Incorporating the Cost of Quality in Supply Chain Design

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Incorporating the cost of quality in supply chain design
Amar Ramudhin
Department of Automated Manufacturing Engineering, ´ ´ Ecole de Technologie Superieure, Montreal, Canada, and

Incorporating the cost of quality 71

Chaher Alzaman and Akif A. Bulgak
Department of Mechanical and Industrial Engineering, Concordia University, Montreal, Canada
Abstract
Purpose – This paper aims at exploring the challenges of introducing a model integrating the Cost of Quality (COQ) into the modeling of a supply chain network. Design/methodology/approach – This paper introduces a comprehensive supply chain model that minimizes a series of costs, in which COQ is integrated. Findings – The scenario of incorporating COQ in supply chain network design will ensure the lowest overall cost, because it reduces the probability of defects and hence the probability of additional cost which might be due to corrective action. Practical implications – With many industries today on the quest of improving their quality systems, finding ways to reduce nonconformities and failure of products is crucial. In industries such as the aerospace industry, the variable production cost is high; hence producing extra parts to compensate for defectives would be a costly option. Originality/value – While COQ is a very good indicator of how much poor quality is costing a company, no work has been published in regard to integrating COQ into supply chain modeling. Keywords Supply chain management, Quality costs, Mathematical programming Paper type Research paper

Introduction A supply chain can be defined as an integrated process of various business entities interacting with each other to source, process and distribute value added products or services to customers. Those business entities can be generally categorized in four categories: suppliers, manufacturers, distributors and retailers

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