To Calculate The Cost of Quality. 2. To Develop An Intelligent Calculation Book For The Further Measurement of Coq of The

Abstract
The Cost of Quality of an organisation helps in understanding the cost incurred by it due to conformance and non- conformance to quality of its products.
Conformance to quality comprises of cost of prevention and appraisal measures taken by the organisation to ensure that the quality of a product does not fail the set standards, while the non- conformance to quality includes cost incurred by the organisation due to failure to meet the set standards.
Due to the high investment of organisations today in upholding the standards of quality of their products, it has become imperative to measure the total amount incurred by them. Further, a comparative analysis of all the costs involved in quality helps in understanding where the organisation stands in the scale of poor to good quality.
Objectives
1. To calculate the Cost of Quality. 2. To develop an Intelligent Calculation Book for the further measurement of CoQ of the factory.
Keywords
Cost of conformance, cost of non- conformance, re-cutting, repair, rework, rejections
Analysis
After observation of two months of data the overall CoQ of the factory was found to be approximately 4.2% of the sales turnover of a month. Extrapolation of the sales turnover of two months into a year gives an amount of 62, 27, 78,400.00 and the CoQ comes out to be 2, 60, 82,444.76. The appraisal and internal failure costs were the major contributors in CoQ. The appraisal cost was 46% of the total CoQ in February and 43% of the total CoQ in March. The
internal failure cost was 45% of the total CoQ in February and 50% of the total CoQ in March.
The major contributor of appraisal cost was sewing department, where the first time inspection cost had the maximum contribution with approximately 97% of the share.
The major contributors of internal failure cost were cutting and sewing department. In cutting, the major share of 70% of the cost was incurred in parts changing process, whereas in sewing the major share of 80% was due to inline rejection.
Conclusion
For the factory to keep a check on its Cost of Quality on a regular basis, an intelligent calculation workbook was designed, where all the costs associated are divided among the various parameters and the input is done on a daily basis.
The Intelligent Calculation Workbook will help the factory in measuring the Cost of Quality on a regular basis.
The graphs generated will help in seeing any sporadic changes, which can then be monitored in the factory.
Since, the input and output of the data is separate for all the lines, the results can be monitored for each of the lines.
The CoQ of the factory is fairly low, and so the efforts are to keep the CoQ stabilized.
CONTENT
CHAPTER 1: LITERATURE REVIEW ................................................................................................................. 6 1.1 INTRODUCTION...................................................................................................................................................... 7 1.2 QUALITY ................................................................................................................................................................ 8 1.3 IMPORTANCE OF QUALITY .................................................................................................................................... 8 1.4 CONCEPTS OF QUALITY COST .............................................................................................................................. 9 1.5 EVOLUTION OF COST OF QUALITY ..................................................................................................................... 10 1.6 PRIMARY THEORIES AND HISTORICAL BACKGROUND ....................................................................................... 10 1.6.1 Jurans Model ............................................................................................................................................ 10 1.6.2 Lesser's Classification ............................................................................................................................. 11 1.6.3 Prevention-Appraisal-Failure Model ...................................................................................................... 12 1.6.4 Jurans Revised Model ............................................................................................................................ 12 1.7 VARIOUS COQ MODELS ..................................................................................................................................... 13 1.7.1 P-A-F Cost Model ..................................................................................................................................... 13 1.7.2 Crosbys model ......................................................................................................................................... 15 1.7.3 Opportunity Costs..................................................................................................................................... 16 1.7.4 Process Cost Model ................................................................................................................................. 16 1.7.5 ABC Costing.............................................................................................................................................. 17 1.8 COST OF QUALITY STUDIES IN THE INDIAN APPAREL INDUSTRY ....................................................................... 18 1.8.1 Case Study 1 ............................................................................................................................................ 18 1.8.2 Case Study 2 ............................................................................................................................................ 19 CHAPTER 2: ABOUT THE FACTORY .............................................................................................................. 21 2.1 INTRODUCTION.................................................................................................................................................... 22 2.2 FABRIC WAREHOUSE .......................................................................................................................................... 22 2.3 SPREADING AND CUTTING DEPARTMENT............................................................................................................ 22 2.4 SEWING DEPARTMENT ........................................................................................................................................ 23 2.4.1 Parts Section ............................................................................................................................................. 23 2.4.2 Assembly section ..................................................................................................................................... 23 2.5.1 Trim & exam section ................................................................................................................................ 24 2.5.2 End of line section .................................................................................................................................... 24 2.5.3 Ironing and folding section ...................................................................................................................... 24 2.5.4 Packaging section .................................................................................................................................... 25 2.6 Customer Satisfaction Office ..................................................................................................................... 25 CHAPTER 3: ABOUT THE PROJECT .............................................................................................................. 26 3.1 RESEARCH METHODOLOGY ............................................................................................................................... 27 3.2 INTRODUCTION:................................................................................................................................................... 28 3.3 PHASE I ............................................................................................................................................................... 28 3.3.1 Department- wise working of the quality personnel ............................................................................ 29 3.3.2 Summary of the reporting structure of Quality department ................................................................ 32 3.3.3 Data collection .......................................................................................................................................... 33 3.3.4 Data segmentation ................................................................................................................................... 34 3.3.5 Data calculation ........................................................................................................................................ 37 3.3.6 Time Study ................................................................................................................................................ 42 3.3.7 Miscellaneous Calculations .................................................................................................................... 44 3.3.8 Cost calculations ...................................................................................................................................... 46 3.3.9 Values required for CoQ calculations .................................................................................................... 48
3.4 PHASE II .............................................................................................................................................................. 50 3.4.1 Personnel salary (QCs and checkers) of fabric warehouse ............................................................... 50 3.4.2 Personnel salary (QCs) of spreading and cutting department .......................................................... 50 3.4.3 Personnel salary (QCs) of sewing department .................................................................................... 50 3.4.4 Personnel salary (QCs) of finishing department .................................................................................. 50 3.4.5 Personnel salary (QCs) of CSO ............................................................................................................. 51 3.4.6 Personnel salary (managers) of Management ..................................................................................... 51 3.4.7 External failure cost ................................................................................................................................. 51 3.4.8 Prevention cost ......................................................................................................................................... 51 CHAPTER 4: DATA ANALYSIS ......................................................................................................................... 53 4.1SPREADING AND CUTTING DEPARTMENT............................................................................................................. 54 4.2 SEWING DEPARTMENT ....................................................................................................................................... 57 4.3 FINISHING DEPARTMENT ..................................................................................................................................... 60 4.3.1 Trim & exam section ................................................................................................................................ 60 4.3.2 End of line section .................................................................................................................................... 63 4.4 CSO.................................................................................................................................................................... 65 4.5 MISCELLANEOUS REPORTS ................................................................................................................................ 67 CHAPTER 5: INTELLIGENT CALCULATION BOOK ...................................................................................... 70 5.1 INTRODUCTION.................................................................................................................................................... 71 5.2 LEVEL 1 ............................................................................................................................................................... 72 5.2.1 Spreading & cutting department............................................................................................................. 72 5.2.2 Sewing Department ................................................................................................................................. 73 5.2.3 Finishing department ............................................................................................................................... 73 5.2.4 Customer Satisfaction Office .................................................................................................................. 74 5.3 LEVEL 2 ............................................................................................................................................................... 75 5.3.1 Spreading and cutting department......................................................................................................... 75 5.3.2 Sewing department .................................................................................................................................. 76 5.3.3 Finishing department ............................................................................................................................... 76 5.3.4 Customer Satisfaction Office .................................................................................................................. 77 5.3.5 Calculations ............................................................................................................................................... 78 5.3.6 Additional Values required for CoQ calculations ................................................................................. 82 5.4 LEVEL 3 ............................................................................................................................................................... 84 5.4.1 Personnel salary (QCs and checkers) of fabric warehouse ............................................................... 84 5.4.2 Personnel salary (QCs) of spreading and cutting department .......................................................... 84 5.4.3 Personnel salary (QCs) of sewing department .................................................................................... 84 5.4.4 Personnel salary (QCs) of finishing department .................................................................................. 84 5.4.5 Personnel salary (QCs) of CSO ............................................................................................................. 85 5.4.6 Personnel salary (managers) of Management ..................................................................................... 85 5.4.7 External failure cost ................................................................................................................................. 85 5.4.8 Prevention cost ......................................................................................................................................... 85 5.5 LEVEL 4 ............................................................................................................................................................... 87 5.6 LEVEL 5 ............................................................................................................................................................... 88 5.6.1 Department cost analysis between Appraisal and Internal Failure Cost (in %) .............................. 88 5.6.2 Appraisal cost analysis of each department ......................................................................................... 89 5.6.3 Internal failure cost of each department ............................................................................................... 89 5.6.4 Department wise Contribution in COQ .................................................................................................. 90 5.6.5 Category wise contribution of each line in CoQ ................................................................................... 91 5.6.6 Category wise contribution of factory in CoQ ....................................................................................... 91
5.6.7 Advantages of the Intellingent Calculation Book ................................................................................. 92 CHAPTER 6: SUGGESTIONS ............................................................................................................................ 93 6.1 RECORD KEEPING OF SEWING DEPARTMENT ..................................................................................................... 94 6.2 DOWNTIME COST ................................................................................................................................................ 95 CHAPTER 7: ANALYSIS & CONCLUSION ...................................................................................................... 96 7.1 ANALYSIS ............................................................................................................................................................ 97 7.2 CONCLUSION ...................................................................................................................................................... 98 CHAPTER 8: LIMITATIONS AND SCOPE ........................................................................................................ 99 8.1 LIMITATIONS ...................................................................................................................................................... 100 8.2 SCOPE............................................................................................................................................................... 100 CHAPTER 8: BIBLIOGRAPHY ........................................................................................................................ 101
Chapter 1: Literature Review
1.1 Introduction
According to Juran, there are two ways of categorizing the word Quality, 1. Quality means those features of products which meet customer needs and thereby provide customer satisfaction. In this sense, the meaning of quality is oriented to income. The purpose of such higher quality is to provide greater customer satisfaction and, one hopes, to increase income. However, providing more and/or better quality features usually requires an investment and hence usually involves increases in costs. Higher quality in this sense usually costs more. 2. Quality means freedom from deficienciesfreedom from errors that require doing work over again (rework) or that result in field failures, customer dissatisfaction, and customer claims, and so on. In this sense, the meaning of quality is oriented to costs, and higher quality usually costs less. (Juran, 1998)
These definitions highlight that there is not just one but two ways for the assessment of quality of a product or a process. First, is the cost of good quality, which is also known as cost of conformance of quality and the second is the cost of poor quality, also known as cost of non-conformance of quality.
The essential breakdown of quality into these two parts makes the measurement of cost of quality in an organization easier, which in the recent years, has become highly important because of the high investments made by organizations in increasing their quality.
Today many companies promote quality as the central customer value and consider it to be a critical success factor for achieving competitiveness. Any serious attempt to improve quality must take into account the costs associated with achieving quality since the objective of continuous improvement programs is not only to meet customer requirements, but also to do it at the lowest cost. This can only happen by reducing the
costs needed to achieve quality, and the reduction of these costs is only possible if they are identified and measured.
1.2 Quality
The definition of quality depends on the role of the people defining it. The difficulty in defining quality exists regardless of product, and this is true for both manufacturing and service organizations. Further complicating the issue is that the meaning of quality has changed over time. Today, there is no single universal definition of quality. Below are some definitions of quality by well- known quality gurus.
Quality is fitness for use. - J.M. Juran
Quality is conformance to requirements.-P.B. Crosby
Quality is correcting and preventing loss, not living with loss. -Hoshin
Quality is a predictable degree of uniformity and dependability, at low cost and suited to the market. -Deming
The totality of characteristics of an entity that bear on its ability to satisfy stated and implied need. -British Standard
1.3 Importance of Quality

