Return on Quality
Because of the significant costs that can be incurred in considering quality,the concept of return on quality (ROQ) can be important. The basic components are that:
-Because of its major influence on customer satisfaction, quality must be viewed as an investment.
-There has to be a certain limit to how much should be spent on quality improvements.
-Expenditure specifically should be made toward quality improvement.
-An incremental improvement in quality versus the additional costs involved must be reviewed carefully.
Contrary to a general perception, high-quality products do not necessarily cost more. For example, in industries making computer chips and computer hardware, the ROQ is minimized at a value approaching zero defects; while in others (such as ordinary water faucets or door hinges), the cost to eliminate the final few defects can be unnecessarily high. Customer satisfaction is increased and the customers are more likely to be retained when there are no defects in products. It has been estimated that the relative costs involved in identifying and repairing defects in products grow by orders of magnitude, also called the rule of ten.
(Kalpakjian S. & Schmid S., Manufacturing Engineering and Technology, p.1243)
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