PEV Dec 2003

Re:PEV Dec 2003

Costs of Quality first
There are 4 explicit costs of quality

Prevention costssuch as appropriate staff training

Appraisal costs such as the costs of inspection

Internal failure costs such as the costs of reworking errors identified in inspection

External failure costs such as the costs of sending an engineer to a client's premises to put right a fault

There is another implicit cost of quality

Lost contribution from lost sales if you are to measure this one your question should state that the business can sell as many products as they produce, then any lost production would constitute lost contribution

the "average delay in completeing an order in months" second

The average delay in completing an order is the sort of ratio I refer to as a Chinese Takeaway - after the Inland Revenue's hounding of those proprietors who persistently understated their profits in an attempt to evade tax. The most well known ratio they produced was the ratio of turnover to the cost of the tin foil containers traditionally used to sell Chinese meals.

Just as the Revenue had to produce their own ratios to suit a specific circumstance, so must you.

You could look at the orders over a year less the sales delivered to customers from those orders, that would give you the orders received but not yet delivered. If you express them as a proportion of the total orders x 12 months that would be one way of identifying a notional average delay in completing an order.

sandy.hood@chichester.ac.uk

Re:PEV Dec 2003

If you can get yourself to one of my revision days I will try to help
This Sunday (4th June) in Croydon (nearly full)
http://www.aat.org.uk/forums/posts/list/11439.page

Next Saturday (10th June) in Mansfield (still places available)
http://www.aat.org.uk/forums/posts/list/11440.page


Sandy.hood@chichester.ac.uk