Cost of quality consideration following product launch in a present worth assessment

摘要

Purpose - The purpose of this paper is to investigate the impact of costs of quality on the presentworth (PW) of a new product launch at a North American automobile manufacturer.Design/methodology/approach - The paper is based on the examination of various cash flowsassociated with a new product launch within an automobile manufacturer. Standard cash flows and aPW analysis were examined and compared to non-standard cash flows which take into considerationpost-launch cost of quality (CoQ). A sensitivity analysis was used to determine if any CoQ factorsaffected the integrity of the product launch.Findings - The paper concludes that there is an impact on the PW of a program when CoQ isconsidered as a cash flow element. CoQ should be considered in a product launch PW analysispreceding any commitment to invest.Research limitations/implications - This study suggests that, given data on the costs that willaccrue assuming standard quality concerns following product launch, and the occurrence of specialcause issues, the business case can establish a better estimate of the costs a program will face undervarying levels of post-launch quality. An understanding of the potential cost consequences of qualityissues can shape the understanding of the risks in a planned project.Practical implications - The paper shows that CoQ can have a significant impact on a PW analysis.CoQ concerns should be considered during pre-launch planning of a new product.Originality/value - The paper satisfies the need to study when a manufacturer considers investmentin the launch of a new product with CoQ concerns.