Todays customers demand and expect high quality. The companies which do not make quality a priority; risk long-run survival.
The importance of quality to a business in a competitive business environment was explained by Juran;
"It is possible to fail in business even though quality of product is good. However it is not possible to stay in business if quality is poor, unless one has a monopoly". (Juran, 1951 page 22).
1.4 Concepts of Quality cost

The concept of quality costs is a means to quantify the total cost of quality-related efforts and deficiencies (Armand V. Feigenbaum, 1956).
There are two costs of quality, the first one is the cost associated with the definition, creation and control of quality as well as the evaluation and the feedback of conformance with quality, reliability and safety requirements, which is also known as the cost of conformance. The other is the costs associated with the consequence of failure to meet the requirements both within the factory and in the hands of customer are quality costs, which is also known as the cost of non- conformance.
These two costs are further divided into: Prevention Costs Cost of Conformance Appraisal Costs Cost of Quality Internal Failure Costs Cost of non- Conformance External Failure Costs
Figure 1.1: Components of Cost of Quality
1.5 Evolution of Cost of Quality

All organisations make use of the concept of identifying the costs needed to carry out the various functions- product development, marketing, personnel, production, etc. Until the 1950s this concept had not been extended to the quality function except for the developmental activities of inspections and tests. During the 1950s there evolved numerous quality oriented staff departments. The head of these departments were faced with selling their activities to the company managers. Because the main language of those managers was money, there emerged the concept of studying quality related costs as the means of communication between the quality staff departments and the company managers. Gradually the objectives emerged in two main forms. Estimate the costs of poor quality as a one shot study, and then use the findings to identify specific projects for improvement. Expand the accounting system to quantify the quality and to publish the result as a continuing scoreboard. The expectation was that the published figures would stimulate the managers to take action to reduce the costs.
1.6 Primary Theories and Historical Background
1.6.1 Jurans Model In 1951, Juran presented the concept of the cost of quality as "Gold in the mine" in his famous Quality Control Handbook (p. 34). He described "cost of quality" as avoidable costs. He recommended assessing the "Gold in the mine" by asking, "What present costs would disappear if all defects disappeared?" (Juran, 1951, p. 34). He mentioned the concept of the quality reputation to wrap up the importance of quality, "The value of a good quality reputation is unbelievably high. To the sales force, a good quality reputation is a matchless tool for competition"(Juran, 1951, p. 24). In presenting the importance of cost of quality, Juran introduced one of the most famous Cost of Quality models in his handbook, a model which is still discussed by many researchers as an important reference today. He depicted the behaviour of cost of
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defectives and the cost of quality control in this model. "Increased conformance reduces the losses due to defects. However, the cost of the controls needed for greater conformance rises geometrically as perfection is approached. The optimum is always short of perfection." (Juran, 1951, p. 7).
Figure1.2: Model for optimum quality
Juran gave some of his findings about the intangible costs, (1) Delays and stoppages caused by defectives, (2) Customer good will, (3) Loss in morale due to friction between departments These concepts about the intangible costs are important to figure out the real effects of consequences of not doing well in quality (Juran, 1951, p. 34).
1.6.2 Lesser's Classification W. H. Lesser was the first quality professional who proposed the segments of prevention, appraisal and failure in the concept of COST OF QUALITY. He clarified the costs associated with quality to be scrap, rework, inspection, test, customer complaint, and quality control. He also defined the hidden cost as, 1. Extra costs due to poor quality planning, 2. Production and shipping delays due to defective work, 3. Lost business due to a poor quality reputation among customers, 4. Inherent product design weakness,
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1.6.3 Prevention-Appraisal-Failure Model In his 1956 paper, Feigenbaum proposed a classic categorization of COST OF QUALITY, namely Prevention, Appraisal and Failure (P-A-F), which is generally accepted in modem applications (Sandoval- Chavez and Beruvides, 1997). Feigenbaum pointed out that the prevention cost would be the preferable outcome of quality cost beyond appraisal cost and failure cost by thinking about total quality control, which is the smallest one of the three parts of quality cost (Feigenbaum, 1956).
1.6.4 Jurans Revised Model After almost five decades of his original work on Cost of Quality, Juran updated his theory by adapting the influences of the new technologies in the late twentieth century. He believes that the perfection of product quality might be reached under limited prevention and appraisal cost, due to the growth of manufacturing and inspection technologies (Juran & Gryna, 1993). The latest production technologies make the product quality almost perfect in certain highly automated manufacturing industries; the automated inspection technology assists industry in figuring out the defective product under very low appraisal cost. These were the driving forces for Juran to revise his Cost of Quality model. The above concept is shown in figure:
Figure 1.3: New model for optimum quality
This model categorizes quality cost into three segments, the zone of improvement project, the zone of indifference, and the zone of high appraisal cost. The optimal cost is located in the middle of the three categories, the zone of indifference. This model is shown in figure
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Figure 1.4: Optimum segment of quality cost model (source; Juran & Gryan, 1993, p. 26)
1.7 Various COQ models

1.7.1 P-A-F Cost Model
Prevention Costs
The costs of all activities specifically designed to prevent poor quality in products or services. Examples are the costs of:

New product review Quality planning Supplier capability surveys Process capability evaluations Quality improvement team meetings Quality improvement projects Quality education and training
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Appraisal Costs
The costs associated with measuring, evaluating or auditing products or services to assure conformance to quality standards and performance requirements. These include the costs of:

Incoming and source inspection/test of purchased material In-process and final inspection/test Product, process or service audits Calibration of measuring and test equipment Associated supplies and materials Failure Costs
The costs resulting from products or services not conforming to requirements or customer/user needs. Failure costs are divided into internal and external failure categories.
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Internal Failure Costs
Failure costs occurring prior to delivery or shipment of the product, or the furnishing of a service, to the customer. Examples are the costs of:

Scrap Rework Re-inspection Re-testing Material review Downgrading
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External Failure Costs
Failure costs occurring after delivery or shipment of the product and during or after furnishing of a service to the customer. Examples are the costs of:

Processing customer complaints Customer returns Warranty claims Product recalls
The basic suppositions of the PA-F model are that investment in prevention and appraisal activities will reduce failure costs, and that further investment in prevention activities will reduce appraisal costs (Porter and Rayner, 1992; Plunkett and Dale, 1987). The objective of a CoQ system is to find the level of quality that minimizes total cost of quality. Feigenbaums and Jurans P-A-F scheme has been adopted by the American Society for Quality Control (ASQC, 1970), and the British Standard Institute (BS6143, 1990), and is employed by most of the companies which use quality costing (Porter and Rayner, 1992).
1.7.2 Crosbys model The cost categories of Crosbys model (Crosby, 1979) are similar to the P-A-F scheme. Crosby sees quality as conformance to requirements, and therefore, defines the cost of quality as the sum of price of conformance and price of non-conformance (Crosby, 1979). The price of conformance is the cost involved in making certain that things are done right the first time, which includes actual prevention and appraisal costs, and the price of nonconformance is the money wasted when work fails to conform to customer requirements, usually calculated by quantifying the cost of correcting, reworking or scrapping, which corresponds to actual failure costs. The model is used in companies that measure quality costs; however, most of the time it is Only a different terminology describing a P-A-F model (Goulden and Rawlins, 1995) and the two costing structures are used interchangeably.
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1.7.3 Opportunity Costs The importance of opportunity and intangible costs has been recently emphasized. Intangible costs are costs that can be only estimated such as profits not earned because of lost customers and reduction in revenue owing to non-conformance. Sandoval-Chavez and Beruvides (1998) incorporate opportunity losses into traditional P-A-F quality expenses. According to them, opportunity losses may be broken down into three components: underutilization of installed capacity, inadequate material handling and poor delivery of service. They express total CoQ as revenue lost and profit not earned. Modarress and Ansari (1987) also advocate that the PA-F model be expanded to accommodate extra dimensions that are identified as the cost of inefficient resource utilization and quality design cost. Carr (1992) includes opportunity cost and reports evidence of its successful use in a quality program. Quality costs are defined in three categories: the cost of conformance, the cost of non-conformance and the cost of lost opportunity. Other authors address the cost of lost costumers derived from product failures that reach the market (Tatikonda and Tatikonda, 1996; Heagy, 1991). Jurans model (Juran et al., 1951) also recognizes the importance of intangibles. His CoQ scheme includes two measurable cost categories: tangible factory costs and tangible sales costs, and he suggest the inclusion of intangible internal benefits. Albright and Roth (1992) have proposed Taguchis quality loss function as a means of estimating quality costs that are hidden by accounting systems. Kim and Liao (1994) have extended the usefulness of this concept by developing various forms of quality Loss functions and have showed how different loss functions can be used for measuring hidden quality costs for any variation of the actual value from the target value of designated characteristics of a product. 1.7.4 Process Cost Model The process cost model developed by Ross (1977) and first used for quality costing by Marsh (1989) represents quality cost systems that focus on process rather than products or services. Process cost is the total cost of conformance and non-conformance for a particular process. The cost of conformance is the actual process cost of producing products or services first time to the required standards by a given specified process, whereas cost of non- conformance is the failure cost associated with the process not being executed to the required standard. These costs can be measured at any step of the
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process. Accordingly, it can be determined whether high non-conformance costs show the requirement for further expenditure on failure prevention activities or whether excessive conformance costs indicate the need for a process redesign (Porter and Rayner, 1992). The use of a process cost model is suggested as a preferred method for quality costing within total quality management (TQM) as it recognizes the importance of process cost measurement and ownership, and presents a more integrated approach to quality than a P-A-F model (Porter and Rayner, 1992). Goulden and Rawlins (1995) also suggest that analysts place emphasis on the cost of each process rather than on an arbitrarily defined cost of quality under a P-A-F model. Moreover, the quality cost categorization is simpler and some researchers (Porter and Rayner, 1992) argue that it is also more relevant than the P-A-F scheme. The process model has wider application in that it facilitates the collection and analysis of quality costs for both direct and indirect functions. However, the process cost model is not in widespread use (Goulden and Rawlins, 1995).
1.7.5 ABC Costing An activity-based costing ABC) model was developed by Cooper and Kaplan (Cooper, 1988; Cooper and Kaplan, 1988) to solve this problem. Under ABC, accurate costs for various cost objects are achieved by tracing resource costs to their respective activities and the cost of activities to cost objects. The ABC approach is actually not a CoQ model. It is an alternative approach that can be used to identify, quantify and allocate quality costs among products, and therefore, helps to manage quality costs more effectively. Tsai (1998) proposes an integrated CoQ-ABC framework, in which ABC and CoQ systems are merged and share a common database in order to supply various cost and nonfinancial information for related management techniques. The long-term goal of ABC systems is to eliminate non-value added activities and to continuously improve processes, activities and quality so that no defects are produced.
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1.8 Cost of Quality Studies in the Indian Apparel Industry

