1) The study analyzes the relationship between costs of quality (prevention costs, appraisal costs, internal failure costs, and external failure costs) and profitability of the VIP Nursing Care Unit at Stella Maris Hospital in Makassar, Indonesia from 2008-2010.
2) It finds that prevention and appraisal costs have a significant positive relationship with profitability, while external failure costs have a significant negative relationship. Internal failure costs did not significantly impact profitability.
3) The study concludes that improving allocation of prevention and appraisal costs can increase profitability.
International Journal of Business and Management Invention (IJBMI)inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
This study develops a framework for optimizing logistics costs using a game theory approach called the "game with nature" model. It employs the Hurwitz criterion as an optimality criterion for evaluating mixed strategies. The Hurwitz criterion allows for obtaining optimal strategies that consider both risks and rewards simultaneously. The framework is demonstrated using a simplified three-level logistics structure of a textile company. This study provides a comprehensive approach to logistics optimization that accounts for both risks and rewards, addressing limitations of prior methods that focused on only one factor.
The Effects of Service Quality Dimensions on Customer Satisfaction: An Empir...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
- The document discusses a research project analyzing the use and effectiveness of Total Quality Management (TQM) approaches in the German food industry.
- A survey of 442 food industry companies in Germany was conducted to assess the current status of TQM implementation based on the EFQM Excellence Model, which defines nine key areas.
- The results showed that companies have successfully implemented some TQM requirements like reducing environmental impacts and ensuring organizational structures. However, other areas like collecting employee feedback and communicating societal impacts need improvement.
- Statistical analysis found a positive correlation between TQM implementation and long-term business success, though companies ranked the impact of different TQM areas differently than the statistical results.
An effective way to optimize key performance factors of supply chainIAEME Publication
This document summarizes an article from the International Journal of Management that discusses optimizing key performance factors in supply chain management. The article begins with an abstract that outlines the goal of using analytical techniques to optimize costs in the outward supply chain. It then reviews relevant literature on supply chain performance measurement and modeling supply chain systems. The methodology section outlines the steps taken, which include identifying key parameters that influence performance, formulating the problem as minimizing total supply chain costs given constraints, validating the model, and implementing the solution. The conclusion emphasizes the importance of supply chain performance measurement for competitiveness.
This document discusses modeling repair strategies under warranty contracts to minimize expected warranty costs. It proposes using quasi-renewal processes to model product failures and imperfect repairs. Three repair strategies - static, improved, and dynamic - are developed and evaluated using representative cost functions under one-dimensional and two-dimensional warranty structures. Numerical experiments indicate the performance of the policies depends on factors like product reliability, cost function structure, and warranty contract type.
Supply Chain Efficiency Evaluation: A Contemporary Theoretical ModelWorld-Academic Journal
Supply chain management has gained a prodigious amount of attention from both practitioners and industriessince the last decade. Until now, there are many articles, and dissertations that address supply chain management, but there is still a lack of integration between the current efficiency evaluation methods and practical requisites for the supply chain management. A contemporary efficiency evaluation method is proposed to provide necessary support for efficiency improvement in supply chain management. The proposed method will address this aim in the
following main aspects: a basic supply chain model; concrete and unconcrete efficiency measurement in various dimensions; a cross-organizational efficiency evaluation; and weighted average and fuzzy set theory method.
Service quality measurement and customers perception about the services of su...IAEME Publication
This document summarizes a research study on measuring customer perceptions of service quality at supermarkets. The study uses the SERVQUAL model to assess customer expectations and perceptions across five dimensions of service quality: tangibles, reliability, responsiveness, assurance, and empathy. The researchers administered SERVQUAL surveys to customers of a supermarket called XYZ to analyze gaps between customer expectations and perceptions of service quality. The goal was to identify areas of weak service quality that require improvement in order to increase customer satisfaction.
International Journal of Business and Management Invention (IJBMI)inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
This study develops a framework for optimizing logistics costs using a game theory approach called the "game with nature" model. It employs the Hurwitz criterion as an optimality criterion for evaluating mixed strategies. The Hurwitz criterion allows for obtaining optimal strategies that consider both risks and rewards simultaneously. The framework is demonstrated using a simplified three-level logistics structure of a textile company. This study provides a comprehensive approach to logistics optimization that accounts for both risks and rewards, addressing limitations of prior methods that focused on only one factor.
The Effects of Service Quality Dimensions on Customer Satisfaction: An Empir...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
- The document discusses a research project analyzing the use and effectiveness of Total Quality Management (TQM) approaches in the German food industry.
- A survey of 442 food industry companies in Germany was conducted to assess the current status of TQM implementation based on the EFQM Excellence Model, which defines nine key areas.
- The results showed that companies have successfully implemented some TQM requirements like reducing environmental impacts and ensuring organizational structures. However, other areas like collecting employee feedback and communicating societal impacts need improvement.
- Statistical analysis found a positive correlation between TQM implementation and long-term business success, though companies ranked the impact of different TQM areas differently than the statistical results.
An effective way to optimize key performance factors of supply chainIAEME Publication
This document summarizes an article from the International Journal of Management that discusses optimizing key performance factors in supply chain management. The article begins with an abstract that outlines the goal of using analytical techniques to optimize costs in the outward supply chain. It then reviews relevant literature on supply chain performance measurement and modeling supply chain systems. The methodology section outlines the steps taken, which include identifying key parameters that influence performance, formulating the problem as minimizing total supply chain costs given constraints, validating the model, and implementing the solution. The conclusion emphasizes the importance of supply chain performance measurement for competitiveness.
This document discusses modeling repair strategies under warranty contracts to minimize expected warranty costs. It proposes using quasi-renewal processes to model product failures and imperfect repairs. Three repair strategies - static, improved, and dynamic - are developed and evaluated using representative cost functions under one-dimensional and two-dimensional warranty structures. Numerical experiments indicate the performance of the policies depends on factors like product reliability, cost function structure, and warranty contract type.
Supply Chain Efficiency Evaluation: A Contemporary Theoretical ModelWorld-Academic Journal
Supply chain management has gained a prodigious amount of attention from both practitioners and industriessince the last decade. Until now, there are many articles, and dissertations that address supply chain management, but there is still a lack of integration between the current efficiency evaluation methods and practical requisites for the supply chain management. A contemporary efficiency evaluation method is proposed to provide necessary support for efficiency improvement in supply chain management. The proposed method will address this aim in the
following main aspects: a basic supply chain model; concrete and unconcrete efficiency measurement in various dimensions; a cross-organizational efficiency evaluation; and weighted average and fuzzy set theory method.
Service quality measurement and customers perception about the services of su...IAEME Publication
This document summarizes a research study on measuring customer perceptions of service quality at supermarkets. The study uses the SERVQUAL model to assess customer expectations and perceptions across five dimensions of service quality: tangibles, reliability, responsiveness, assurance, and empathy. The researchers administered SERVQUAL surveys to customers of a supermarket called XYZ to analyze gaps between customer expectations and perceptions of service quality. The goal was to identify areas of weak service quality that require improvement in order to increase customer satisfaction.
This document provides an overview of a study on the impacts of service quality on customer satisfaction for Corporation X. The study aims to (1) construct service quality dimensions and a research framework for food retail chains, (2) explore differences between customer importance and satisfaction, and (3) provide a new management approach. The methodology section outlines the research framework based on SERVQUAL, a 36-item questionnaire, data collection from 400 customers, and analyses including descriptive statistics, factor analysis, reliability/validity testing, paired t-tests, ANOVA, and Importance-Performance Analysis.
Customer expectations and perceptions of service quality of mobile phoneIAEME Publication
This document analyzes customer expectations and perceptions of service quality among the top five mobile phone service providers in Kerala, India using the SERVQUAL model. A survey was conducted of 238 mobile phone users to evaluate service quality across five dimensions: reliability, responsiveness, assurance, empathy and tangibles. Gap analyses were presented for each service provider comparing customer expectations to perceptions for the reliability and assurance dimensions. The analyses revealed gaps between expectations and perceptions for most providers and dimensions, with Vodafone showing the largest gaps of 48% for assurance and 32% for reliability.
