Impact of endogenous demand on cost of quality in the automotive industry Online publication date: Wed, 06-Mar-2024
by Klaus Emerschitz; Andreas Größler
International Journal of Productivity and Quality Management (IJPQM), Vol. 41, No. 2, 2024
Abstract: Despite a great deal of effort, companies in the automotive industry frequently fail to reduce their overall cost of quality. While the efficiency of quality inspections can be determined via static cost-benefit analysis in a system with exogenous demand, dynamic approaches are needed in production systems where customers respond to the quality delivered. In this paper, the differences between costs of quality under endogenous and exogenous demand assumptions are investigated. To investigate the impact of customer behaviour on the cost of quality, expert interviews were conducted, and an established dynamic simulation model was extended. Based on the results, a financial threshold between the outlay of quality inspections and the level of quality delivered to the customer was identified. Strict quality inspections are not necessarily more efficient because the quality level does not improve linearly with the effort of the tests.
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