Case Study on Cost of quality.

M/s.Quality Toolings & Pressed components (QTPC) is a tooling & pressed components
manufacturing company supplying to automotive, electronics & electrical industries.
QTPC initiated a program to collect and analyse the cost of quality. Following data were
collected for a period of 3 months. Assume the manhour cost to company is Rs.200 per
hour. Calculate the cost of quality, Cost of poor quality.

Sr. Details April-10 May-10 June-10

No.
1. Gauge calibration cost Rs.1,24,254 Rs.0/- Rs.28,000

2. Salary paid to inspector Rs.30,250 Rs.32,000 Rs.32,000

3. Gauge procurement Rs.2,25,000 Rs,20,000 Rs.0/-

4. Cost towards procurement of Rs.12,000 Rs.1500 Rs.1750/-

chemicals used in testing
5. Training charges paid to Rs.30,000 Rs.10000 Rs.45000
consultants
6. Charges paid towards Rs.25,500 Rs.0/- Rs.10000
Internal audit for ISO
7. Time spent for customer 30 hrs 120 hrs 10 Hrs
complaint analysis &
corrective action
8. Travel cost spent for quality Rs.11250 Rs.35000 Rs.5000
person visit to customer for
segregation
9. Rework on finished toolings Rs.47850 Rs.85,000 Rs.12000

10. Salary charges towards QA Rs.75,000 Rs.75,000 Rs.75,000

Manager
11. Salary charges paid to Rs.50,000 Rs.50,000 Rs.50,000
Design manager
12. Cost of tooling element Rs.1,25,000 Rs.2,50,000 Rs.75,000
rejected in house
13. Cost of rework on toolings Rs.24,350 Rs.1,25,000 Rs.25,000
supplied to customer
14. Cost spend towards mistake Rs.2,35,000 Rs.75,000 Rs.1,50,000
proofing implemented
15. Time spend for 10 Hrs 20 hrs 40 Hrs
Brainstorming on Continual
improvement
16. Total cost of rejections Rs.32,000 Rs.1,75,000 Rs.27,500
observed at inprocess
inspection
17. Machine breakdown cost Rs.5000 Rs.24,000 Rs.2000

18. Cost of instrument repairs Rs.2500 Rs.0/- Rs.0

19. Total debit notes received Rs.78,000 Rs.2,35,000 Rs.65,000

from customer towards
rejections
20. Sales Rs.50,25,000 Rs.62,00,000 Rs.65,00,000

21. Time spent for doing product 22 Hrs 10 Hrs 30 Hrs

& process audit
22. Time spent for evaluating 10 Hrs 5 HRs 12 Hrs
process capability for critical
characteristics
23. Cost spent for tool repairs Rs.22,000/- Rs.27,000 Rs.19,000

24. Cost spend for tool Rs.2000/- Rs.5,000 Rs.0/-

preventive maintenance
25. Cost of space allocated for Rs.5000/- Rs.5000 Rs.5000
repair / rework station