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Exploratory Evidence on the Behavior of Quality Costs

Author

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  • Christopher D. Ittner

    (University of Pennsylvania, Philadelphia, Pennsylvania)

Abstract

This study examines the time series behavior of quality costs reported by 49 manufacturing units of 21 companies. Analyses using both pooled annual data and plant-specific quarterly data indicate that the majority of units in the sample achieved ongoing reductions in nonconformance costs while maintaining or reducing reported prevention and appraisal costs. These findings are consistent with recent quality-based learning and continuous improvement models which suggest that, once an effective quality program is established, companies can reduce nonconformance costs over time with little or no subsequent increase in conformance expenditures.

Suggested Citation

  • Christopher D. Ittner, 1996. "Exploratory Evidence on the Behavior of Quality Costs," Operations Research, INFORMS, vol. 44(1), pages 114-130, February.
    • Handle: RePEc:inm:oropre:v:44:y:1996:i:1:p:114-130
    DOI: 10.1287/opre.44.1.114
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    Citations

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    Cited by:

    1. Paulson Gjerde, Kathy A. & Slotnick, Susan A., 2004. "Quality and reputation: The effects of external and internal factors over time," International Journal of Production Economics, Elsevier, vol. 89(1), pages 1-20, May.
    2. Freiesleben, Johannes, 2008. "A proposal for an economic quality loss function," International Journal of Production Economics, Elsevier, vol. 113(2), pages 1012-1024, June.
    3. Elena Andreyeva & Guy David & Hummy Song, 2018. "The Effects of Home Health Visit Length on Hospital Readmission," NBER Working Papers 24566, National Bureau of Economic Research, Inc.
    4. Kalaignanam, K. & Kushwaha, T. & Varadarajan, P., 2008. "Marketing operations efficiency and the Internet: An organizing framework," Journal of Business Research, Elsevier, vol. 61(4), pages 300-308, April.
    5. Avner Engel & Shalom Shachar, 2006. "Measuring and optimizing systems' quality costs and project duration," Systems Engineering, John Wiley & Sons, vol. 9(3), pages 259-280, September.
    6. Markus Hoppe & Avner Engel & Shalom Shachar, 2007. "SysTest: Improving the verification, validation, and testing process— Assessing six industrial pilot projects," Systems Engineering, John Wiley & Sons, vol. 10(4), pages 323-347, December.
    7. Nair, Anand & Narasimhan, Ram, 2006. "Dynamics of competing with quality- and advertising-based goodwill," European Journal of Operational Research, Elsevier, vol. 175(1), pages 462-474, November.
    8. Herbert Moskowitz & Robert Plante & Jen Tang, 2001. "Allocation of quality improvement targets based on investments in learning," Naval Research Logistics (NRL), John Wiley & Sons, vol. 48(8), pages 684-709, December.
    9. Christopher D. Ittner & Venky Nagar & Madhav V. Rajan, 2001. "An Empirical Examination of Dynamic Quality-Based Learning Models," Management Science, INFORMS, vol. 47(4), pages 563-578, April.
    10. Kamalini Ramdas & Taylor Randall, 2008. "Does Component Sharing Help or Hurt Reliability? An Empirical Study in the Automotive Industry," Management Science, INFORMS, vol. 54(5), pages 922-938, May.
    11. M Barad & A Engel, 2006. "Optimizing VVT strategies: a decomposition approach," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 57(8), pages 965-974, August.
    12. Ganeshan, Ram & Kulkarni, Shailesh & Boone, Tonya, 2001. "Production economics and process quality: A Taguchi perspective," International Journal of Production Economics, Elsevier, vol. 71(1-3), pages 343-350, May.
    13. Clemons, Rebecca & Slotnick, Susan A., 2016. "The effect of supply-chain disruption, quality and knowledge transfer on firm strategy," International Journal of Production Economics, Elsevier, vol. 178(C), pages 169-186.
    14. Shimon Fridkin & Michael Winokur & Amir Gamliel, 2024. "Development of a Quality Deterioration Index for Sustainable Quality Management in High-Tech Electronics Manufacturing," Sustainability, MDPI, vol. 16(15), pages 1-34, August.
    15. Ana-Maria Stãƒnciuc, 2012. "Quality Costs Links To Business Cost," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 6(1), pages 538-543, November.
    16. DOBRIN Cosmin & STANCIUC Ana-Maria, 2013. "Quality Cost System An Excellent Tool In The Overall Management Business," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 65(6), pages 37-45.
    17. Avner Engel & Miryam Barad, 2003. "A methodology for modeling VVT risks and costs," Systems Engineering, John Wiley & Sons, vol. 6(3), pages 135-151.
    18. Marcos Singer & Patricio Donoso & Alan Scheller-Wolf, 2008. "Una Introducción A La Teoría De Colas Aplicada A La Gestión De Servicios," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 11(2), pages 93-120.

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