In recent years, management and, consequently, supply chain performance measurement, has attracted the attention of a large number of managers and researchers in the field of production and operations management. In parallel with the evolution of organizations from a single approach to a network and supply chain approach, performance measurement systems have also changed and moved towards network and supply chain performance measurement. Therefore, in order to face the storm of great change and transformation and not give in to the wave of competitive aggression, organizations have long had one thing in common, and that is to focus approaches and focus efforts towards achieving results. Results that lead to a competitive advantage and are more effective and decisive in the performance indicators of the organization, including earning more. In this study, in order to identify and prioritize the factors affecting the supply chain in manufacturing companies, using indicators such as cost, timely delivery and procurement time to evaluate the supply chain efficiency is considered. And performance evaluation was performed at the manufacturer level. Therefore, in order to evaluate the performance of the supply chain using the AHP integration approach and the DEA method approach in the fuzzy environment, the suppliers and suppliers of the manufacturing company were evaluated and ranked in terms of performance.
I. Stages of Operational Competitiveness the different levels of customer con...Lena Argosino
I. Stages of Operational Competitiveness
the different levels of customer contact in the service firm
II. Classification of the different strategies in different service operation
Solutions manual for operations management processes and supply chains 11th e...Brown485
Solutions Manual for Operations Management Processes and Supply Chains 11th Edition by Krajewski
Download at: http://downloadlink.org/p/solutions-manual-for-operations-management-processes-and-supply-chains-11th-edition-by-krajewski/
People also search:
operations management processes and supply chains 11th edition free pdf
operations management processes and supply chains 11th edition pdf
operations management processes and supply chains 11th edition solutions
operations management processes and supply chains 10th edition pdf
operations management: processes and supply chains (11th edition) ebook
operations management processes and supply chains 11th edition answers
operations management processes and supply chains 11th edition test bank
operations management processes and supply chains pdf
Operations Management Processes and Supply Chains Global 11th Edition Krajews...Callahanne
The document discusses several processes and examples of process analysis:
1. It provides discussion questions about various processes involving customer contact at different stages.
2. It discusses hybrid process solutions for hospitality businesses dealing with both tourism and business customers.
3. It compares the processes of eBay and McDonald's, noting how eBay accommodates customer variability while McDonald's reduces it.
4. It discusses potential process improvements in the medical industry through increased electronic file sharing.
This document describes a study that aimed to validate a shortened 15-item version of the SERVPERF scale, called SERVPERF-M, for measuring customer perceptions of service quality. The researchers administered SERVPERF to customers of 4 small businesses to collect data. Exploratory factor analysis of the full 22-item SERVPERF scale found a 5-factor structure but the factors were not clearly defined as the original dimensions. Item analysis led to the development of SERVPERF-M with 3 items measuring each of 5 dimensions (Tangibles, Reliability, Responsiveness, Assurance, Empathy). Confirmatory factor analysis was used to validate that SERVPERF-M measures these same 5 latent traits. The researchers
Supply chain cost identification as a means of cost reduction strategy. a ca...Alexander Decker
This document summarizes a research article that examines the supply chain processes of Ghana Supply Company Limited (GSCL) with the aim of identifying non-value adding activities to offer cost reduction strategies. The study used questionnaires and interviews with GSCL procurement, warehousing, and shipping personnel. Findings showed GSCL's supply chain operations are well-coordinated under the director of operations. Activities like procurement, shipping, warehousing and fleet management are integrated. The study also found GSCL uses strategies like proper procurement planning and effective lead time management to reduce supply chain costs.
This study examines the relationship between customer expectation, perceived service quality, and customer satisfaction in the banking sector in Damascus, Syria. The author conducted a survey of 250 customers from 5 banks. The results of the regression analysis found that customer expectation and perceived service quality both have a positive effect on customer satisfaction. Specifically, customer expectation explained 18% of the variance in customer satisfaction, while perceived service quality explained 36% of the variance. The findings indicate that meeting or exceeding customer expectations and improving perceptions of service quality can increase customer satisfaction in the banking industry. Bank managers should understand customer expectations and focus on strengthening service quality to enhance customer satisfaction and retention.
Operations Management Processes and Supply Chains 12th Edition Krajewski Test...kalotogub
This document contains a series of multiple choice questions about operations management processes in services and manufacturing. It covers key topics like the different types of processes (front office, back office, hybrid office and line, job, batch, continuous flow processes), how to position processes on matrices based on factors like customer contact and customization, and strategies like make-to-stock and assemble-to-order. The questions test understanding of core concepts around classifying and analyzing different process structures and choices in both manufacturing and service operations.
This document summarizes David Garvin's work on product quality. It outlines five approaches to defining quality, including transcendent, product-based, user-based, manufacturing-based, and value-based. It also details eight dimensions of quality: performance, features, reliability, conformance, durability, serviceability, aesthetics, and perceived quality. Finally, it discusses the strategic importance of quality and correlates such as the relationships between quality and price, advertising, market share, profitability, and cost.
The document discusses opportunities to improve healthcare supply chain management. It notes that supply costs represent up to 40% of hospital expenses. While inventory management has traditionally focused on tracking physical supplies, supply chain management (SCM) aims to optimize the entire process of procuring and delivering supplies from vendors to patients. Capturing the full benefits of SCM requires greater collaboration across groups and more complete data on total product costs. Initial focus areas for hospitals include pricing and contract management, which often provide quick savings through issues like multiple vendors, expired contracts, and price validation.
Solution manual for operations management processes and supply chains 10th ed...Aamir Ali
This document contains 11 discussion questions about operations management concepts. The questions cover topics like identifying core processes, competitive priorities for companies like Amazon and FedEx, designing hospital emergency room operations, and calculating productivity metrics. Sample responses are provided that analyze strategic plans, environmental factors, core competencies, and key capabilities for different organizations.
This document summarizes two service quality models proposed by Dabholkar: 1) The 1996 attribute and overall affect model which examines how consumers evaluate service quality for technology-based self-service options using attribute-based and affective approaches. 2) The 2000 antecedents and mediator model which provides a more comprehensive examination of service quality that includes antecedents, consequences, and mediators to better understand its conceptual issues. This later model found customer satisfaction to be a better predictor of behavioral intentions than service quality alone.
Quality-Driven Logistics: Reverse Logistics Process Reengineering, Improving ...paperpublications3
Abstract: To succeed in the modern global economy, it is critical to build a Logistics network that is information-rich, highly flexible, cost effective, and defined by both customer needs and internal corporate strategy. Organizations must constantly reinvent the Logistics network to allow business growth and change. Yet, the superiority in Logistics operations is anything but enough to achieve competitive advantage. The proper handling of Reverse Logistics is currently perceived as the leading distinction edge among organizations. From another perspective, high operational efficiency is dependent on quick, accurate, and continuous exchange of information within an organization. Such ability is achieved through the use of modern Information Technology and computer automation. As organizations cannot move into the highly competitive environment by adapting old management methods, Process Reengineering might be the solution. In this research, the concepts of Reverse Logistics, Information Technology, and Process Reengineering are spotlighted. A reengineering of the current maintenance process of a major Egyptian Healthcare Medical Equipment Provider is proposed in order to enhance the Customer Service Quality and the Operational Efficiency. Computer simulation modeling is used to evaluate the proposed model.
1) Quality costs include prevention costs, appraisal costs, and failure costs both internal and external. These costs can range from 5-20% of annual sales.
2) Measuring quality costs provides quantitative data to assess quality activities and make improvements. It focuses attention on reducing failure and appraisal costs.
3) The costs of non-quality, including rework, waste, and lost customers, often outweigh apparent quality costs like prevention. A quality system aims to minimize the costs of non-quality.
1. The document discusses various models and dimensions of service quality. It describes Dabholkar's attribute and overall affect model of service quality for technology-based self-service options, comparing it to his later antecedents and mediator model.
2. It also outlines five dimensions of service quality in Dabholkar's model: physical aspects, reliability, personal interaction, problem solving, and policy. An example is given applying these dimensions to assess service quality at a hospital.
3. Measurement tools for service quality are discussed, including SERVQUAL which measures quality across five dimensions: tangibles, reliability, responsiveness, assurance, and empathy.
