominess, fuel economy, comfort,
and materials used. These differences reflect choices made by designers
that determine the quality of the car. Design decisions must take into
account customer wants, production or service capabilities, safety, costs,
and other similar considerations
Quality of conformancerefers to the degree to which goods and services
conform to the specification of the designers. This is affected by factors such as
characteristics of materials; the capability of equipment used; the skills and
training, the monitoring process to assess conformance; and the taking of
corrective action when necessary. The determination of quality does not stop once
the product or service has been sold or delivered

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3. What are some possible consequences of poor quality?
It is important for management to recognize the different ways that poor quality
of company’s products or services can affect the organization and to take these
into account in developing and maintaining a quality control and assurance
program. Some major ways that poor quality affects an organization are:
1. loss of business
2. liability
3. productivity loss
4. costs
A devastating consequence to the bottom line is the reaction of the consumer who
receives a defective or otherwise unsatisfactory product or service
Organizations must pay special attention to their liability due to damages or
injuries resulting from either fault design or poor workmanship.
Examplea faulty steering wheel on a car could cause the driver to lose
Poor quality can adversely affect productivity during the manufacturing process if
parts are defective and have to be reworked; same with poor serviceit must be
redone. Poor quality also increases costs incurred by the organization
4. Describe the cost of quality
The costs associated with quality can be classified into four categories:
1. internal failure costs
a. failure costs are incurred by defective parts or products or by
faulty services
b. internal failures are those discovered during the production
c. these failures occur for a variety of reasons, including defective
material from vendors, incorrect machine settings, fault
equipment, incorrect methods, incorrect processing, and faulty
or improper material handling procedures
d. costs includeproduction time, scrap and rework,
investigation costs, possible equipment damage and possible
employee injury
2. external failure costs
a. external failures are those discovered after delivery to the
b. External failures are defective products or poor services that go
undetected by the producer.
c. Resulting costs include warranty work, handling of complaints,
replacements, liability/litigation, payments to customers or
discounts used to offset the inferior quality, loss of customer
goodwill, and opportunity costs related to lost sales
3. appraisal costs
a. these costs relate to inspection, testing, and other activities
intended to uncover defective products or services

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b. they include cost of inspectors, testing, test equipment, labs,
quality audits, and field testing
4. prevention costs
a. these costs relate to attempts to prevent defects from occurring
b. they include costs such as quality planning and administrative
systems, working with vendors, training, quality control
procedures, and extra attention in both the design and
production phases to decrease the probability of defective
Internal and External failure costs represent costs related to poor quality, whereas
appraisal and prevention costs represent investments for achieving good quality.
5. Describe the evolution of quality management (page 305-6)
Prior to the industrial revolution, in most cases skilled craftsmen performed all
stages of production. Pride of workmanship and reputation provided the
motivation to see that a job was done right. Apprenticeships cause this attitude to
carry over to new workers; one person or a small group of people were
responsible for an entire product.
Division of labour accompanied industrial revolution; each worker was then
responsible for only a small portion of each product. Pride of workmanship
became less meaningful because workers could no longer identify readily with the
final product. The responsibility for quality control shifted to the foremen and
full-time quality inspectors; inspection was either haphazard of nonexistent
Fredrick Taylor, the ―father‖ of scientific management gave a new emphasis on
quality including product inspection and gauging in his list of fundamental areas
of manufacturing management
Later, Bell telephone Laboratories introduced statistical control charts that could
be used to monitor production and tables for acceptance sampling. But these
statistical quality control procedures was not widely used until the second world
war when the government began to require vendors to use them
The Second World War caused a dramatic increase in emphasis on quality control
During the 1950s, the quality movement started to evolve into quality assurance,
which aims to prevent defects rather than finding them after they occur
A ―cost of quality‖ focus was also implemented during this time emphasizing
accurate and complete identification and measurement of the costs of quality
lowering product failures
In the mid-1950s, total quality control was proposed, which enlarged the realm of
quality efforts from its primary focus on manufacturing to include marketing,
Product design, and after-sale service. A greater involvement of upper
management in quality was required.
During the 1960s, the concept of zero defects gained favour. This approach
focused on management’s role and the expectation of perfection from each
In the 1980s, the evolution of quality management shifted to a strategic
management approach. Quality and profits are closely linked. This approach
places greater emphasis on customer satisfaction, and it involves all levels of
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