Abstract

In the present business environment where quality is a key factor and customer expectation of quality is ever-changing, measuring Cost of Quality (COQ) seems to be a critical factor for organizations in order to keep or grow their market share. However, until now the COQ has been measured almost exclusively only internally, i.e. within a company, while the role of a supply chain in delivering quality product to end users has been ignored. In this thesis we argue that all the entities within supply chain affect the quality of a product or a service and their quality related activities should thus be inevitably considered. Incorporating all the quality related costs of the supply chain entities into the COQ measurement will create a powerful measure of improvement in an organization. The objective of this research is to develop a mathematical model to estimate COQ as key performance measurement within manufacturing supply chain while considering quality Excellency status. Using classic PAF (Prevention-Appraisal-Failure) model classification to develop mathematical model and its integration with significant variables in supply chain entities are the key methodology in this work. Perceived quality is assumed as an appropriate definition of quality in manufacturing supply chain. Moreover, proposed model is examined against real time quality cost data of manufacturing supply chain in two intervals, first at quality immaturity period and then at quality maturity period. Statistical tools are used to validate the model and compare its behavior in the two intervals. The results are then analyzed and discussed, and possible future works are presented.