Through the last decade a number of studies have been carried out in the apparel industry to understand the effect of good and poor quality on the organisation.
1.8.1 Case Study 1 One such study, the pioneer in this field was carried by Dr Rajesh Bheda, Professor, GMT department, NIFT, Delhi, in 2003, where a total of six factories were surveyed. The data collected for this study was for one fiscal year. The following are the inference of the study conducted.
Factory No. Factory 1 Factory 2 Factory 3 Factory 4 Factory 5 Factory 6 Total COQ as % of Sales Turnover 20.55 33.36 22.32 18.09 8.07 12.54
Table 1.1: Total CoQ as % of sales turnover of each factory
As can be seen, there is a wide range in which the total COQ value falls for the six factories, varying from 8.07% for Factory 5 to 33.36% for Factory 2. A further breakup of the total COQ figure in the four categories is shown in the table on the next page.
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Factory No.
Prevention Cost as % of Total COQ
Appraisal Cost as % of Total COQ 9.68 14.17 9.57 11.27 19.70 24.72
Internal Failure Cost as % of Total COQ 89.89 64.61 89.53 56.07 79.80 57.07
External Failure Cost as % of Total COQ 0.00 21.04 0.00 31.39 0.00 13.22
Factory 1 Factory 2 Factory 3 Factory 4 Factory 5 Factory 6
0.43 0.11 0.89 1.21 0.37 5.26
Table 1.2: All categories of CoQ as %of total CoQ
From the results shown above, it can be inferred that Internal Failure Cost is the major contributor in COQ.
Final Inferences:
Cost Category Total COQ Prevention Cost Appraisal Cost Internal Failure Cost External Failure Cost Cost Range (As % of Sales Turnover) 8.07 33.36 0.03 0.22 1.59 4.73 6.44 29.93 0.00 7.02
Table 1.3: Each category of CoQ as % of sales turnover
1.8.2 Case Study 2 A COQ study was conducted Mr Mukesh Kumar & Mr Kulbhushan Shakya in the year 2009 under the guidance of Ms Archana Gandhi in Matrix Clothing. The study was done for each of the departments i.e. stores, cutting & spreading, sewing, finishing, packing. This was further broken down for each style. February 2009. The data was collected for January-
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Figure 1.5: Departments as % of total CoQ cost (appraisal and internal failure cost)
Figure 1.6: Category wise contribution of each department in the total CoQ
The average COQ for the month of January was Rs. 35.6 per piece.
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Chapter 2: About the Factory
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2.1 Introduction
The Company ABC, under which the project has taken place, has two factories, Factory 1 and Factory 2(not to be confused with the factories discussed in section 2.8.1). The project was executed in Factory 1. For the successful execution of the project, its commencement has to be proper, which means, the understanding of the workflow of the factory, is of the utmost priority at the beginning of the project. To do this, a period of two weeks was spent on the manufacturing floor to understand the departmentalization of the factory and the processes within the various departments, the hierarchy of each department, etc. below are given the details of the functioning of each of the departments, from fabric warehouse to final inspection.
2.2 Fabric warehouse

The two factories share a common fabric warehouse located in Factory 1, where fabric for both the factories is supplied to. Here, the fabric is received from the mills and 10% inspection is done for each lot of fabric which is received. Once the inspection is done and the fabric lot is approved, the rolls are loaded into the storage compartments, from where they are dispatched when the needs arises. The trims store is located at Factory 2 where the inspection takes place and the trims are dispatched a day before the PO is to be sent to the sewing line.
2.3 Spreading and cutting department

The cutting department in the factory has four spreading and cutting tables each. The department is divided in to four lines, corresponding to the four sewing lines. The capacity of the department is up to 8000 cut garments per day. There are two spreading operators per spreading table and two cutting operators per cutting table. The cutting is done by laying the CAD generated marker on the lays and cutting with straight knives. Once the cutting is done, the panels are stored in the shelves. The front, yoke and back panels are sent for block cutting to the relaying section. After the block cutting, these panels are returned to the shelves. The collar, collar band and cuff panels are sent to the fusing section, where they are fused with the interlining and then inspected for any defects. If any panel is found to be defective, it is either repaired or
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recut depending on the severity of the defect. Once all the panels are back from recutting, they are also returned to the previous shelves. From these shelves all the panels are then dispatched to the numbering and bundling section. In the numbering and bundling section, the panels are checked against the cut sheet and ticketed according to the corresponding numbers on the cut sheet. After the numbering, bundles of individual components are made of 20 garment panels per bundle and loaded on movable shelves to be sent for sewing. There are two supervisors and four quality controllers to supervise the working of the cutting department.
2.4 Sewing department

There are four sewing lines in the factory, each with an expectant capacity of 1800 pieces per day, but at a running capacity of approximately 1300- 1500 garments per day. There are approximately 120 sewing operators in each line. Each sewing line is divided into two sections, parts section and assembly section. 2.4.1 Parts Section In the parts section, there are five sub- sections working independently; cuff, collar, front, back and sleeve. The parts section works on the bundle flow system, with each bundle comprising of 20 garments panels. After every one bundle is made, it is given to the quality checker stationed at the end of each parts section. For the cuff, collar and sleeve section, there is one checker for each section. For the front and back section there are two checkers each. At the inspection table, the entire quantity is checked and the defective pieces are repaired. If the defect is because of the fabric or the panel is damaged, then those pieces are sent for re- cutting (technically called as parts changing). For this, the panels are sent to the re- cutting section in the spreading and cutting department. 2.4.2 Assembly section After all the panels of a bundle are approved by the checker, they are sent to the matching shelves, where the respective bundles of individual parts are matched and bundled up together and sent to the assembly section. The bundle is not moved to the assembly section, till the corresponding bundles from all the five parts sections are not received and bundled together.
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In the assembly section, the individual parts are stitched together to form the full garment. The various operations which take place in this section include shoulder join, collar attach, sleeve attach, cuff attach, side seam join, bottom hemming. The lines work in bundle flow. After each operation is completed, the roaming checkers who are appointed for inline inspection of the garments; inspect the garment. The defects in sewing are rectified there and then.
2.5 Finishing department