The international journal of business and managementPatrick Sweet
The study mainly determined the effect of customer satisfaction of service quality on customer retention intention of TiGo in the Abokobi-Madina locality. The study specific determined the extent of customer satisfaction of service delivery by TiGo; evaluated customer retention intention of TiGo; and finally related customer satisfaction of service delivery to customer retention intention. The study used quantitative methodology to investigate the effect of customer satisfaction of service quality on retention of Tigo. A structured questionnaire was used to gather data. Customers’ satisfaction of service quality delivered by Tigo and their intention to retain the service of Tigo were measured perceptually on Five-point scale. Questionnaires with a high reliability (Cronbach’s alpha >0.70) were delivered through personal contact and self-administered by the customers.
Overall, 250 respondent were selected. The study found that: the customers were satisfied with the quality of service delivered by Tigo; the customers could not indicate whether or not they would retain the services of Tigo; of the service quality dimension, tangibility, assurance and reliability had significant positive effect on customer retention intention of Tigo, while responsiveness had significant negative effect on customer retention. The study recommended that maintaining existing customers should be a better option than chasing for new non-existing customers by Tigo and that future study should consider expanding the scope so as to make the findings more dependable.
1. The document discusses the importance of customer service in business and outlines several key components of an effective customer service strategy.
2. It identifies the "Seven R rule" which involves delivering the right product, quantity, condition, place, time, customer, and cost to satisfy customers.
3. Effective customer service strategies involve categorizing customers based on their needs and customizing service levels to different customer groups. This helps ensure all customer service requirements are met.
Development of Model for Quality Costing in a Medium Scale Industry-A Case StudyIOSR Journals
Abstract: Quality c o s t s pl ay s vi tal rol e in improving productivity. These costs are typically
categorized into costs of prevention, appraisal, internal and external failure. Like other activities of
business, quality costs can be programmed, budgeted, measured and analyzed to attain the objective of
better quality at lower cost. Quality costs is the basis by which investments in quality programs may be
evaluated in terms of cost improvement , profit enhancement and other benefits for plants and companies
from these programs. The cost of quality is an increasingly important issue in the debates over quality.
There was a mistaken notion that achievement of better quality requires higher costs. It was the myth that
prevented many Indian companies to invest more on quality cost related programs. In this article the
authors made an attempt to identify the different types of quality costs in a medium scale industry because
the small and medium scale industries pay very little attention towards finding and developing a system for
knowing & optimizing the cost of achieving quality. A model is proposed to identify the different quality
costs in a medium scale industry and is further implemented. It has been found some quality costs are more critical and require greater attention.
Key words: Quality costs, Quality management, Pareto analysis, Model for optimization
This document discusses the cost of quality in organizations. There are two main categories of quality costs: costs to improve quality like prevention and appraisal, and costs from poor quality known as failure costs. Prevention costs involve activities that avoid defects while appraisal costs measure conformance to standards. Failure costs are internal, like rework, or external after delivery. The model shows prevention and appraisal costs rise with quality while failure costs fall. Understanding these relationships helps minimize failure costs and meet customer expectations.
This document provides an overview of a study on the impacts of service quality on customer satisfaction for Corporation X. The study aims to (1) construct service quality dimensions and a research framework for food retail chains, (2) explore differences between customer importance and satisfaction, and (3) provide a new management approach. The methodology section outlines the research framework based on SERVQUAL, a 36-item questionnaire, data collection from 400 customers, and analyses including descriptive statistics, factor analysis, reliability/validity testing, paired t-tests, ANOVA, and Importance-Performance Analysis.
Customer expectations and perceptions of service quality of mobile phoneIAEME Publication
This document analyzes customer expectations and perceptions of service quality among the top five mobile phone service providers in Kerala, India using the SERVQUAL model. A survey was conducted of 238 mobile phone users to evaluate service quality across five dimensions: reliability, responsiveness, assurance, empathy and tangibles. Gap analyses were presented for each service provider comparing customer expectations to perceptions for the reliability and assurance dimensions. The analyses revealed gaps between expectations and perceptions for most providers and dimensions, with Vodafone showing the largest gaps of 48% for assurance and 32% for reliability.
In recent years, management and, consequently, supply chain performance measurement, has attracted the attention of a large number of managers and researchers in the field of production and operations management. In parallel with the evolution of organizations from a single approach to a network and supply chain approach, performance measurement systems have also changed and moved towards network and supply chain performance measurement. Therefore, in order to face the storm of great change and transformation and not give in to the wave of competitive aggression, organizations have long had one thing in common, and that is to focus approaches and focus efforts towards achieving results. Results that lead to a competitive advantage and are more effective and decisive in the performance indicators of the organization, including earning more. In this study, in order to identify and prioritize the factors affecting the supply chain in manufacturing companies, using indicators such as cost, timely delivery and procurement time to evaluate the supply chain efficiency is considered. And performance evaluation was performed at the manufacturer level. Therefore, in order to evaluate the performance of the supply chain using the AHP integration approach and the DEA method approach in the fuzzy environment, the suppliers and suppliers of the manufacturing company were evaluated and ranked in terms of performance.
I. Stages of Operational Competitiveness the different levels of customer con...Lena Argosino
I. Stages of Operational Competitiveness
the different levels of customer contact in the service firm
II. Classification of the different strategies in different service operation
Solutions manual for operations management processes and supply chains 11th e...Brown485
Solutions Manual for Operations Management Processes and Supply Chains 11th Edition by Krajewski
Download at: http://downloadlink.org/p/solutions-manual-for-operations-management-processes-and-supply-chains-11th-edition-by-krajewski/
People also search:
operations management processes and supply chains 11th edition free pdf
operations management processes and supply chains 11th edition pdf
operations management processes and supply chains 11th edition solutions
operations management processes and supply chains 10th edition pdf
operations management: processes and supply chains (11th edition) ebook
operations management processes and supply chains 11th edition answers
operations management processes and supply chains 11th edition test bank
operations management processes and supply chains pdf
Operations Management Processes and Supply Chains Global 11th Edition Krajews...Callahanne
The document discusses several processes and examples of process analysis:
1. It provides discussion questions about various processes involving customer contact at different stages.
2. It discusses hybrid process solutions for hospitality businesses dealing with both tourism and business customers.
3. It compares the processes of eBay and McDonald's, noting how eBay accommodates customer variability while McDonald's reduces it.
4. It discusses potential process improvements in the medical industry through increased electronic file sharing.
This document describes a study that aimed to validate a shortened 15-item version of the SERVPERF scale, called SERVPERF-M, for measuring customer perceptions of service quality. The researchers administered SERVPERF to customers of 4 small businesses to collect data. Exploratory factor analysis of the full 22-item SERVPERF scale found a 5-factor structure but the factors were not clearly defined as the original dimensions. Item analysis led to the development of SERVPERF-M with 3 items measuring each of 5 dimensions (Tangibles, Reliability, Responsiveness, Assurance, Empathy). Confirmatory factor analysis was used to validate that SERVPERF-M measures these same 5 latent traits. The researchers
Supply chain cost identification as a means of cost reduction strategy. a ca...Alexander Decker
This document summarizes a research article that examines the supply chain processes of Ghana Supply Company Limited (GSCL) with the aim of identifying non-value adding activities to offer cost reduction strategies. The study used questionnaires and interviews with GSCL procurement, warehousing, and shipping personnel. Findings showed GSCL's supply chain operations are well-coordinated under the director of operations. Activities like procurement, shipping, warehousing and fleet management are integrated. The study also found GSCL uses strategies like proper procurement planning and effective lead time management to reduce supply chain costs.
This study examines the relationship between customer expectation, perceived service quality, and customer satisfaction in the banking sector in Damascus, Syria. The author conducted a survey of 250 customers from 5 banks. The results of the regression analysis found that customer expectation and perceived service quality both have a positive effect on customer satisfaction. Specifically, customer expectation explained 18% of the variance in customer satisfaction, while perceived service quality explained 36% of the variance. The findings indicate that meeting or exceeding customer expectations and improving perceptions of service quality can increase customer satisfaction in the banking industry. Bank managers should understand customer expectations and focus on strengthening service quality to enhance customer satisfaction and retention.
