Quality Cost Case Study

BM027-3-2-MBUS

Chapter 1 – Quality Costs

Instruction: Read the following case study and answer the question:

Salim joined Advanced Technology Company as a storekeeper about a year ago. He was coached to carry out the warehouse job informally by one of the storekeepers. There is no documented procedure to carry out the job. However, Salim picked up the job as the senior storekeeper demonstrated to him step by step. The storekeepers carry on with their day to day job, and no one come and checked their work. This is because there were no issues from the warehouse all these while. Early last week, Salim arranged a total of 80 cartons, full of finished products (plastic components) up to 8 cartons in a stack in the warehouse. He had taken all the precautions while stacking up the cartons. Minutes later, 4 stacks of the cartons collapsed, and most of the cartons were torn, spilling over the products on the floor. Moreover, almost all the products were damaged beyond repair. Each piece of the component is worth RM2.00. Each carton contained 2,000 pieces of the components. Vignes, the Warehouse Supervisor was furious at Salim, and warned to take disciplinary action against him. Obviously Salim was disappointed with the warning given to him. As a result of the damage, the delivery of the products to the customer could not be carried out on that particular day.

Question: Analyze the situation and explain the various quality costs involved. Discuss how the quality cost can be minimized in future.