Once, the last sewing operator in the sewing line completes all the garments of a bundle, that bundle is considered to be out of the sewing department. It is then sent to the finishing department. Like the departments discussed before, the finishing department is also divided into various sub- sections. 2.5.1 Trim & exam section The first is the trim and exam section, which is stationed right after the sewing line. There are six checkers per line. Here, inspection of the entire quantity of the bundle takes place. The checkers also trim the uncut threads. If a garment is found defective it is returned to the sewing department and afterwards re- inspected. Rejections, if any, are made at this point. The garments which have stains are sent to stain removal section where the stains are removed using spot guns. 2.5.2 End of line section Once all the garments in a bundle are cleared by the trim & exam section, the bundle is sent to the end of line section for the second round of inspection. Here, the inspection is done at AQL 1.5 of each bundle quantity. As the standard bundle size is 20 garments per bundle, an average of 8 garments are inspected per bundle. If the bundle is found to have defective pieces, the entire bundle is sent back to the sewing lines and repair is done on the defective garments and re- inspection of the bundle is done at AQL 1.5. The process is repeated for a bundle for as long as there are any defective garments. 2.5.3 Ironing and folding section After a bundle is passed from the end of line section, it is sent to the finishing section where the garments are ironed and packed, with the use of flat ironing tables, buck
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presses, folding machines, etc. There are 2 thread sucking machines for the, 4 collar and cuff pressing machines, 4 flat ironing table, 4 folding machines, 2.5.4 Packaging section After ironing and folding, the garments are put into polybags with the appropriate finishing trims in place. Once the entire PO is finished, the garments are then loaded into cartons, one carton containing 10 garments each, using either assortment packing method or size- wise distribution method. In the assortment packing method, varying quantities of garments of different sizes are put in the same carton according to the specifications received from the buyer. In the size- wise distribution method, each carton is filled with garments of only one size. Once, the entire PO is packed into cartons, it is said to be cleared from the finishing department. 2.6 Customer Satisfaction Office The POs cleared by the finishing department are sent to the Customer Satisfaction Office, where the personnel work as external customer inspection operators. Here, the inspection (also called audit) is done at AQL 1.5 for each PO. The said quantity of pieces is re- opened from the packing and thoroughly inspected. If the audit is failed, the entire PO is sent for rework, where all the garments in the PO are re- opened and 100% inspection is done. After the inspection, the garments are repacked and put into the cartons in the same distribution method; and the PO is sent for a re-audit. This process is repeated for as long as the PO is not cleared by the CSO. Once the PO is cleared from the CSO, the cartons are then further loaded into bigger cartons and are stored in the garment warehouse before it is sent for shipment.
25
Chapter 3: About the Project
26
3.1 Research Methodology
Literature Survey
Understanding the Research Design
Identifying the cost centers of the departments contributing to COQ
Accumulation of data
Apportionment of costs to each activity
Analysis of the data for two months to understand the factors involved in calculation of the cost
Suggestions for better capturing of data for further calculation
Implementation of approved suggestions for better capturing of data for further calculation
Development of system for measurement of COQ on regular basis
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3.2 Introduction:
For the accurate understanding of the working of the factory and proper calculation and analysis of CoQ, the functioning of the quality personnel was observed for a period of time and their reports were reviewed. This helped in the determination of the cost centres and their calculation. The data were then collected from the reports made by the operators. Selective data according to the need of the project were then compiled in separate workbooks. The lines are divided among the buyers, where lines 1 and 2 are for buyer A, line 3 is for buyer B and line 4 is for buyer C. Since the buyers have very basic changes in their styles, the calculation of CoQ in terms of style was not feasible, and hence it was decided to carry forward the project in terms of lines, wherever possible. This led to the project being divided into two phases. The data collection was divided into two phases: Appraisal and internal failure cost of the departments on a line wise basis Appraisal, prevention, internal failure and Phase II external failure cost, where line wise division is not possible and/or weekly data is not available
Phase I
Table 3.1: Phases of data collection
3.3 Phase I
Appraisal and internal failure cost of the departments on a line wise basis The factory takes a keen interest in the comparative analysis of the various factors of the four lines in each department. This made the CoQ calculation and the subsequent
28
development of a calculation workbook for the factory on a line wise basis more advantageous,
3.3.1 Department- wise working of the quality personnel 3.3.1.1 Spreading and cutting department The inspection done in the department is only for fused panels, i.e. top collar, top collar band, top cuff. The inspection team is divided into two groups, each group associated with two lines, i.e. the garments to be sewn in lines 1 and 4 are inspected by group 1 and for lines 2 and 3 are inspected by group 2. In each group there are four checkers, one each for collar and collar band and two for cuff, making it a total of 8 checkers in the spreading and cutting department. Additionally, there are 2 Quality Controllers in the department to overlook the work of the checkers. The checkers are provided with separate notebooks for each line. In the notebooks, they keep an account of the PO details, number of pieces checked for the PO, number of pieces found defective, the severity of the defect, i.e. the cause of the defect, the measures to take to remove the defect. For example, if a coloured thread is found trapped between the interlining and the fabric panel, then the interlining is removed from the fabric, taking proper care so that it is not torn and then it is again fused on the fabric and re- inspected. In case of a defect where the interlining gets damaged then, it is removed and a new interlining is fused with the fabric panel. In case the fabric panel is found to have a defect which cannot be repaired then, the panel is sent to the re- cutting section and after having been cut, the new fabric panel is fused with interlining and re- inspected. After all the panels of a certain number of bundles are inspected and cleared, they are sent to the numbering and bundling section. The reports made by the checkers are on a daily basis for each line. The reports were not submitted for further documentation and so the records are only kept with the checkers.
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3.3.1.2 Sewing department The inspection in this department is divided into two parts, one for parts section and the second for the assembly section. In the parts section, there are five sections, one for each panel of the garment, i.e. collar, cuff, sleeve, front, back. The inspection procedure is such that, there is one checker each for collar, cuff and sleeve for each line and two checkers each for back and front per line. This gives a total of 7 checkers for every line; totalling up to 28 checkers in the parts section for the factory. The defective pieces are resent to the sewing line and repair is done on the pieces. The rejected pieces are sent to the cutting department for re- cutting where the pieces are recut after matching with the end bits fabric kept in the shelves there. After that, the panels are sent to the sewing line for stitching. Each operator is provided with a notebook, where they enter the number of pieces inspected, pieces defective and pieces rejected. In the assembly section, the inspection is done by roaming checkers, who inspect the garment while it is being sewn; the repairs are done on the spot while the garment is in operation. The operations inspected by checkers are collar attach, cuff attach, shoulder join, sleeve attach, side seam attach, bottom hem. There is one checker for each of the operations, making a total of 24 checkers in the factory. Here, the operators note down the number of pieces inspected and the defective pieces. 3.3.1.3 Finishing department The inspection in this department is divided into two phases, in the first phase called Trim & Exam, 100% inspection takes place and in the second phase called End of Line, inspection takes place at AQL 1.5 of the bundle quantity. In Trim & Exam, the checkers inspect the measurements and stitches of the garments and trim the uncut threads. They have tilted tables on which they hang the garments
30
using spoons drilled into tables. The spoons, having no sharp edges do not cause any distress to the garments. There are 6 checkers for each line, making a total of 24 checkers for the factory. Each operator makes an entry of the number of pieces inspected and pieces defective. The defective pieces are folded and put back into the bundle (20 garment s per bundle) and sent back to the sewing line for repair, along with the entire bundle. After the repair, the bundle is returned back to the inspection table, with the repaired garment folded, and re- inspection of only that garment is done. After the bundle is cleared from the trim & exam, it is sent to the end of line inspection table, where the inspection takes place at AQL 1.5 of the bundle quantity. Here, each bundle is opened and 8 garments are selected at random and inspected. If any of the garments inspected are found defective, the entire bundle is sent to the sewing line, with the defective pieces folded. The folded pieces are repaired and the bundle is sent back with none of the pieces folded. The bundle is then re- opened and 8 random garments are inspected, again if any garments are found defective the bundle is again sent to the sewing line for repair. This happens for as long as the bundle has any defective garments. There are a total of 5 checkers for the factory, every one of who make an entry of the pieces inspected and pieces defective on a daily basis. 3.3.1.4 Customer Satisfaction Office Once, the bundles are cleared from the finishing department, after having been properly ironed, folded and packaged, they are put into cartons. The garments are then sent to CSO. Here, the inspection is done at AQL 1.5 of the PO quantity. The cartons are randomly opened and the packed garments are taken out. The requisite number of garments according to the PO quantity is inspected. The inspection is focussed on checking the presentation and workmanship of the garment. In the process, the garments are re- opened from the packaging for thorough inspection. If more than the allowed number of pieces fails the inspection, set by AQL. Then the PO is said to have failed the audit. In case this happens, the entire PO is sent for rework.
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A team of 4 checkers are appointed for rework. They are not especially employed for this purpose but are revoked from either the sewing or finishing department to carry out the task. The cartons are opened, one at a time, the garments are taken out, their packaging is opened and they are inspected. After the inspection, the garments are re- folded, the packaging is re- done and the garments are kept back in the cartons. The cartons are then resent to CSO for re- audit, where the garments are again selected at random and inspected. The process is repeated until the PO passes the audit. The personnel in the CSO note down the quantity of the PO, the quantity inspected, whether the PO has passed or failed and details of the subsequent re-audits, in case of failure. 3.3.2 Summary of the reporting structure of Quality department The reports made by the personnel involved in quality checking are sent upwards through the hierarchy and cumulative reports are then generated. The following are the inspection plans of the factory: 3.3.2.1 Fabric warehouse 10% inspection of all incoming fabric (for both the factories) 100% inspection at mills, done by personnel stationed in the mills by the factory.
3.3.2.2 Spreading and cutting department 100% inspection of fused parts, namely, collar, collar band and cuff.
3.3.2.3 Sewing department 100% inline inspection of individual parts, namely, cuff, collar, sleeve, front, back, after completion of the parts. 100% inline inspection of garments in the assembly section, while in process.
3.3.2.4 Finishing department 1st phase: 100% inspection and trimming of uncut threads. 2nd phase: inspection at AQL 1.5 of the bundle size.
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3.3.2.5 Customer satisfaction office Inspection at AQL 1.5 of the PO quantity.
3.3.3 Data collection Relevant data from the reports maintained by each of the checkers in the departments mentioned earlier were collected. The data collected is as follows: Pieces inspected Spreading and cutting department Pieces rejected Re- cut cost Parts change cost Sewing department Parts section Pieces inspected First time inspection First time inspection Re- inspection cost
Pieces defective
Re- inspection cost Repair cost
Pieces rejected
Re- inspection cost Sewing cost
Assembly section
Pieces inspected First time inspection
Pieces defective
Re- inspection cost Repair cost
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Finishing department Pieces inspected First time inspection Trim and exam section Pieces defective Re- inspection cost Repair cost Pieces rejected Pieces inspected End of line section First time inspection Reject cost
Re- inspection cost Pieces defective Repair cost Rework cost (if PO failed audit) Audit inspection cost Audit re- inspection cost
PO quantity Customer Satisfaction Office
Quantity checked POs failed
Table 3.2: Classification of the parameters of the reports into cost centres
3.3.4 Data segmentation The costs were then divided among the appraisal and internal failure cost. Spreading and cutting department Appraisal costs First time inspection cost Re- inspection cost Internal failure costs Re- cut cost Parts change cost
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Sewing department Parts Section Appraisal costs First time inspection cost Re- inspection cost Internal failure costs Repair costs Reject costs Appraisal costs Assembly Section Internal failure costs Finishing department Appraisal costs Trim and exam section First time inspection cost Re- inspection cost Reject cost Internal failure costs End of line section Appraisal costs Repair cost First time inspection cost Re- inspection cost Internal failure costs Appraisal costs Customer Satisfaction Office Internal failure costs Repair cost Audit inspection Audit re- inspection Audit rework First time inspection cost Re- inspection cost Repair costs
Table 3.3: Classification of the cost centres into appraisal and internal failure costs
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After the cost centres were divided between appraisal and internal failure costs, the costs involved in each of the cost centres were identified. Spreading and cutting department First time inspection Re- inspection Cost Re- cut cost Labour cost Labour cost Labour cost, material cost Parts change cost Labour cost, material cost Sewing department: Parts section First time inspection cost Re- inspection cost Repair costs Reject costs Labour cost Labour cost Labour cost Labour cost, material cost First time inspection cost Assembly section Re- inspection cost Repair cost Finishing department Trim and exam section First time inspection cost Re- inspection cost Reject cost Labour cost Labour cost Labour cost Labour cost Labour cost Labour cost, material cost End of line section Repair cost First time inspection cost Re- inspection cost Repair cost Labour cost Labour cost Labour cost Labour cost
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Customer Satisfaction Office Audit inspection Audit re- inspection Audit rework
Labour cost Labour cost Labour cost
Table 3.4: Classification of the cost centres into man and material costs
3.3.5 Data calculation The following formulae were devised for the calculation of the cost for the cost centres. 3.3.5.1 Spreading and cutting
Cost-centre # 1: First time inspection of fused panels Calculation: o No. of checkers x Average salary of checker x No. of pieces for line / Total no. of pieces for inspection and re-inspection Assumptions: o Time taken for panel checking is same for all styles and all sizes.
Cost-centre # 2: Re-inspection of fused parts Calculation: o No. of checkers x Average salary of checker x No. of pieces for reinspection for line / Total no. of pieces for inspection and re-inspection Assumptions: o Re-inspection will be done for all the defected pieces. o Time taken for inspection and re-inspection will be equal and same for all the styles and sizes.
Cost-centre # 5: Re-cutting of fused parts Calculation: o No. of pieces for re-cutting x Average re-cutting time x Cost per min
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Assumptions: o Time taken for re-cutting is same for all styles and all sizes o Cutting required for the re-cutting process will be done by the cutter only
Cost-centre # 6: Part changing Calculation: o Total No. of pieces for part changing x Average cost of part changing per piece Assumption: o Spreading and Cutting required for the part changing process will be done by lay man and cutter.
3.3.5.2 Sewing department The calculation of cost centres are taken together for parts and assembly section
Cost-centre # 7: Inline inspection Calculation: o No. of checkers for inline inspection x Average salary of checker x No. of pieces stitched for line / (Total no. of pieces stitched + Total no. of pieces for inline repair) Assumptions: o Time taken for inspection and re-inspection of all operations will be equal and same for all the styles and sizes
Cost-centre # 8: Inline re- inspection Calculation: o No. of checkers for inline inspection x Average salary of checker x No. of defective pieces stitched for line / (Total no. of pieces stitched + Total no. of pieces for inline repair) Assumptions: o Time taken for inspection and re-inspection of all operations will be equal and same for all the styles and sizes
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Cost-centre # 9: Inline repair Calculation: o Total no. of pieces for inline repair for line x Average time taken for repair x cost per min for sewing Assumptions: o Repair will be done by the operators in sewing line. o Average time taken for repair will be same for all the operations.
Cost-centre # 10: In line rejects Calculation: Total no. of pieces for in line reject for the line x half of sewing room charges Assumption: o Half of the sewing operations have been done before rejection.
3.3.5.3 Finishing department
3.3.5.3.1 Trim & exam section
Cost-centre # 11: First time inspection Calculation: o No. of checkers for Trim & Exam inspection x Average salary of checker x No. of pieces stitched for line / (Total no. of pieces stitched + Total no. of pieces for Trim & Exam repair) Assumptions: o Time taken for inspection and re-inspection of a piece will be equal and same for all the styles and sizes o 100 % inspection will be done
Cost-centre # 12: Re- inspection Calculation:

