Relevant Cost Impacts of Rework on Metal Manufacturing Operations

Author

Daniel A. Schrader, Fontbonne College

Original Publication Date

N/A

Year of Award

1986

Degree

Master of Business Administration (MBA)

College

College of Business & Professional Studies

Degree Program

Business

Department

Business Administration

Keywords

Manufacturing, Costs, Optimization, Relevant Quality, Metalworking, Metals

Abstract

In our profit oriented society, decisions are made between alternatives and the effect each alternative has on the expense and income of the business entity. The manager making rework decisions must use costs which are relevant to the decision. Relevant cost decisions for rework are made prior to the product being manufactured. The only time rework cost decisions are relevant are during the prevention stage when all the bugs can be worked out of a product and the rework can be avoided.

Quality costs can be placed into four generalized categories: prevention, appraisal, internal failures, and external failures. The prevention and appraisal costs are incurred in order to avoid failure costs. An optimum balance between these four general quality cost categories will help to improve productivity and quality at a desirable profit level.

Rework costs are a subcategory of internal failure costs, a general quality cost category. Rework is the cost of correcting defective products so they are conforming to applicable specifications. Reworked material will always meet the product requirements and this is what makes it different from a repair. For purposes of explanation rework has been limited to the repeating of an operation.

Producing items that have a high level of product quality is not always enough. Product quality must be defined as a product that realizes the customers expectations of performance based on the intended use and the selling price. The cost of achieving this quality must be carefully managed so the effect of quality costs on the companies profits is desirable.

A business striving for improvement of product or service through the continual reduction of waste and optimization of quality and productivity costs in the manufacturing operation will develop into a dominate force and highly respected adversary in the marketplace.

Document Type

Restricted Thesis

Recommended Citation

Schrader, Daniel A., "Relevant Cost Impacts of Rework on Metal Manufacturing Operations" (1986). All Theses, Dissertations, and Capstone Projects. 654.
https://griffinshare.fontbonne.edu/all-etds/654