Operations Management Processes and Supply Chains 12th Edition Krajewski Test...kalotogub
This document contains a series of multiple choice questions about operations management processes in services and manufacturing. It covers key topics like the different types of processes (front office, back office, hybrid office and line, job, batch, continuous flow processes), how to position processes on matrices based on factors like customer contact and customization, and strategies like make-to-stock and assemble-to-order. The questions test understanding of core concepts around classifying and analyzing different process structures and choices in both manufacturing and service operations.
This document summarizes David Garvin's work on product quality. It outlines five approaches to defining quality, including transcendent, product-based, user-based, manufacturing-based, and value-based. It also details eight dimensions of quality: performance, features, reliability, conformance, durability, serviceability, aesthetics, and perceived quality. Finally, it discusses the strategic importance of quality and correlates such as the relationships between quality and price, advertising, market share, profitability, and cost.
The document discusses opportunities to improve healthcare supply chain management. It notes that supply costs represent up to 40% of hospital expenses. While inventory management has traditionally focused on tracking physical supplies, supply chain management (SCM) aims to optimize the entire process of procuring and delivering supplies from vendors to patients. Capturing the full benefits of SCM requires greater collaboration across groups and more complete data on total product costs. Initial focus areas for hospitals include pricing and contract management, which often provide quick savings through issues like multiple vendors, expired contracts, and price validation.
Solution manual for operations management processes and supply chains 10th ed...Aamir Ali
This document contains 11 discussion questions about operations management concepts. The questions cover topics like identifying core processes, competitive priorities for companies like Amazon and FedEx, designing hospital emergency room operations, and calculating productivity metrics. Sample responses are provided that analyze strategic plans, environmental factors, core competencies, and key capabilities for different organizations.
This document summarizes two service quality models proposed by Dabholkar: 1) The 1996 attribute and overall affect model which examines how consumers evaluate service quality for technology-based self-service options using attribute-based and affective approaches. 2) The 2000 antecedents and mediator model which provides a more comprehensive examination of service quality that includes antecedents, consequences, and mediators to better understand its conceptual issues. This later model found customer satisfaction to be a better predictor of behavioral intentions than service quality alone.
Quality-Driven Logistics: Reverse Logistics Process Reengineering, Improving ...paperpublications3
Abstract: To succeed in the modern global economy, it is critical to build a Logistics network that is information-rich, highly flexible, cost effective, and defined by both customer needs and internal corporate strategy. Organizations must constantly reinvent the Logistics network to allow business growth and change. Yet, the superiority in Logistics operations is anything but enough to achieve competitive advantage. The proper handling of Reverse Logistics is currently perceived as the leading distinction edge among organizations. From another perspective, high operational efficiency is dependent on quick, accurate, and continuous exchange of information within an organization. Such ability is achieved through the use of modern Information Technology and computer automation. As organizations cannot move into the highly competitive environment by adapting old management methods, Process Reengineering might be the solution. In this research, the concepts of Reverse Logistics, Information Technology, and Process Reengineering are spotlighted. A reengineering of the current maintenance process of a major Egyptian Healthcare Medical Equipment Provider is proposed in order to enhance the Customer Service Quality and the Operational Efficiency. Computer simulation modeling is used to evaluate the proposed model.
1) Quality costs include prevention costs, appraisal costs, and failure costs both internal and external. These costs can range from 5-20% of annual sales.
2) Measuring quality costs provides quantitative data to assess quality activities and make improvements. It focuses attention on reducing failure and appraisal costs.
3) The costs of non-quality, including rework, waste, and lost customers, often outweigh apparent quality costs like prevention. A quality system aims to minimize the costs of non-quality.
1. The document discusses various models and dimensions of service quality. It describes Dabholkar's attribute and overall affect model of service quality for technology-based self-service options, comparing it to his later antecedents and mediator model.
2. It also outlines five dimensions of service quality in Dabholkar's model: physical aspects, reliability, personal interaction, problem solving, and policy. An example is given applying these dimensions to assess service quality at a hospital.
3. Measurement tools for service quality are discussed, including SERVQUAL which measures quality across five dimensions: tangibles, reliability, responsiveness, assurance, and empathy.
The international journal of business and managementPatrick Sweet
The study mainly determined the effect of customer satisfaction of service quality on customer retention intention of TiGo in the Abokobi-Madina locality. The study specific determined the extent of customer satisfaction of service delivery by TiGo; evaluated customer retention intention of TiGo; and finally related customer satisfaction of service delivery to customer retention intention. The study used quantitative methodology to investigate the effect of customer satisfaction of service quality on retention of Tigo. A structured questionnaire was used to gather data. Customers’ satisfaction of service quality delivered by Tigo and their intention to retain the service of Tigo were measured perceptually on Five-point scale. Questionnaires with a high reliability (Cronbach’s alpha >0.70) were delivered through personal contact and self-administered by the customers.
Overall, 250 respondent were selected. The study found that: the customers were satisfied with the quality of service delivered by Tigo; the customers could not indicate whether or not they would retain the services of Tigo; of the service quality dimension, tangibility, assurance and reliability had significant positive effect on customer retention intention of Tigo, while responsiveness had significant negative effect on customer retention. The study recommended that maintaining existing customers should be a better option than chasing for new non-existing customers by Tigo and that future study should consider expanding the scope so as to make the findings more dependable.
1. The document discusses the importance of customer service in business and outlines several key components of an effective customer service strategy.
2. It identifies the "Seven R rule" which involves delivering the right product, quantity, condition, place, time, customer, and cost to satisfy customers.
3. Effective customer service strategies involve categorizing customers based on their needs and customizing service levels to different customer groups. This helps ensure all customer service requirements are met.
Development of Model for Quality Costing in a Medium Scale Industry-A Case StudyIOSR Journals
Abstract: Quality c o s t s pl ay s vi tal rol e in improving productivity. These costs are typically
categorized into costs of prevention, appraisal, internal and external failure. Like other activities of
business, quality costs can be programmed, budgeted, measured and analyzed to attain the objective of
better quality at lower cost. Quality costs is the basis by which investments in quality programs may be
evaluated in terms of cost improvement , profit enhancement and other benefits for plants and companies
from these programs. The cost of quality is an increasingly important issue in the debates over quality.
There was a mistaken notion that achievement of better quality requires higher costs. It was the myth that
prevented many Indian companies to invest more on quality cost related programs. In this article the
authors made an attempt to identify the different types of quality costs in a medium scale industry because
the small and medium scale industries pay very little attention towards finding and developing a system for
knowing & optimizing the cost of achieving quality. A model is proposed to identify the different quality
costs in a medium scale industry and is further implemented. It has been found some quality costs are more critical and require greater attention.
Key words: Quality costs, Quality management, Pareto analysis, Model for optimization
This document discusses the cost of quality in organizations. There are two main categories of quality costs: costs to improve quality like prevention and appraisal, and costs from poor quality known as failure costs. Prevention costs involve activities that avoid defects while appraisal costs measure conformance to standards. Failure costs are internal, like rework, or external after delivery. The model shows prevention and appraisal costs rise with quality while failure costs fall. Understanding these relationships helps minimize failure costs and meet customer expectations.
The impact of applying quality management system and environment standard on ...Alexander Decker
This document summarizes a study that examined the relationship between applying quality management systems
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The study collected data from 150 SME management staff through surveys. It found that QMS and environmental
standards were both related to organizational performance, but that QMS had a greater impact on performance than
environmental standards. The findings provide empirical evidence that QMS significantly influences organizational
performance more than environmental standards.
1) The document discusses concepts related to Total Quality Management including continuous improvement processes and principles. It provides examples of key performance indicators that can be used to measure quality in the health sector such as mortality rates, infection rates, and patient satisfaction.
2) The continuous improvement process involves detecting issues, analyzing causes, finding solutions, and implementing corrections. Principles of the process include teamwork, prevention over correction, and commitment to improvement.
3) Effective performance management requires establishing key performance indicators, measuring and monitoring performance, and using results to reward employees and improve processes. Setting the right KPIs is important for effective management.
HIDDEN COSTS OF QUALITY: MEASUREMENT & ANALYSIS ijmvsc
This document discusses hidden costs of quality and provides a literature review on previous studies related to measuring and analyzing quality costs. It identifies direct and hidden costs of quality and categorizes them into costs of conformance and non-conformance. The study aims to identify, measure, and quantify all hidden quality costs, like indirect and opportunity costs, across all processes and activities in a manufacturing firm to understand their impact on total quality costs and organizational performance. A methodology is outlined to collect comprehensive cost data and compare traditional quality cost analysis with one including hidden costs.
