Cost of Quality

Revision Date: 02/07/2020

Project Name: Wilmont's pharmacy and DroneTech Engineering's joint venture for delivery using drone technology
Revision No.: 00
Current Cost Estimate (Before using Quality Assurance Planning) Future Cost Estimate (After using Quality Assurance Planning) Comparison of Cost Estimate
Type of Cost Amount in US$ % of COPQ Type of Cost Amount in US$ % of COPQ Cost comparison Conclusion

Prevention Cost Prevention Cost

Research & Design $ 70,000.00 13.80% Research & Design $ 1,10,000.00 28.08% $ 40,000.00 Investment
Machine Cost $ 74,600.00 14.71% Machine Cost $ 47,580.00 12.15% $ -27,020.00 Cost Saving
Training $ 8,225.00 1.62% Training $ 18,650.00 4.76% $ 10,425.00 Investment
Quality Control Administration $ 16,700.00 3.29% Quality Control Administration $ 26,954.00 6.88% $ 10,254.00 Investment
Quality Planning $ 15,500.00 3.06% Quality Planning $ 33,419.00 8.53% $ 17,919.00 Investment
Total Prevention Cost $ 1,85,025.00 36.49% Total Prevention Cost $ 2,36,603.00 60.40% $ 51,578.00 Increase in Cost

Appraisal Cost Appraisal Cost

Incoming Inspection $ 18,000.00 3.55% Incoming Inspection $ 26,500.00 6.76% $ 8,500.00 Investment
Inprocess Inspection $ 10,000.00 1.97% Inprocess Inspection $ 14,605.00 3.73% $ 4,605.00 Investment
Pre-Dispatch Inspection $ 14,600.00 2.88% Pre-Dispatch Inspection $ 21,023.00 5.37% $ 6,423.00 Investment
Vendor Control $ 12,000.00 2.37% Vendor Control $ 5,142.00 1.31% $ -6,858.00 Cost Saving
Testing $ 33,060.00 6.52% Testing $ 43,654.00 11.14% $ 10,594.00 Investment
Materials Consumed $ 29,800.00 5.88% Materials Consumed $ 14,695.00 3.75% $ -15,105.00 Cost Saving
Total Appraisal Cost $ 1,17,460.00 23.16% Total Appraisal Cost $ 1,25,619.00 32.07% $ 8,159.00 Increase in Cost

Internal Failure Cost Internal Failure Cost

Spare parts consumption $ 26,250.00 5.18% Spare parts consumption $ 3,846.00 0.98% $ -22,404.00 Cost Saving
Repairs $ 54,102.00 10.67% Repairs $ 6,574.00 1.68% $ -47,528.00 Cost Saving
Failure Analysis $ 14,694.00 2.90% Failure Analysis $ 3,548.00 0.91% $ -11,146.00 Cost Saving
Total Internal Failure Cost $ 95,046.00 18.74% Total Internal Failure Cost $ 13,968.00 3.57% $ -81,078.00 Reduction in Cost

External Failure Cost External Failure Cost

Penalties $ 40,000.00 7.89% Penalties $ 3,482.00 0.89% $ -36,518.00 Cost Saving
Customer complaints $ 26,000.00 5.13% Customer complaints $ 1,469.00 0.37% $ -24,531.00 Cost Saving
Replacement cost $ 36,068.00 7.11% Replacement cost $ 8,633.00 2.20% $ -27,435.00 Cost Saving
Warranty failure cost $ 7,500.00 1.48% Warranty failure cost $ 1,970.00 0.50% $ -5,530.00 Cost Saving
Total External Failure Cost $ 1,09,568.00 21.61% Total External Failure Cost $ 15,554.00 3.97% $ -94,014.00 Reduction in Cost

Total COQ before QA Planning $ 5,07,099.00 Total COQ after QA Planning $ 3,91,744.00 $ -1,15,355.00 Final Cost Saving

Results:
1 The total savings in cost after inplementation of Quality Assurance Planning is US$115,355
2 The investments made in certain areas have proved to be extremely fruitful in terms of reduction of total cost of quality
3 By increasing the investment in R&D, it resulted in a direct effect on various other aspects like design, machine cost, repairing etc.
4 The negative cost in the comparison table indicates where cost savings has been made possible by increasing the amount of investments in other areas
5 This cost of quality report provides enough evidence that there will be a huge amount of cost savings if Quality Assurance Planning is implemented.
 Cost Comparison Chart
$6,00,000.00

$5,07,099.00
$5,00,000.00

$4,00,000.00 $3,91,744.00
Cost

$3,00,000.00

$2,36,603.00

$2,00,000.00 $1,85,025.00

$1,25,619.00
$1,17,460.00
$1,09,568.00
$95,046.00
$1,00,000.00

$13,968.00 $15,554.00

$-
Current Cost Estimate Future Cost Estimate

Total Prevention Cost Total Appraisal Cost Total Internal Failure Cost Total External Failure Cost Total COQ before QA Planning