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Unit 5: Quality Management

quality zones relative to the point of minimum total quality costs. The “zone of improvement Notes
projects” lies below the optimum quality level, while the “zone of perfectionism” lies above it.
Between them, and in the area of the minimum total quality costs, lies the “zone of indifference.”
He identifies the boundary of the zone of perfectionism as lying typically at a quality level
where failure costs amount to 40 per cent of the total quality cost. The costs include:
1. Internal Failure Costs,
2. External Failure Costs,
3. Appraisal Costs,
4. Prevention Costs.

Figure 5.1: Juran’s Model of Optimum Quality Costs

As can be seen from Juran’s model shown in Figure above, the costs of improvement continue to
rise whilst the costs of failure continue to fall. Juran suggests relaxing prevention efforts and
allowing (even encouraging) increased defect rates in the zone of perfectionism. The principle
of diminishing marginal returns in both benefits and effort suggest that a firm should produce
where Marginal Revenue is equal to Marginal Cost; but when profit is less than zero, it may be
preferable to decrease efforts rather than continue. (In practice, the output units do not have to
be single and judgments have to be made in relation to unit or batch size.)

5.1.1 Evolution of Quality Management: Quality Gurus

1. Walter Shewart
(i) In 1920s, developed control charts

(ii) Introduced expression “Quality Assurance”
2. W. Edwards Deming
(i) Developed courses during World War II to educate statistical quality control
techniques to engineers and executives of companies that were military suppliers.
(ii) After war. Began teaching statistical quality control to Japanese companies.
3. Joseph M Juran

(i) Followed Deming to Japan in 1954
(ii) Focused on strategic quality planning

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