There is an increasing trend in competition on the global market and this has compelled many manufacturing and service companies to revise their understanding of quality. Customers today make informed choices and patronize products and services based on their quality. There are also regulations which are established by government agencies to ensure that products and services are of expected quality that satisfies the needs of the customer. This demand from customers has triggered a need for manufacturing companies to always provide quality products to stay in competition. Provision of quality products has a cost element attached to it. The study was a case study and focused on the assessment of cost of quality and its effect on manufacturing performance. There have been several researches that have shown the relevance of cost of quality assessment in a manufacturing firm. This research looks at cost of quality with specific emphasis on the classical P-A-F (Prevention-Appraisal-Failure) cost model and tries to ascertain its effects on manufacturing performance. The study focused on Special Ice Company Limited as a case study. The study employed three categories namely, cost of prevention, cost of appraisal and cost of failure as a proxy for cost of quality on the manufacturing performance. A sample of 80 participants was randomly selected for this study. Primary data was collected and analyzed. The findings show that the cost of quality element like cost of external failure and cost of appraisal had a statistically significant impact on the manufacturing performance of the company. A semi-structured interview was also conducted with the Manager Director to further understand the posturing of the top management with regards to the study. The study recommended that the organization make a conscious effort to sensitize employees to understand the cost of quality and its implications on the manufacturing performance of the company and also appraise their production processes at all times and ensure their entire staff adhere to accepted procedures. Again, the study also recommended that top management get actively involved and make a conscious effort to incorporate the cost of quality in their decision-making process and get all staff to align and adhere to it and also pay close attention to customer complaints act on it to improve on the products.
Impacts of the Cost of Quality Components on Business Execution and the Strat...Dr. Amarjeet Singh
This research paper discusses and analyzes the
components of the cost of quality (namely the cost of good
quality and the cost of poor quality), their impacts on business
execution and the company’s bottom line (i.e. profits) and
suggests strategies to minimize the cost of poor quality.
Z energy aims to manage quality in its coffee bar by establishing a quality manual. The manual will define the quality management system boundaries and responsibilities. It will also describe the records and methods used to manage quality. Quality is the result of high intention, sincere effort, intelligent direction and skillful execution. Z energy strives to provide high quality coffee and maintain standards in areas like storing coffee beans, cleaning equipment, and meeting ISO 9001 standards for espresso preparation. Management must focus on customer satisfaction and quality planning.
What are the challenges in measuring pulic sector efficiency? - Julian Kelly,...OECD Governance
This presentation was made by Julian Kelly, United-kingdom, at the 37th Annual Meeting of OECD Senior Budget Officials held in Stockholm on 9-10 June 2016
This document discusses cost of quality and provides definitions, categories, and models of quality costs. It defines cost of quality as the costs incurred to prevent, detect, and fix defects. Quality costs are divided into conformance costs (prevention and appraisal) and non-conformance costs (internal and external failure). Prevention costs aim to avoid defects, appraisal costs detect defects, and failure costs result from defects. The document also outlines the history of cost of quality analysis, gives examples to illustrate the categories, and presents a case study of a company's quality costs over four years that demonstrates how prevention costs can reduce total quality costs.
IJRET : International Journal of Research in Engineering and Technology is an international peer reviewed, online journal published by eSAT Publishing House for the enhancement of research in various disciplines of Engineering and Technology. The aim and scope of the journal is to provide an academic medium and an important reference for the advancement and dissemination of research results that support high-level learning, teaching and research in the fields of Engineering and Technology. We bring together Scientists, Academician, Field Engineers, Scholars and Students of related fields of Engineering and Technology
The degree to which banks are committed to applying the dimensions of total q...Alexander Decker
This document summarizes a study on the degree to which banks are committed to applying total quality management principles regarding customer service. It introduces total quality management and its importance. It then states the study's main question as examining how banks' commitment to total quality management principles affects customer service levels. It lists several sub-questions and outlines the study's hypotheses. Finally, it provides background information on total quality management philosophies and definitions.
Impact of Cost of Quality on Total Quality Management in Garment Industryijtsrd
There is a very much need to take a new perspective to gain a competitive advantage in this modern era of consistently increasing of competition. This has accommodated to implement quality management in RMG Ready made garment Sector. As it has much importance in maximizing the productivity and minimizing the cost of operation. But it requires spending huge cost expenses which doesn't guarantee a desired outcome. This study is taken up with the intention to evaluate the extent how cost spend on quality is advantageous to organization. To perform this study we have used some data analysis tools to analyze the collected data which were collected through survey method and discovered that evaluation of cost of poor quality will help to implement appropriate quality policy which minimize the cost and helps to reach the standard of the customer. Prof. Lakshminarayana. N | Kusuma. P ""Impact of Cost of Quality on Total Quality Management in Garment Industry"" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-4 , June 2019, URL: https://www.ijtsrd.com/papers/ijtsrd23857.pdf
Paper URL: https://www.ijtsrd.com/management/strategic-management/23857/impact-of-cost-of-quality-on-total-quality-management-in-garment-industry/prof-lakshminarayana-n
The document discusses the rising costs of healthcare delivery and the need for healthcare facilities to contain costs while maintaining quality. It defines different types of costs like direct, indirect, fixed, variable and sunk costs. It also summarizes the different levels of cost hierarchy, theories of cost inflation, principles of efficiency, stages of cost effectiveness and containment, and types of economic evaluation.
This document discusses key concepts related to measuring the effectiveness and efficiency of health care systems. It defines efficacy, effectiveness, and efficiency, noting that efficacy measures the effect under ideal conditions while effectiveness considers real-world conditions, and efficiency examines the relationship between costs and benefits. Regarding effectiveness, it emphasizes that resources are wasted if treatments do not produce improved outcomes for patients, regardless of production efficiency. The document also distinguishes between technical, productive, and allocative efficiency, and notes that efficiency analysis in health care must account for market anomalies and differences between service provision and health outcomes. Overall, it provides an overview of important economic concepts for evaluating health systems.
IRJET-Analysis of Cost of Poor Quality (COPQ) and its Calculation: Steel Indu...IRJET Journal
This document summarizes a research paper analyzing the cost of poor quality (COPQ) in the steel industry. The paper reviews various models for calculating COPQ and proposes a new methodology. Key points:
- COPQ includes costs from internal failures like rework and external failures like customer returns and warranty claims that result from poor quality.
- The proposed methodology adds a cost mapping step to existing process and product mapping approaches to capture all relevant cost data for COPQ calculation.
- The paper argues that prevention and appraisal costs should be excluded from COPQ calculations since they are basic manufacturing requirements rather than costs due to poor quality.
- A modified COPQ calculation formula is presented that sums internal failure
The economy is developing very fast and it is becoming more competitive with each passing day as customers also become more difficult (Weckenmann and Akkasoglu, 2012). The organization has to face more fierce competitions and challenges every day. Many companies provide the same products or services for the same customers (Weckenmann, Akkasoglu and Werner, 2015). To survive on this conjuncture, they must build up their reputation based on great product quality.
Many foundational principles of quality were introduced and developed by Deming in 1986 (Wicks. A and Roethlein. C, 2009). They had quickly become essential factors in many companies’ operation. Consequently, quality management must be given more attention like an important strategy (Khaled Omar and Murgan, 2014). Many authors think that quality of products or services has a close relationship with customer satisfaction. In order to help companies control their product quality more efficiently, the concept of cost of quality (CoQ) was formed and developed continuously.
Quality cost philosophy was first described by Armand V. Feigenbaum (1956) in his book, “Total quality management”. After that, many modified definitions of CoQ had appeared. Chiadamrong (2003) said, “The cost of quality is a comprehensive system, not a piecemeal tool.” According to Chopra and Garg (2012), quality cost is the gap between actual cost and perfect cost of products or service. In general, quality cost is a useful methodology that helps companies to build trust with customers, ensure sustainable development and increase their profit.
