Supply chain network design based on cost of quality and quality level analysis

Abstract

Purpose The purpose of this paper is to explore the impact of the cost of quality (COQ) expenditure allocations on a capacitated supply chain (SC) network. Design/methodology/approach This paper proposes a non-linear optimization model which integrates the opportunity cost (OC) (i.e. customer satisfaction cost), into the COQ with consideration of the QL in the supply chain network design decisions. In addition, it examines the effect of considering an investment at each SC echelon to ensure the best overall QL. A numerical example is presented to illustrate the behavior of the model. Findings The results show how the QL, COQ and facility location decisions change when incorporating the OC, investments and transportation costs into the SC model. Originality/value The novelty of this paper is that it considers the effect of OC, investment at each echelon and transportation costs on SC design by minimizing the overall spending on the COQ. These issues have not been explored, and for that reason, this paper contributes to the understanding of the critical factors that optimizes the SC COQ.

Quality cost management in the SMEs of Poland

“…By applying this approach to quality cost management, these units may be at risk of undermining their stability. Observation of all quality costs through the use of quality costing can significantly reduce this risk (Durmaz and Sevil, 2012; Cheah et al , 2011; Omar and Murgan, 2014; Alglawe et al , 2019). Dobrin and Stanciuc (2013) argue that intangible or “hidden” costs of quality are the largest contributor to quality loss.…”

Modelling of just-in-time distrubution network under raw material quality and time constraints

“…In this equation, it is aimed to minimize the costs of transportations between stages, purchasing costs, production and quality costs, fixed costs of the opened distribution center, inventory, and backorder costs. Equation (2) ensures that the raw material sent from suppliers cannot exceed the supplier capacity. Equation (3) is the capacity constraint for the manufacturers, while Equation (4) is the capacity constraint for the distribution center.…”

“…The methodology used provides a new paradigm to understand customer and supplier interactions that shape a company's performance by analyzing a company's logistics policies. Alglawe et al [2] propose a nonlinear optimization model on quality costs and quality level analysis in supply chain design. In the proposed model, the aim is to minimize the total costs including operating costs, production costs, fixed costs, and quality costs.…”

“…Strategic decisions are taken to realize this aim constitutes supply chain network design problems. These problems, determine the capacities of the plants in the chain, their locations, the quantities of products distributed between facilities, the quantities of items required for all transactions from supplier to the customer, and the distribution network [2]. The most important factor in supply chain network design problems is the company's aim.…”

Industry practices on the rework of defective products: survey results

“…The existing models of quality costs, on the category of internal failures, do not describe the effects that defective items have on cost. Additionally, the same models do not identify decisions and actions that companies should do after a defective item is identified, which influences the determination of the related effects and, consequently, the failure cost (Alglawe et al , 2019; Arabian et al , 2013; Campanella, 1999; Chopra and Garg, 2011, 2012; Duarte et al , 2016; Fons, 2012; Holota et al , 2016; Jaju et al , 2009; Johnson, 1995; Juran and Godfrey, 1999; Kiani et al , 2009; Lim et al , 2015; Malik et al , 2016; Omar and Murgan, 2014; Ozcan, 2012; Pires et al , 2013; Plewa et al , 2016; Psomas et al , 2018; Sailaja et al , 2015; Schiffauerova and Thomson, 2006, 2013; Su et al , 2009; Superville and Gupta, 2001).…”