Using cost of quality to select alternative suppliers and determine incoming inspection in dynamic contexts

Abstract

Process quality planning should establish the incoming quality inspection plan to achieve the desired quality level with minimum Cost of Quality (CoQ). Additionally, the selection of alternative suppliers must be defined, and, in a dynamic context, the best solution may vary. The purpose of this study is to, through a simulation approach, minimize the total CoQ of two related decisions: i) supplier selection and ii) incoming quality inspection selection. We will determine the CoQ of alternative suppliers and determine the CoQ of alternative incoming inspections that are associated with such decisions. The inputs to the model are components costs, inspection costs, proportion of defectives from incoming lots, Type I and Type II inspection errors, alternative control methods, and the cost of delivering defective components to the manufacturing system. The uncertainty of some inputs is modelled through probability distributions and the dynamic context is modelled through different scenarios. The results from simulations estimate the total CoQ of each alternative decision. This model allows to determine the CoQ of the alternative scenarios and to define a best supplier and incoming quality inspection plan. A numerical example based on a manufacturing process demonstrates the applicability of this model and the results indicate that the optimal solution may vary when the model parameters are updated.