Crandall and Julien (2010) said that The American Society of Quality (ASQ) define cost of quality as follows: “Quality costs are the total of the cost incurred by investing in the prevention of nonconformance to requirements, appraising a product or service for conformance to requirements, and failing to meet requirements. The sum of these costs represents the difference between the actual cost of a product or service and what the reduced cost would be if there were no possibility of substandard service, failure of products or defects in their manufacturing.”
This paper will provide general and in-depth information about costs of quality and its development up to the present day with two main parts. The first part will concentrate on concepts, definitions, and models of quality costs as well as how it was formed. The second part will contain real example, discussion and analysis about how CoQ concept is as relevant today as it has ever been.
Running Head: FROM THE FRONT LINES1
From the Front Lines
Lisa M. Buentello
HCA 311: Health Care Financing & Information Systems
Professor Kathleen Martocci
May 29, 2015
- 1 -
[no notes on this page]
Future Direction of Health Care 2
From the Front Lines
The break even analysis figures can be used to establish the impacts of various
reimbursements such as Medicare, Medicaid, and Private and self-pay contributions. Notably,
from the break even analysis of the “From the Front lines” facility, increase in Medicare and
Medicaid benefits have an effect of increasing sales volume. Eventually, the value of the gross
margin increases leading to an upsurge of the value of the contribution per unit. This leads to a
reduction in the number of the break-even procedures. Private or self-pays have an effect of
increasing the volume of sales in addition to the increment made by Medicaid and Medicare
benefits. As a result, the break even procedures will become even smaller causing a
corresponding increase in profit margins.
Break even analysis is essentially important in developing my upcoming capital
investment proposal. It will be applicable in clarifying the extent of the viability of my planned
objectives. Specifically, this tool will be of great significance in evaluating expansion
opportunities, new providers, new services or new capital purchases (Cafferky, 2012). Break
even analysis is basically used in establishing whether the planned activity is viable enough to
cover the expected costs that are principally divided into variable and fixed expenses.
Also, I will utilize break analysis values to ascertain whether the capital proposal will be
financially viable. Specifically, it will be applicable in determining the activity level that will
- 2 -
[no notes on this page]
Future Direction of Health Care 3
cover the projected fixed and variable costs of the venture satisfactorily. It is at this point that a
break even analysis will be used to evaluate the critical components of my budget plan.
Typically, break even analysis and the budget plan are used interchangeably while
making financial analysis that concerns various capital investment plan proposals (Cafferky,
2012).
Break Even Analysis
Break Even
Analysis
Sales payment per procedure $885
numbe of procedures in year 1 500
numbe of procedures in year 2-5 850
Total Sales amount
1, 194,
750
Variable costs Cost of each Procedure $175
Total number of procedures 1350
Total Variable costs $236, 250
Contribution Per Unit 710
Gross Margin=sales-variable costs
$958,
500
Fixed Costs Purchasing costs
$ 11,
000
Rennovation Costs $9,000
$20,000
Employees Salaries
$ 336,
000
Total fixed costs
.
This document provides an overview of health care cost concepts and economic evaluation. It defines key cost terms like total cost, fixed cost, variable cost, marginal cost, and opportunity cost. It also explains different methods of economic evaluation used to analyze health care costs and outcomes, including cost-benefit analysis, cost-effectiveness analysis, cost-utility analysis, and cost-minimization analysis. Quality-adjusted life years (QALYs) and disability-adjusted life years (DALYs) are discussed as common measures used in cost-utility analysis to evaluate health outcomes.
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Improving hospital profitability through cost of quality
1. European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol 4, No.11, 2012
Improving Hospital Profitability through Cost of Quality
(Case Study: VIP Nursing Care Unit, Stella Maris Hospital, Makassar, Indonesia)
Indrianty Sudirman1* Yos Immanuel2
1. Department of Management, Faculty of Economics, Hasanuddin University, Makassar, Indonesia 90245
2. Department of Hospital Administration, Hasanuddin University, Makassar, Indonesia 90245
* Email of the corresponding author: indrianty_sudirman@yahoo.com
Abstract
The Stella Maris Hospital of Makassar, Indonesia has made various efforts in improving the quality of services to maximize
profitability through the increasing of market share and cost containment. The financial cash flow within the year 2008-
2010 indicates that the operating costs increased which is in contrast to the rate of bed utilization that decreased for the same
period, that subsequently give impact to profitability. This paper is intended to analyze the relationship between cost of
quality with profitability. The result indicates that the cost of quality has a significant relationship to the profitability.
Partially, prevention and appraisal cost have a significant relationship to improve profitability, while the external failure
costs have a significant relationship to lower profitability. Internal failure costs, on the other hand, have no significant
relationship to the profitability. In conclusion, improving the allocation of prevention and appraisal costs will subsequently
increase the profitability.
Keywords: cost of quality, prevention costs, appraisal costs, internal failure costs, external failure costs, and profitability.
1. Introduction
Increasing competition in the manufacturing and service industry requires companies to give more attention to the quality of
products and services produced, so as to survive in a dynamics competitive environment. Quality improvement can be done
by improving the quality of processes and products or services as it is one of the key strategic objectives in the Balanced
Scorecard concept (Norton and Kaplan, 2008). Improving the quality of products or services will increase customer
satisfaction and market share and subsequently increasing market share will have implications for revenue growth. Thus,
companies need to implement continuous quality improvement efforts by controlling the cost arisen through measurement
of the cost of quality.
Many companies promote quality as the central customer value and consider it to be a critical success factor for achieving
competitiveness. Any serious attempt to improve quality must take into account the costs associated with achieving quality
since the objective of continuous improvement programs is not only to meet customer requirements, but also to do it at the
lowest cost. This can only happen by reducing the costs needed to achieve quality, and the reduction of these costs is only
possible if they are identified and measured. Therefore, measuring and reporting the cost of quality (COQ) should be
considered an important issue for the companies.
Although the cost of quality (COQ) has been a well known concept for many years, but there is no general agreement on a
single broad definition of quality costs (Machowski and Dale, 1998). The cost of quality is usually understood as the sum of
conformance plus non-conformance costs. Cost of conformance is the price paid for prevention of poor quality (inspection
and quality appraisal). Cost of non-conformance is the cost of poor quality caused by product and service failure (rework
and returns). According to Purgslove and Dale (1995), it is now widely accepted that quality costs are the cost incurred in
the design, implementation, operation and maintenance of a quality management system, the cost of resources committed to
continuous improvement, the cost of system, product and service failures, and all other necessary costs and non-value added
activities required to achieve a quality product or service.
Campanella, Jack, et. al. (1990) and ASQC (1970), recognized four categories of quality costs namely: (1) prevention cost;
(2) appraisal cost; (3) internal failure cost; and (4) external failure cost. The definition of each catagory is describes as
follows;
Prevention costs are “the costs of all activities specifically designed to prevent poor quality in products and services”. This
is a proactive approach to defect prevention rather than defect correction and removes the idea of quality efforts essentially
being reactive in efforts to “put out fires”. Prevention expenses can be recovered many times over through reduced appraisal
and failure costs.
Appraisal costs are “the costs associated with measuring, evaluating, and auditing products or services to assure
conformance to quality standards and performance requirements”. Appraisal techniques are used for the verification and
validation. These techniques help organization to increase the quality with lower cost.
Internal failure costs are “the costs resulting from products or services not conforming to requirements or customer/user
needs (which) occur prior to delivery or shipment to the customer”.
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External failure costs are “the costs resulting from products or services that not conforming to requirements or
customer/user needs which occur after delivery or shipment of the product, and during or after furnishing of a service to the
customer”. External failure can include loss of failure business through customer dissatisfaction.
There are also correlation between the maturity of a quality system and the distribution of quality costs. Some studies have
been conducted to determine the actual effectiveness of COQ systems and the degree of maturity, and total costs model
relates the distribution cos of quality to the maturity of the quality system (Juran, J.M., Gryna, F.M. and Bingham, R.,
1975), as shown in Table 1.
Table 1. Conceptual Model of Relative COQ Expenditures Versus Quality System Maturity Level.