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o No. of checkers for Trim & Exam inspection x Average salary of checker x No. of defective pieces stitched for line / (Total no. of pieces stitched + Total no. of pieces for Trim & Exam repair) Assumptions: o Time taken for inspection and re-inspection of a piece will be equal and same for all the styles and sizes o 100 % re- inspection will be done.
Cost-centre # 13: Repair Calculation: o Total no. of pieces for repair for line x Average time taken for repair x cost per min for sewing Assumptions: o Repair will be done by the operators in sewing line. o Average time taken for repair will be same for all the operations.
Cost-centre # 14: Rejection Calculation: o Total no. of rejected pieces x (average cutting time x Cost per min for cutting + Sewing SAM x Cost per min for sewing) + Cost of fabric and trims for a piece Assumption: o None of the finishing processes have been done before rejection.
3.3.5.3.2 End of line section
Cost-centre # 15: first time inspection Calculation: o No. of checkers for End of Line inspection x Average salary of checker x AQL 1.5 of no. of bundles stitched for line / (Total no. of pieces stitched + Total no. of pieces for End of Line repair) Assumptions:
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o Time taken for inspection and re-inspection of a piece will be equal and same for all the styles and sizes o Inspection on the basis of AQL 1.5 for each bundle will be done.
Cost-centre # 16: Re- inspection Calculation: o No. of checkers for End of Line inspection x Average salary of checker x no. of defective pieces for every bundle stitched for line / (Total no. of pieces stitched + Total no. of pieces for End of Line repair) Assumptions: o Time taken for inspection and re-inspection of a piece will be equal and same for all the styles and sizes
Cost-centre # 17: Repair Calculation: o Total no. of pieces for repair for line x Average time taken for repair x cost per min for sewing Assumptions: o Repair will be done by the operators in sewing line. o Average time taken for repair will be same for all the operations.
3.3.5.4 Customer satisfaction office
Cost-centre # 18: CSO audit inspection Calculation: o No. of auditors x Average salary x AQL 1.5 of no. of POs for CSO audit for line/ Total no. of pieces for CSO audit checked Assumption: o Time taken for audit of a piece will be equal and same for all the styles and sizes.
Cost-centre #19: CSO audit re-inspection

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Calculation: o No. of auditors x Average salary x AQL 1.5 of the POs failed for CSO audit for line / Total no. of pieces for CSO audit checked
Assumption:
Time taken for audit of a piece will be equal and same for all the styles and sizes
Cost-centre #20: CSO audit rework Calculation: o Total no. of pieces for rework for line x Average time taken for repair x cost per min for rework Assumptions: o Rework will be done by a team of 4 checkers. o Average time taken for rework will be same.
3.3.6 Time Study To determine the costs incurred by the factory due to re- cutting, repairs reworks; time studies were conducted in the various departments. RE- CUTTING Operation 1st 2nd 3rd 4th 5th Total Average
Collar Collar Band Cuff
02:56 01:12 02:13
03:01 01:14 02:35
02:46 01:25 02:31
02:57 01:17 02:26
02:49 01:20 02:27
14:29 06:28 12:12
02:53 01:17 02:26 02:12
Table 3.5: Time study of the re- cutting process
PART CHANGING Operation 1st 2nd 3rd 4th 5th Total Average
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Collar Back Cuff Front Sleeve
03:17 03:19 02:41 03:27 03:56
03:29 03:16 02:35 03:42 03:32
03:20 03:25 02:45 03:25 03:36
03:14 03:32 02:52 03:48 03:25
03:11 03:14 02:31 03:41 03:45
16:31 16:46 13:24 18:03 18:14
03:18 03:21 02:40 03:36 03:38 03:19
Table 3.6: Time study of the parts changing process
SECTION: PARTS
Operation
1st
2nd
3rd
4th
5th
Total
Average
Collar: Pairing Out Collar: Piping Back: Yoke Mismatch Cuff: Piping Front: Front Placket Sleeve: Sleeve Box
02:18 03:12 03:15 03:01 02:27 02:23
02:19 03:15 03:07 03:04 02:24 02:22
02:31 03:24 03:18 02:51 02:28 02:28
02:20 03:21 03:13 02:56 02:15 02:31
02:30 03:18 03:16 03:05 02:18 02:34
11:58 16:30 16:09 14:57 11:52 12:18
02:23 03:18 03:13 02:59 02:22 02:27 02:47
Table 3.7: Time study of repair in parts section
SECTION: ASSEMBLY Operation 1st 2nd 3rd 4th 5th Total Average
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Sleeve Reattach Cuff Reattach Collar Reattach Bottom Hem
03:48 03:23 04:34 02:56
04:10 03:54 04:57 03:42
04:31 03:47 05:21 03:12
03:56 04:12 04:44 03:28
04:32 04:01 05:01 03:36
20:57 19:17 24:37 16:54
04:11 03:51 04:55 03:22 04:05
Table 3.8: Time study of repair in assembly section
CSO Rework Operation 1st Opening Bag 00:14 00:13 00:12 00:18 00:23 00:22 00:17 00:11 00:13 00:15 02:38 00:15 2nd 3rd 4th 5th 6th 7th 8th 9th 10th Total Average
Checking Putting clips back on Putting back in bag Putting in cartons Putting in cartons/10
00:34 00:41 00:32 00:37 00:35 00:37 00:46 00:44 00:51 00:49 06:46
00:40
00:14 00:19 00:17 00:18 00:16 00:15 00:18 00:16 00:21 00:18 02:52
00:17
00:33 00:32 00:38 00:29 00:24 00:33 00:22 00:25 00:31 00:32 04:59
00:29
01:38 00:56 01:27 01:05 01:27 01:19 01:23 01:12 01:27 01:26 13:20
01:20
00:09 00:05 00:08 00:06 00:08 00:07 00:08 00:07 00:08 00:08 01:20
00:08
Total
01:51
Table 3.8: Time study of CSO rework
3.3.7 Miscellaneous Calculations Re-cutting

