OTM 300 Lecture Notes - Lecture 10: Outsourcing, The Takeaway, Quality Control

• School: UW-Madison
• Department: Operations and Technology Management
• Course: OTM 300
• Professor: Allison Briggs

Document Summary

Consists of the links through which goods and services get transformed to finished goods. The magnitude of demand volatility a company faces. The sum of cost of good quality and poor quality. Costs incurred to prevent or minimize defects or failures. Costs of all activities that are designed to prevent poor quality from arising. Costs incurred as part of the inspection process to make sure quality of incoming materials and outgoing finished products. Costs of testing and inspections to confirm quality requirements are met. Problem is identified and corrected before it reaches the customer. Problem is identified and corrected after the product reaches the customer. Low cost and better quality not contrary to goals. Doing it right the first time is extremely cost effective. The cost of getting it wrong is much greater than the cost of getting it right. External failure costs are the most expensive category of quality cost. Nonconformance went undetected and will become a sunken cost.