Set up: the cost of internal loss is C1, external loss cost is C2,
The cost of prevention is C3, identification cost C4
Then: the balance point: C1 + C2 = C3 + C4,
When increase C3 and C4, C1 and C2 should be reduced.
Principles: C3 + C4 < the lower amount of (C1 + C2), or not the economy.
3. The analysis of internal loss cost.
a) should analysis the main components of internal loss
b) use chart method to identify range of products, the internal loss amount of each process.
4. External loss cost analysis.
a) should analyze the main source of external loss cost
b) analyze and assess the intangible losses external loss costs bring
5. To form quality cost analysis report.
a) the analysis of the total quality cost and recommendations for improvement,
b) the analysis of quality cost constitution and recommendations for improvement,
c) the analysis of internal and external loss cost and recommendations for improvement,
d) the comparison of cost quality and targets, and gap analysis.
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