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Fabric Consumption in linear meter Collar x 2 Collar band x 2 Cuff x 4 0.09 0.06 0.09
Fabric consumption for 1 panel 0.045 0.03 0.0225 Average Total 9.00 6.00 4.50 6.50
Table 3.9: Material cost for re- cutting
Parts Change Fabric Consumption in linear meter Front x 2 Back Collar x 2 Sleeve x 2 Cuff x 4 0.4 0.38 0.09 0.44 0.09 Fabric consumption for 1 panel 0.2 0.38 0.045 0.22 0.0225 Average 40.00 76.00 9.00 44.00 4.50 34.70 Total
Table 3.10: Material cost for part changing
The conversion of the time taken for remedy of internal failure into money is done by the following formula
Cutting SAM + Sewing SAM + Finishing SAM= CMT Where, Cutting SAM= 4.65, Sewing SAM = 29.03, Finishing SAM = 5.11, CMT = 101.00
Using the formula discussed on the previous page, 4.65x +29.03x+5.11x = 101 38.79x = 101
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x = 2.603764
Multiplying the SAM value with the value of x gives us the monetary value of each department,
Cutting room charges= Sewing room charges= Finishing room charges= 4.65 x 2.60= 29.03 x 2.60= 5.11 x 2.60= 12.11 78.19 13.31
Table 3.11: Division of CMT into the three departments
Cutting room charges for 1 min= Sewing room charges for 1 min= Finishing room charges for 1 min=
12.11/4.65= 78.19/29.03 = 13.31/5.11=
2.60 2.69 2.60
Table 3.12: Cost per minute of the three departments
3.3.8 Cost calculations The values calculated in the last two sections help in determining the cost of re- cutting, repairs and rejects.
Re-cutting Cost Time Labour Material Total 02:12 Cost 5.72 6.50 12.22
Table 3.13: Re- cutting cost
Parts Change Cost Time Cost
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Labour Material Total
03:19
8.62 34.70 43.32
Table 3.14: Parts changing cost
Repair Cost(inline) Time Labour 03:25 Cost 9.19
Table 3.15: Inline repair cost (parts & assembly section)
Reject cost (inline) Sewing Labour 39.10
Table 3.16: Inline reject cost (Parts section)
Repair cost( Trim & Exam, End of Line) Time Labour 04:05 Cost 10.98
Table 3.17: Finishing repair cost (trim & exam, end of line section)
Reject Cost (Trim & Exam) Fabric Trims CM Total 300 67.3 90.3 457.6
Table 3.18: Finishing rejection cost (trim and exam section)
Rework cost (CSO) Average Salary of checkers in sewing, finishing departments 4155
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Salary per day (22 working days) Salary per hour (9hours per day) Salary per minute Cost of rework for 1 checker (rework time 1:51) Cost of rework for 4 checkers
188.86 21 0.35 0.64 3.00
Table 3.19: Rework cost (CSO)
3.3.9 Values required for CoQ calculations
3.3.9.1 Spreading and cutting department
No. of checkers Average salary Average time for recut Average time for parts change Re- cut cost Parts change cost
8 3995 2:12 3:19 12.22 43.32
Table 3.20: Values of spreading and cutting department
3.3.9.2 Sewing department
No. of checkers Average salary Average time for repair Repair cost Reject cost
52 4200 3:25 9.19 39.10
Table 3.21: Values of sewing department
3.3.9.3 Finishing department
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3.3.9.3.1 Trim and exam section
No. of checkers Average salary Average time for repair Repair cost
24 4200 4:05 10.98
Table 3.22: Values for trim and exam section
3.3.9.3.2 End of line section
No. of checkers Average salary Average time for repair Repair cost
5 4065 4:05 10.98
Table 3.23: Values for end of line section
3.3.9.4 Customer satisfaction office No. of checkers Average salary Average time for repair Repair cost 5 4886 1:51 3
Table 3.24: Values for CSO
Once, these values are entered into the worksheets, along with the data for every week, the appraisal and internal failure cost for these departments are calculated automatically.
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3.4 Phase II
Appraisal, prevention, internal failure and external failure cost, where line wise division is not possible and/or weekly data is not available. The cost centres to be covered in this phase are, 3.4.1 Personnel salary (QCs and checkers) of fabric warehouse
Total No. of QC Average Salary of QC No. of Checkers Average Salary of Checkers Total Salary 1 8,923.00 2 4,832.00 9,664.00 18,587.00 8,923.00
Table 3.25: Appraisal cost of fabric warehouse
3.4.2 Personnel salary (QCs) of spreading and cutting department

Total No. of QC Average Salary of QC 3 7,000.00 21,000.00
Table 3.26: Appraisal cost of spreading and cutting department
3.4.3 Personnel salary (QCs) of sewing department

No. of QC Average Salary of QC Total Salary Line 1 4 7,175.00 28,700.00 Line 2 4 7,461.25 29,845.00 Line 3 4 7,853.75 31,415.00 Line 4 Total 4 8,022.25 32,089.00 1,22,049.00
Table 3.27: Appraisal cost of sewing department
3.4.4 Personnel salary (QCs) of finishing department

3.4.4.1 End of line section Total No. of QC Average Salary of QC 5 7,950.00 39,750.00
Table 3.28: Appraisal cost of end of line section
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3.4.5 Personnel salary (QCs) of CSO

Total No. of QC Average Salary of QC 2 11681.5 23,363.00
Table 3.29: Appraisal cost of CSO
3.4.6 Personnel salary (managers) of Management
Total No. of QC Average Salary of QC 3 14,333.33 43,000
Table 3.30: Appraisal cost of Management
3.4.7 External failure cost The external failure cost is variable for each month, depending on the claims, warranty, etc. issued by the buyer.
3.4.8 Prevention cost 3.4.8.1 Pre- run For any new style which is introduced, a pre- production sampling is done, with 4- 8 shirts made for each style, depending on whether it is wash program or non- wash program. Fabric cost Trims cost CMT Total
300 67.3 100 467.3
Table 3.31: Cost per garment for pre- run
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3.4.8.2 Training The factory has in house training. No. of Trainers Average salary Total 4
6,500.00 26,000.00
Table 3.32: Salary of trainers Machine Type SNLS Needle Feed KANSAI SNLS computerised UBT SNLS ORDINARY SNLS Needle feed ( Auto lifter ) Double needle chain stitch Make Durkopp Adler KANSAI JUKI JUKI JUKI JUKI Quantity 1 1 3 5 2 1 Total Depreciation Cost 9,208.33 4,250.00 13,812.50 23,020.83 18,416.67 16,734.38 85,442.71
Table 3.33: Depreciation cost of training machines
3.4.8.3 Depreciation cost of fabric warehouse machines Machine Type Ramsons Checkmate Quantity 2 Depreciation Cost
25,500.00
Table 3.34: Depreciation cost of fabric warehouse machines
3.4.8.4 Depreciation cost of finishing machines The machines involved in quality improvement are included in this, namely spot guns. Machine Type Ramsons Checkmate Quantity 4 Depreciation Cost
1,275.00
Table 3.35: Depreciation cost of finishing machines
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Chapter 4: Data Analysis
53
Once, all the data concerning the Cost of Quality is collected and the subsequent calculations are done, the results are analysed to understand the costs incurred by the factory. The following results were generated:
4.1Spreading and cutting department
February Cutting Appraisal Cost

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Line 1 Line 2 Line 3 Line 4 Factory
0.90% 0.99% 0.73% 1.27% 0.94% 99.10% 99.01% 99.27% 98.73% 99.06%
First time inspection Re- inspection
Graph 4.1: February Cutting Aprraisal cost analysis
March Cutting Appraisal Cost

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% First time inspection Re- inspection
98.40% 97.96% 98.55% 96.58% 98.11%
30.00%
20.00% 10.00% 0.00% Line 1 Line 2 Line 3 Line 4 Factory
1.60% 2.04% 1.45% 3.42% 1.89%
Graph 4.2: March Cutting Aprraisal cost analysis
The above graphs show the division of appraisal, i.e. the salary of the checkers between the first time inspection and re- inspection costs. As can be seen, the re- inspection cost
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is marginal as compared to the first time inspection, showing that the no. of defects are very low. It can also be observed that compared to February, in March the cost associated to reinspection is higher in March.
February Cutting Internal Failure Cost

80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Line 1 Line 2 Line 3 Line 4 Factory 26.12% 73.88% 63.97% 62.57% 75.83% 69.46%
36.03%
37.43% 30.54% 24.17%
Re- cut Parts change
Graph 4.3: February Cutting Internal Failure cost analysis
March Cutting Internal Failure Cost

100.00% 90.00%
80.00%
70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%
76.53% 65.97% 68.30%
73.20%
71.28%
Re- cut
34.03% 23.47% 31.70% 26.80% 28.72%
Parts Change
Line 1
Line 2
Line 3
Line 4
Factory
Graph 4.4: March Cutting Internal Failure cost analysis
The internal failure cost analysis of cutting department, for the two months, show that the cost incurred due to re- cutting is less than half of the cost incurred due to parts changing.
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February Cutting department cost analysis

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 18.02% 23.45% 13.27% 14.25% 17.20% Appraisal Internal Failure 81.98% 86.73% 76.55% 85.75% 82.80%
0.00%
Line 1 Line 2 Line 3 Line 4 Factory
Graph 4.5: February cutting department cost analysis
March Cutting department cost analysis

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Line 1 Line 2 Line 3 Line 4 Factory 14.08% 15.50% 16.14% 11.39% Appraisal Internal Failure 85.92% 84.50% 83.86% 88.61% 85.69%
14.31%
Graph 4.6: March cutting department cost analysis
The analysis of the two months shows that the appriasal cost has a very low contribution as compared to internal failure cost.
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4.2 Sewing Department
Sewing Appraisal Cost: February

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 99.01% 98.09% 98.93% 98.79% 98.71%
First time inspection

Re- inspection
20.00%
10.00% 0.00% 0.99% 1.91% 1.07% 1.21%
1.29% Factory
Line 1
Line 2
Line 3
Line 4
Graph 4.7: February Appraisal Cost Analysis
Sewing Appraisal Cost: March

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 98.96% 98.73% 98.62% 98.65% 98.74%
First time inspection Re- inspection
1.04%
1.27%
1.38%
1.35%
1.26%
Line 1
Line 2
Line 3
Line 4
Factory
Graph 4.8: March Appraisal Cost Analysis
The above graphs show the division of appraisal, i.e. the salary of the checkers between the first time inspection and re- inspection costs. As can be seen, the re- inspection cost is marginal as compared to the first time inspection, showing that the no. of defects are very low.
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Sewing Internal Failure Cost: February

100.00% 90.00% 80.00% 70.00% 74.05% 60.24% 51.83% 48.17% 39.76% 25.95% 33.46% 37.11% 66.54% 62.89% Repair Reject
60.00%
50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Line 1
Line 2
Line 3
Line 4
Factory
Graph 4.9: February Sewing Internal Failure Cost
Sewing Internal Failure Cost: March