Maturity Level
1 2 3 4 5
Prevention Very low Low Moderate High Very high
Appraisal Low Low-Moderate Moderate Low-Moderate Low
Int failure High Very high Moderate-high Low-Moderate Very low
Ext failure High High Moderate Low Very low
Total COQ High Very high Moderate-high Low-Moderate Low
Source: Sower, V.E., Quarles, R., Broussard, E. (2007)
The Stella Maris Hospital of Makassar, in particular, has developed VIP treatment unit as one profit center with services
focusing on middle to upper segments of the economy. In fact, the purpose of the VIP treatment unit development is not
only to improve the profitability of the hospital to cover all operational and maintenance costs but also to subsidize poor
patients as the committment and implementation of the hospital missions. In conducting the service, variety quality
improvement programs have been conducted to support the hospital profitability through the improvement of market share
and operational cost efficiency. However, in the year 2008-2010, VIP treatment unit operating costs increased by 15.7%
annually. Conversely, the bed utilization rate decreased by 3.59% each year, so a such contradictory trend has given impact
to the profitability of the VIP treatment unit as one of the profit centers at Stella Maris Hospital of Makassar.
Based on these phenomenon, is important to analyze the quality cost of the profitability of the VIP Care Unit at Stella Maris
Hospital of Makassar. The main purpose of this study is to calculate and analyze the cost of quality (prevention costs,
appraisal costs, internal failure costs and external failure costs) and the level of profitability to identify the variable costs
that have a significant relationship to the profitability of the VIP treatment unit so that it can provide inputs related to the
allocation and control of the quality costs.
2. Research Method
The research was carried out at the VIP Nursing Care Unit at Stella Maris Hospital of Makassar, between April and May
2011.
The research used in this study was descriptive analytic using retrospective study design and quantitative approach. The
variables in this study consisted of 2 (two) groups, the independent variables and the dependent variable. Independent
variables consist of the cost of prevention (X1), the cost of assessment (X2), internal failure costs (X3), and external failure
costs (X4), while the dependent variable in this study is the profitability (Y).
The data was collected by examining and assessing some documents related to the research topic, namely the operational
cost data, annual reports, and implementation of hospital rates. In addition, the interview method was also used to assist the
identification of the hidden cost to equip the data that was not obtained during documentation process. Interviews were also
conducted to the heads of the related surgery units and heads of inpatient unit within the hospital.
The scope of the data in this study comprised the financial structure of the VIP care unit consisting of actual costs, hidden
costs, and estimated profitability. Sampling technique used was a census technique related to monthly operating costs and
profitability of the VIP care unit of Stella Maris Hospital of Makassar during the period of 2008-2010, where the number of
samples were 36 months (n = 36).
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3. Results and Discussions
The concept of Balanced Scorecard in the customer's perspective described that service quality will increase customer
satisfaction that subsequently will support the acquisition and retention so that it will also increase the market share that
ultimately will affect the profitablity as illustrated in figure 1 (Norton and Kaplan, 2008). From the perspective of cost, the
concept of quality cost considers that the service quality requires the allocation for cost of control (prevention and appraisal)
and failure costs (internal and external) efficiently, thus increasing profitability (Foord K., 2004).
Consumer
Aquisition
Market Share
Consumer
Satisfactionn Consumer
Retention
Service Quality
Profitability
Cost of Quality
Cost of Cost of
Control Failure
Prevention Cost Internal Failure Cost
Appraisal Cost External Failure Cost
Figure 1. Theoritical Framework
The analysis of the profitability of the unit cost of quality care is carried out by measuring the profitability VIP care units
and components of quality cost, which consists of prevention costs, appraisal costs, internal failure costs and external failure
costs. The conceptual framework of this study is illustrated in figure 2.
Prevention Cost
Appraisal Cost Profitability of the
VIP Nursing Care
Internal Failure Cost
Unit
External Failure Cost
: Independent Variable
: Dependent Variable
Figure 2. Conceptual Framework
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3.1. Cost of Quality
Cost of quality is the cost associated with the prevention, identification, improvement of low (bad) quality products or do
not meet customer needs and the opportunity cost of time lost of production and sales. Cost of quality includes 4 (four)
groups of costs, i.e., prevention costs, appraisal costs, internal failure costs, and costs of failure external (Campanella, Jack,
et. al. 1990). The cost of quality of Stella Maris Hospital during 2008 – 2010 is presented in figure 3.
1.916.137.155
2.500.000.000
1.620.080.000
1.414.410.674
2.000.000.000
Prevention Cost
1.200.349.037
1.169.850.000 Appraisal Cost
1.500.000.000
942.667.000
Internal Failure Cost
1.000.000.000
External Failure Cost (BOD
80%)
126.981.740
131.684.437
125.178.068
147.474.915
92.862.123
92.998.306
Cost of Quality
33.135.477
26.384.300
21.600.500
500.000.000
-
2008 2009 2010
Figure 3. The cost of quality within the year period of 2008 to 2010
Based on the statistical F test, it was shown that prevention costs, appraisal costs, internal failure costs and external failure
costs linked to the profitability simultaneously. It can be seen from the value of R Square of 0.914 or in other words, Stella
Maris Hospital profitability of 91.4% determined by the cost of prevention, appraisal costs, internal failure costs and
external failure costs, while the remaining 8.6% is determined by other factors beyond the cost of quality is not examined in
this study.
Partial relationshion between each cost of quality components with profitabilty is illustrated in table 2, and will be further
elaborated in the following sections.
Table 2. Paired T-Test of Profitability Correlation
Profitability
Variables Significant Level
Correlation
Prevention Cost (X1) 0,521 0,001
Appraisal Cost (X2) 0,716 0,000
Internal Failure Cost (X3) 0,063 0,715
External Failure Cost (X4) -0,475 0,003
Source: Primary Data
3.2. Prevention costs
Prevention costs are costs incurred as a result of efforts to prevent poor quality of services rendered. It is intended to
maintain and improve the quality of service to consumers (Foord K., 2004). In this study, the costs of prevention include the
cost of quality planning and nursing care, the cost of human resource training, and facility maintenance of care units. As can
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be seen from Figure 3, the cost of prevention in the periods of 2008-2009 decreased by 4.94% from 131 million IDR to 125
million IDR. In the periods of 2009-2010, on the other hand, the prevention cost increased up to 17.81% from 125 million
IDR to 147 million IDR. The decrease in the prevention cost is also followed by a decrease of 0.27% in failure costs both
internal and external in the periods of 2008-2009, and a further decrease of 34.79% in 2010. This indicated that during the
years of 2008-2010, Stella Maris Hospital has tried to fix the quality of the VIP nursing care unit through the allocation of
quality cost as a part of prevention cost.
As shown in table 2, the analysis results showed that prevention cost has a significant effect on profitability at level of
0.001. Partial correlation coefficients of the cost of prevention with a value of 0.521 have a positive direction. This value
means that the rising costs of prevention will be followed by improved profitability significantly. In this case, the Stella
Maris Hospital still needs to further enhance its prevention cost allocation to maximize the profitability of VIP nursing care
unit as indicated by the regression correlation. This finding is in a good agreement with Hansen & Mowen (2006) stating
that the prevention cost and appraisal cost are part of control costs intended to prevent increasing of bad impact resulted
from poor product/service quality delivered to customers through minimizing the cost occurred from the failure.
Previous research carried out by Rahmat and Amalia (2007), also found that the increase of budget allocation for prevention
and appraisal costs of hospital will reduce the cost occured caused by external and internal failures. Therefore, it is necesary
for the Stella Maris Hospital to increase the allocation of prevention to maximize the profitability of VIP nursing care unit.
Under optimum allocation, the prevention cost could minimize the occurance of failre cost which subsequently increase the
profitability. This is inline with Hansen and Mowen (2006) that stated that cost efficiency will increase profitability.
This thought is also consistent with Balanced Scorecard hierarchical logic (Norton and Kaplan, 2008) stating that the
improvement of growth and learning will increase the quality of internal process that may have impact to consumer
satisfaction and ultimately will influence profitability. The prevention efforts that need to be done by Stella Maris Hospital
includes the improvement the quality of human resources including selection and recruitment process, better qualification
through sustainable education as well as internal and external training. The Stella maris hospital should also periodically
maintain the medical and non medical equipment and facilities as well as establish a electromedical team to supervise the
medical and non medical equipment and facilites. In addition, the Stella Maris Hospoital also need to improve and control
the quality continuously. Such efforts are covered in the perspective learning and growth from Balanced Scorecard concept
(Kaplan and Norton, 2008).
