Quality Assurance Theory

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It make sense to assume that the term cost of quality (COQ) refers to the expenses needed for generating a quality services or products, but this definition is completely mistaken as it comprises only the costs of product and/or services (Qualitymag, 2013). In fact COQ is the price of not making a quality product or services, which according to the American Society of Quality means “any cost that would not have been expanded if quality were perfect contributes to the cost of quality” (Crandall and Julien, 2010, p. 15). The study of the classical prevention, appraisal and failure model (P-A-F) which founded in 1950s by Armand Feigenbaun and later by Gryna Juran might be beneficial to figure out COQ denotation (Bangert, 2012; Vaxevanidis et al,…show more content…
Moreover, the arrival of Quality Assurance concept expanded the approach to include processes and activities related to improving quality such as training, audit and documentation (Slack et al, 2010). At these levels of quality development, the expense of prevention and appraisal was the only cost counted to exemplify the quality cost and other oblique or hidden cost such as adverse customers’ perception was not as it should be considered (Fons, 2012) until the total quality management (TQM) model was elevated. Though, TQM can be described as “the integration of the quality development, quality maintenance and quality improvement efforts of the various groups in an organization so as to enable production and service at the most economical levels which allow for full customer satisfaction” (Slack et al, 2010, p. 508) see Figure 2. Thus, rather than focusing on the processes only in the classical models of quality, TQM consider more influences like the impact of employee, leadership, effectiveness and customer gratification as a vital aspects towards perfect quality outcomes (Weckenmann et al, 2015) with customer satisfaction and engagement of employees remains the main motivating forces behind the concept of TQM (Lyle, 2013; Manuele,…show more content…
For example in traditional accounting system, waste like scrap and rework institutionalized and acceptable part of the operation but in TQM waste are not allowed as TQM emphasis on continues improvement (Hoque and Alam, 1999). Therefore, organizations may require to implement a more comprehensive costing methods such as Activity Based Costing (ABC) in order to provide more accurate information about cost in general and COQ to management (Fons, 2012). ABC initially allocates costs to the activities that are the real source of the operating cost and afterwards assigns the cost of those activities only to the services or products that are essentially enquiring the activities, so the value added and non-value added activities can be determine (AccountingCoach, 2016; Tsai, 1998). So, ABC is a multidimensional and process oriented cost measurement which supports calculating and observing of COQ created in all of company parts (Andrijašević,
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