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 72.77% 61.55% 38.45% 27.23% 60.89% 39.11% 63.08% 64.70% Repair 35.30% Reject
36.92%
Line 1
Line 2
Line 3
Line 4
Factory
Graph 4.10: March Sewing Internal Failure Cost
The internal failure cost analysis of sewing department, for the two months, show that the cost incurred due to re- cutting is less than the cost incurred due to parts changing, with an approximate ration of 40; 60.
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Sewing Department Cost Analysis: February

100.00% 90.00% 80.00% 70.00%
65.18%
56.81% 43.19% 54.97% 45.03% 34.82% 57.98% 42.02%
60.00%
50.00% 40.00% 30.00% 20.00% 10.00% 0.00%
58.75% 41.25% Appraisal Internal Failure
Line 1
Line 2
Line 3
Line 4
Factory
Graph 4.11: February Sewing Department Cost Analysis
Sewing Department Cost Analysis: March

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%
56.02% 43.98%
59.29% 40.71%
57.74% 42.26%
56.93% 43.07%
57.47% 42.53% Appraisal Internal Failure
Line 1
Line 2
Line 3
Line 4
Factory
Graph 12: March Sewing Department Cost Analysis
The analysis of the two months shows that the appriasal cost has a higher contribution as compared to internal failure cost. This means that the first time right cost is higher than the defect cost, whih means that the department has a good quality adherence.
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4.3 Finishing department

4.3.1 Trim & exam section
Trim & Exam Appraisal Cost: February

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 96.68% 91.77% 95.94% 88.40% 93.79%

Re- inspection 11.60% 4.06%
20.00%
10.00% 0.00% 3.32%
8.23%
6.21%
Line 1
Line 2
Line 3
Line 4
Factory
Graph 4.13: February Trim & Exam Appraisal Cost
Trim & Exam Apparaisal Cost: March

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Line 1 Line 2 Line 3 Line 4 Factory 3.37% 4.13% 4.70% 8.50% 4.89% First time inspection Re- inspection 96.63% 95.87% 95.30% 91.50% 95.11%
Graph 4.14: March Trim & Exam Appraisal Cost
As is seen for the department covered before, here also , the re- inspection cost is marginal as compared to the first time inspection, showing that the no. of defects are low.
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Trim & Exam Internal Failure Cost: February

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 5.61% Line 1 Line 2 Line 3 20.65% Repair Reject 94.39% 79.35% 84.56% 91.72% 89.68%
15.44% 8.28%
10.32%
0.00%
Line 4 Factory
Graph 4.15: February Trim & Exam Internal Failure Cost
Trim & Exam Internal Failure Cost: March

100.00% 90.00%
92.35%
76.75%
91.49% 86.05%
80.00%
70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Line 1
55.66% 44.34%
Repair Reject 23.25% 13.95%
7.65%
8.51%
Line 2
Line 3
Line 4
Factory
Graph 4.16: March Trim & Exam Internal Failure Cost The repair cost here is low compared to the reject cost, this is because the repair cost of a complete sewn grarment is very less than its rejection cost, therefore, eventhough in numbers the repairs are higher than the rejects, the cost for the latter is higher.
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Trim & Exam Cost Analysis: February

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Line 1 Line 2 Line 3 Line 4 Factory 17.17% 21.61% 16.04% 7.56% 30.97% Appraisal Internal Failure 82.83% 92.44% 83.96% 78.39%
69.03%
Graph 4.17: February Trim & Exam Cost Analysis
Trim & Exam Cost Analysis: March

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Line 1 Line 2 Line 3 Line 4 Factory 16.32% 19.76% 13.99% 33.32% 30.00% Appraisal Internal Failure 66.68% 83.68% 86.01% 80.24% 70.00%
Graph 4.18: March Trim & Exam Cost Analysis
The above charts show that internal failure cost is much higher than the appraisal cost, and as was seen earlier, the rejection costs are the major contributors of the internal
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failure cost, therefore the number of rejects has to be reduced, in order to reduce the CoQ of the section. 4.3.2 End of line section
End of Line Appraisal Cost: February

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% First time inspection Re- inspection 22.70% 21.57% 17.14% 77.30% 78.43% 82.86% 84.15% 80.76%
30.00%
20.00% 10.00% 0.00%
15.85%
19.24%
Line 1
Line 2
Line 3
Line 4
Facctory
Graph 4.19: February End of Line Appraisal Cost
End of Line Appraisal Cost: March

Graph 4.20: March End of Line Appraisal Cost The first time inspection cost ere also is higher than the re- ispection cost, but the difference is not that vast as compared to the earlier departments. This is because, the number of pieces inspected in this is section is near about 10% of the pieces checked in trim and exam section, therefore making the number of defective look much higher.
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End of Line Cost Analysis: February

80.00%
70.00%
60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%
67.71% 61.67% 62.41%
69.60%
65.27%
38.33%
37.59% 32.29% 30.40%
34.73%
Appraisal Internal Failure
Line 1
Line 2
Line 3
Line 4
Facctory
Graph 4.21: February End of Line Cost Analysis
End of Line Cost Analysis: March

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 56.60% 43.40% 52.04% 47.96% 52.14% 47.86% 57.21% 42.79% 53.02% 46.98% Appraisal Internal Failure
Line 1
Line 2
Line 3
Line 4
Factory
Graph 4.22: March End of Line Cost Analysis
The cost analysis of the section shows that although the appraisal cost is higher than internal failure cost, the difference is not very stark and therefore, efforts need to put in order to bring the internal failure cost down, i.e. the number of garments requiring repair need to be brought down.
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4.4 CSO
CSO Appraisal Cost: February

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 21.06% 20.85% 20.91% 78.94%
79.15%
79.09%
83.19%
80.03%

Re- inspection 16.81% 19.97%
20.00%
10.00% 0.00%
Line 1
Line 2
Line 3
Line 4
Factory
Graph 4.23: February CSO Appraisal Cost
CSO Appraisal Cost: March

Graph 4.24: March CSO Appraisal Cost
The re- inspection cost in this department is approximately one- fifth the inspection cost, which means, that for 5 POs checked, 1 is failed. The main reason for faiure of audit in this deartment is improper packaging, therefore efforts hav to be made to ensure that the garments are packaged correctly in the first time.
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CSO Cost Analysis: February

100.00% 90.00% 80.00% 70.00% 88.76% 86.93% 88.26% 85.23% 87.48%
60.00%
50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Line 1 Line 2 Line 3 Line 4 Factory 11.24% 13.07% 11.74% 14.77% 12.52% Appraisal Internal Failure
Graph 4.25: February CSO Cost Analysis
CSO Cost Analysis: March

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 90.25% 92.85% 84.65% 85.58% 89.37%
Appraisal
Internal Failure 15.35% 14.42% 7.15% 10.63%
20.00%
10.00% 0.00%
9.75%
Line 1
Line 2
Line 3
Line 4
Factory
Graph 4.26: March CSO Cost Analysis
The internal failure cost is much higher than the appraisal cost because at the time of audit inspection and re- inspection of only AQL 1.5 of the entire PO is don, but rework is done for the whole PO quantity.
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4.5 Miscellaneous reports

3,00,000.00 2,50,000.00 2,00,000.00 1,50,000.00 1,00,000.00 50,000.00 0.00 CSO
Line 1 Line 2 Line 3 Line 4
EOL
Trim & Exam
Appraisal
Internal Failure
Graph 4.27: February category wise cost analysis

2,50,000.00 2,00,000.00 1,50,000.00 1,00,000.00 50,000.00 0.00 CSO Trim & Exam Trim & Exam Cutting Cutting Sewing Line 1 Line 2 Line 3 Line 4
Trim & Exam
Cutting
Cutting
Sewing
Sewing
Appraisal
Internal Failure
Graph 4.28: March category wise cost analysis
The graphs above show a comparative analysis of appraisal and internal failure costs of the four lines in all the departments.
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Sewing
CSO
EOL
EOL
CSO
EOL
The highest spikes belong to the internal failure cost of trim and exam section, because of the huge cost related to rejection of garments.
Department wise Cost Distribution: February

CSO 17%
EOL 4%
Cutting 21%
Trim & Exam 17% Sewing 41%
Graph 4.29: February department wise cost distribution
Department wise Cost Distribution: March
CSO 19% EOL 4% Trim & Exam 20%
Cutting 18%
Sewing 39%
Graph 4.30: March department wise cost distribution
The pie charts represent each department as % of the CoQ calculated in Phase I. the sewing department has the maximum contribution to CoQ.
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category wise contribution in CoQ in factory: February

External Failure Prevention 1% 8%
Internal Failure 45%
Appraisal 46%
Graph 4.31: February category wise contribution to total CoQ
category wise contribution in CoQ in factory External :March

Failure 0% Prevention 7%
Appraisal 43%
Graph 4.32: March category wise contribution to total CoQ
The above pie charts represent each category of CoQ as % of the total CoQ.
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Chapter 5: Intelligent Calculation Book
70
For the continuous and regular calculation of CoQ and its subsequent analysis, an Intelligent Calculation Book was designed for the factory. The book allows for the calculation of the variable factors to give the output. The calculations done in this workbook are much more extensive than was done for the preliminary calculation. Assumptions, rounding up and averages are avoided at all places possible and the formulas and their workings are devised after utmost understanding of the factors involved in the cost centres.
5.1 Introduction
The Intelligent Calculation Book is a Microsoft Excel based program; the flowchart shown below lists out the levels of its functions.
Level 1: Daily data entry of inspection reports from various departments
Level 2: Cost calculation of the inputted data
Level 3: Entry of costs which are not divisible on line wise basis
Level 4: Monthly result sheet generation of all the cost factors involved in Cost of Quality
Level 5 Analysis of the costs incurred by the factory using graphs
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5.2 Level 1
Daily data entry of inspection reports from various departments For the accurate calculation of CoQ, the variable data is the most crucial, as the fluctuations help in determining the areas that need to be monitored, and the places where improvements can be made. The data needs to be entered in a separate sheet for each of the four lines. The data needed for this, are listed below: 5.2.1 Spreading & cutting department No. of fused parts No. of pieces No. of pieces re- No. repaired: Collar Collar band Cuff Collar Collar band Cuff cut: Collar Collar band Cuff
of
Parts
Changed: Front Back Sleeve Collar Cuff
Table 5.1: Parameters of the spreading and cutting department
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5.2.2 Sewing Department