3.3. Appraisal Cost
Appraisal costs are costs ocurred as a result of the evaluation or audit on an ongoing basis to the standard of services to meet
the expectations of consumers (Foord K., 2004). It is intended to evaluate the quality of service to customers. In this study,
appraisal fee covered the folllowing costs as follows; the cost of internal surveys, nursing care evaluation cost, and
callibration cost of medical facilities of the VIP nursing care unit in Stella Maris Hospital.
Based on figure 3, the appraisal cost in the years of 2008-2009 increased by 0.15%, from 92.8 million IDR to 93 million
IDR. Similarly, in the year 2009-2010, the cost valuation increased by 36.54% from 92 million to 127 million IDR. This
indicates that an increase in the cost of the VIP care unit has applied a particular system related to the services provided. In
addition, the allocation of appraisal costs in the VIP nursing care unit has not been maximized, especially in the years 2009-
2010, where the cost of failure has increased by 34.79% (internal and external) even though after the year 2008-2009 it had
ever decreased by 0.27%.
The analysis result as shown in table 2 indicates that appraisal cost have a significant relationship to profitability at level of
0.000. In addition, partial correlation coefficients of the appraisal with a value of 0.716 have a positive direction. This value
means that the rising cost of appraisal will be followed by the improvement of profitability significantly. Therefore, the
Stella Maris Hospital needs to to further enhance the allocation of appraisal cost to maximize the profitability of the VIP
nursing care unit as also shown in the regression correlation.
Based on the findings, the Stella Maris Hospital has to increase the budget allocated for appraisal cost to maximize its
profitability. Several efforts could be improved regarding evaluation process as follows: (1) consistently conducting staff
performance and productivity evaluation based on key performance indicator that has been decided together, (2) conducting
monitoring and evaluation as well as follwing up the impelemtation of nursing care standard, and (3) continuously
improving the accreditation status in which one of the criteria is related to nursing care management.
3.4. Internal and External Failure Costs
Internal failure costs are costs ocurred due to a mismatch of internal processes to produce the services in accordance with
established standards and consumers requirements (Foord K., 2004). In this study, the costs of internal failure include
several components i.e., the cost of repairs and costs due to the resignation of HR in the VIP nursing care unit in the Stella
Maris Hospital during the periods of 2008-2010.
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In addition, based on figure 3, it can be seen that the cost of internal failure in the periods of 2008-2009 decreased by
20.37% i.e., from 33 million IDR to 26 million IDR. Similarly, in the years of 2009-2010, the internal failure costs
decreased by 18.13% from 26.4 million IDR to 21.6 million IDR. Such decrease can be caused by the improvement of the
quality of internal services in the VIP nursing care unit which then minimizing the cost of internal failure including the cost
of repairs and the resignation of HR. Moreover, this decrease can also be caused by the low allocation of funds to fix the
internal process improvement in VIP nursing care unit of the Stella Maris Hospital.
Based on the trend in external failure costs during the periods of 2008-2010, which increased by 10.52% in the years of
2008-2009 and then increased again by 35.35% in 2010, therefore the low of external failure costs are caused by the low
allocation of funds to fix the improve the internal process of the VIP nursing care unit at the Stella Maris Hospital.
Therefore the hospital needs to pay more attention to improve of the internal processes in the VIP nursing care unit to
improve the service quality and minimize the external failure costs simultaneously.
Based on the statistical analysis result as illustrated in table 2, the external failure cost has a significant level of 0.715,
indicating that there is no significant relationship to the profitability. However, the partial correlation coefficients of the
external failure cost is 0.063 implying that the rising costs of internal failure would be followed by an increase in
profitability, but not significant. Therefore, the Stella Maris Hospital needs to improve the allocation of costs for the
improvement of internal processes to maximize profitability levels as reflected by the regression correlation, but the
utilization must be evaluated and controlled continuously.
In relation to the balanced scorecard concept (Kaplan and Norton, 2008), several efforts could be done by the Stella Maris
Hospital related to surpress the inetrnal failure cost, among others are: (1) standardizing and implementing the hospital
service procedure, (2) impelementing patient safety program consistently, and (3) improving remuneration system.
3.5. Profitability
In this study, profitability is obtained through several stages, which are generally divided into 4 stages:
• Calculating the cost of distribution of cost of supporting unit which charged at the hospital for nursing care unit as
a center of production costs by using Double-Distribution.
• Counting the cost of the activity in VIP nursing care unit using the Activity Based Costing (ABC).
• Combining the results of the cost of distribution at point (1) the cost of the activity at points (2) to determine the
unit cost of VIP care class (Super VIP - VIP C).
• Calculating the difference in profitability with earnings estimates based on hospital rates and earnings estimates
based on the calculation of unit cost (Double Distribution and Activity Based Costing).
As can be seen in figure 4, the profitability of VIP nursing care unit withing the year of 2008-2009 decreased by 8.65%, but
then increased by 16.32% in the year of 2009-2010. This situation indicates that the service at the VIP nursing care unit at
the Stella Maris Hospital is productive and profitable. Among the overall cost of quality, there are several types of costs that
can significantly affect the profitability of the VIP nursing care unit including the cost of prevention, appraisal costs, and
external failure costs. Prevention and appraisal costs have a positive correlation coefficient to increase profitability, while
the external failure costs have a negative correlation coefficient, which can reduce the profitability of VIP nursing care unit
significantly. Therefore, it is necessary for the Stella Maris Hospital to minimize the external failure costs through efforts in
an integrated quality control and allocation of cost control (cost of prevention and appraisal costs) optimally. Although there
is no significant relationship to the profitability, the internal failure cost allocation is still required to be optimized since it
still has a positive correlation coefficient that can improve the profitability.
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1.916.137.155
2.500.000.000
1.656.261.512
1.558.761.626
1.423.921.850
1.414.410.674
2.000.000.000
1.200.349.037
1.500.000.000
1.000.000.000
500.000.000
-
2008 2009 2010
Cost of Quality Profitability
Figure 4. Comparison of Profitability and Cost of Quality within the year of 2008-2010
4. Conclusion
The prevention and appraisal costs have a positive correlation value to the profitability, which means that an increase in
prevention and appraisal costs can increase the profitability of VIP nursing care unit at the Stella Maris Hospital. Thus, the
hospital needs to improve the allocation of prevention and appraisal costs to support quality improvement of the VIP
nursing care unit at the Stella Maris Hospital through well-managed of the budget planning of operational control.
The Stella Maris Hospital needs to to suppress the internal and external failure costs by allocating the cost of control
(prevention and appraisal costs) which can be used for quality control on an ongoing basis so as to increase the profitability
of VIP care unit.
5. Research Limitations and Future Research
This research is limited by data availability related to revenue and financial statement of the VIP nursing care unit at the
Stella Maris Hospital. Therefore, the revenue was calculated using an estimation approach. Preferably, subsequent research
is required using real data in order to obtain more accurate results.
The calculation of external failure was used bed utilization standards instead of using the standard BOR (Bed Occupancy
Rate). According to the Ministry of Health, Indonesia, the ideal number of BOR is supposed to be equal to 80%, but at a
certain month the bed utilization is above 80%; consequently it will produce some extreme values in the statistical analysis
that could affect the results of analysis of the relationship variables. Therefore, the standard bed untilization using BOR is
the maximum standard of 100%. In the inpatient services, the standards of this magnitude can have an impact to the poor
quality of service provided. Further studies can use the standard BOR by 80% as recommended by the Ministry of Health,
Indonesia.
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Indrianty Sudirman. A full time lecture in strategic management and the secretary of the doctoral study program of
economics at Faculty of Economics, Hasanuddin University of Makassar, as well as a part time lecturer in marketing at the
University of Indonesia of Jakarta. Since 2000, the author has been actively involved in the development of teaching
hospital of Hasanuddin University, and now assigned as a management consultant of the teaching hospital. The author has
also been heavily involved in research and community services related to strategic management and marketing as author’s
expertise as well as being a consultant in variety healthcare industries. The author is active as a member of several
professional organizations such as Association of Indonesia Economics Scholars (since 1997), Indonesia Marketing
Association (since 2000), Indonesia Management Scientist Association (since 2005), and Communication Forum of
Indonesia Hospital Administration Master Programs.
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