Front No. of pieces Back No. of pieces Sleeve No. of pieces Collar No. pieces No. of pieces No. of pieces No. of pieces No. repaired repaired repaired pieces repaired Downtime Downtime Downtime Downtime Downtime of No. of pieces rejected Cuff of No. of pieces Assembly No. pieces of No. of pieces No. repaired pieces repaired Downtime of of
No. of pieces No. of pieces No. of pieces No. rejected rejected rejected pieces rejected
Table 5.2: Parameters for the sewing department
5.2.3 Finishing department 5.2.3.1 Trim & Exam Section No. of pieces No. of pieces repaired No. of pieces rejected
Table 5.3: Parameters for the trim & exam section
5.2.3.2 End of Line Section No. of pieces No. of pieces repaired
Table 5.4: Parameters for the end of line section
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5.2.4 Customer Satisfaction Office No. of pieces No. of pieces re- inspected No. of pieces reworked
Table 5.5: Parameters for the sewing department
All the parameters mentioned above, are variable depending on the productivity of the line on the particular day. A new parameter called downtime has been introduced, which refers to the sum of the time spent by operators of a particular section in a line on repair, this time is then effectively lost for production and the factory incurs opportunity loss due to non- production of garments for that particular time.
Figure 5.1: Snapshot of the data entry sheet (arbitrary data)
The sheet above, shows arbitrary data, but the sample is helpful in undersatnding how the data has to entered daily, there are 22 working days in a month, on dates with holiday, the particular column is deleted.
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5.3 Level 2
Cost calculation of the inputted data The data entered in the data entry sheet of each line is linked to th result sheet of that line. In this sheet, all th calculations are done according ot the formulas devised. These formulas generate the output, i.e. the cost value upon the entr of values in the data entry sheet. The following calculations were made: 5.3.1 Spreading and cutting department First time inspection cost: (collar, collar Pieces inspected on the day for the line x band, cuff) average of the daily salary of the checkers x no. of checkers for the line x total no. of pieces inspected in the factory (sum of pieces passed, repaired, rejected) Re- inspection cost: (collar, collar band, Pieces re-inspected on the day for the line cuff) x average of the daily salary of the checkers x no. of checkers for the line x total no. of pieces inspected in the factory (sum of pieces passed, repaired, rejected) Re- cutting cost: (collar, collar band, cuff) No. of pieces recut x cost of re- cutting cost of panel
Parts changing cost: (front, back, collar, No. of pieces recut x cuff, sleeve) changing
Table 5.5; Calculation of cost centres for spreading and cutting department
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5.3.2 Sewing department First time inspection cost: (front, back, Pieces inspected on the day for the line x sleeve collar, cuff, assembly) average of the daily salary of the checkers x no. of checkers for the line x total no. of pieces inspected in the factory (sum of pieces passed, repaired, rejected) Re- inspection cost: (front, back, sleeve Pieces re-inspected on the day for the line collar, cuff, assembly) x average of the daily salary of the checkers x no. of checkers for the line x total no. of pieces inspected in the factory (sum of pieces passed, repaired, rejected) Repair cost: (front, back, sleeve collar, cuff, No. of pieces repaired x cost of repair assembly) Downtime cost: (front, back, sleeve collar, Downtime in seconds / (SAM of operation cuff, assembly) in seconds at 60% efficiency) x amount lost due to non- production Reject cost: (front, back, sleeve collar, cuff) No. of pieces rejected x cost of reject
Table 5.6: Calculation of cost centres for sewing department
5.3.3 Finishing department Trim & Exam section, End of Line section: First time inspection cost: (sewn garment) Pieces inspected on the day for the line x average of the daily salary of the checkers x no. of checkers for the line x total no. of pieces inspected in the factory (sum of pieces passed, repaired) Re- inspection cost: (sewn garment) Pieces re-inspected on the day for the line x average of the daily salary of the checkers x no. of checkers for the line x
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total no. of pieces inspected in the factory (sum of pieces passed, repaired) Repair cost: (sewn garment) No. of pieces repaired x cost of repair
Table 5.7: Calculation of cost centres for trim & exam, end of line sections
5.3.4 Customer Satisfaction Office First time inspection cost
Pieces inspected on the day for the line x average of the daily salary of the checkers x no. of checkers for the line x total no. of pieces inspected in the factory (sum of pieces passed, repaired, rejected)
Re- inspection cost
Pieces re-inspected on the day for the line x average of the daily salary of the checkers x no. of checkers for the line x total no. of pieces inspected in the factory (sum of pieces passed, repaired)
Rework cost
No. of pieces reworked x cost of rework
Table 5.8: Calculation of cost centres for CSO
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5.3.5 Calculations In the result sheet, unlike the calculations made for the preliminary study using aveages, exact measurements of the panels are taken for re- cutting and panel changes.
Re-cutting Fabric Consumption in linear meter Collar x 2 Collar band x 2 Cuff x 4 0.09 0.06 0.09 Fabric consumption for 1 panel 0.045 0.03 0.0225 Total 9.00 6.00 4.50
Table 5.9: Material cost for re- cutting, separate for each part
Parts Change Fabric Consumption in linear meter Front x 2 Back Collar x 2 Sleeve x 2 Cuff x 4 0.4 0.38 0.09 0.44 0.09 Fabric consumption for 1 panel 0.2 0.38 0.045 0.22 0.0225 40.00 76.00 9.00 44.00 4.50 Total
Table 5.10: Material cost for part changing
The division of CMT charges into the cutting, sewing, finishing departments is shown in Section 3.2.7.The results of the calculation are used here to get the re-cutting, parts changing, repair and rework cost in this section.
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The following tables show the exact re- cutting and parts changing cost, varying according to the consumption of fabric.
Re-cutting Cost (collar) Time Labour Material Total 02:12 Cost 5.72 9.00 14.72
Table 5.11: Re- cutting cost of collar
Re-cutting Cost (collar band) Time Labour Material Total 02:12 Cost 5.72 6.00 11.72
Table 5.12: Re- cutting cost of collar band
Re-cutting Cost (cuff) Time Labour Material Total 02:12 Cost 5.72 4.50 10.22
Table 5.13: Re- cutting cost of cuff
Parts Change Cost (Front) Time Labour Material Total 03:19 Cost 8.62 40.00 48.62
Table 5.14: Parts changing cost of front 79
Parts Change Cost (Back) Time Labour Material Total 03:19 Cost 8.62 76.00 84.62
Table 5.15: Parts changing cost of back
Parts Change Cost (Collar) Time Labour Material Total 03:19 Cost 8.62 9.00 17.62
Table 5.16: Parts changing cost of collar
Parts Change Cost (Sleeve) Time Labour Material Total 03:19 Cost 8.62 44.00 52.62
Table 5.17: Parts changing cost of sleeve
Parts Change Cost (Cuff) Time Labour Material Total 03:19 Cost 8.62 4.50 13.12
Table 5.18: Parts changing cost of cuff
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Inline Repair Cost (parts) Time Labour 02:47 Cost 7.49
Table 5.19: Inline repair cost (parts section)
Inline Repair Cost (assembly) Time Labour 03:25 Cost 11
Table 5.20: Inline repair cost (assembly section)
SAM Front Back Sleeve Collar Cuff 360 166 167 355 223
60% of SAM 216 99.6 100.2 213 133.8
Calculation Downtime/216*200 Downtime/99.6*200 Downtime/100.2*200 Downtime/213*200 Downtime/133.8*200
Table 5.21: Downtime cost
Reject cost (inline) Sewing Labour 39.10
Table 5.22: Inline reject cost (Parts section)
Repair cost( Trim & Exam, End of Line) Time Labour 04:05 Cost 10.98
Table 5.23: Finishing repair cost (trim & exam, end of line section)
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Reject Cost (Trim & Exam) Fabric Trims CM Total 300 67.3 90.3 457.6
Table 5.24: Finishing rejection cost (trim and exam section)
Rework cost (CSO) Average Salary of checkers in sewing, finishing departments Salary per day (22 working days) Salary per hour (9hours per day) Salary per minute Cost of rework for 1 checker (rework time 1:51) Cost of rework for 4 checkers 4155 188.86 21 0.35 0.64 3.00
Table 5.25: Rework cost (CSO)
5.3.6 Additional Values required for CoQ calculations 5.3.6.1 Spreading and cutting department No. of checkers Average salary 8 3995
Table 5.26: Values of spreading and cutting department
5.3.6.2 Sewing department No. of checkers Average salary 52 4200
Table 5.27: Values of sewing department
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5.3.6.3 Finishing department 5.3.6.3.1 Trim and exam section No. of checkers Average salary 24 4200
Table 5.28: Values for trim and exam section
5.3.6.3.2 End of line section No. of checkers Average salary 5 4065
Table 5.29: Values for end of line section
5.3.6.3.3 Customer satisfaction office No. of checkers Average salary 5 4886

Table 5.30: Values for CSO
Figure 5.2: Snapshot of the result sheet (arbitrary data)
The screenshot above shows the look of the result sheet, the values are corresponding to the arbitrary data entered in the data entry sheet.
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5.4 Level 3
Appraisal, prevention, internal failure and external failure cost, where line wise division is not possible and/or weekly data is not available. The cost centres to be covered in this phase are, 5.4.1 Personnel salary (QCs and checkers) of fabric warehouse
Total No. of QC Average Salary of QC No. of Checkers Average Salary of Checkers Total Salary 1 8,923.00 2 4,832.00 9,664.00 18,587.00 8,923.00
Table 5.31: Appraisal cost of fabric warehouse
5.4.2 Personnel salary (QCs) of spreading and cutting department

Total No. of QC Average Salary of QC 3 7,000.00 21,000.00
Table 5.32: Appraisal cost of spreading and cutting department
5.4.3 Personnel salary (QCs) of sewing department

No. of QC Average Salary of QC Total Salary Line 1 4 7,175.00 28,700.00 Line 2 4 7,461.25 29,845.00 Line 3 4 7,853.75 31,415.00 Line 4 Total 4 8,022.25 32,089.00 1,22,049.00
Table 5.33: Appraisal cost of sewing department
5.4.4 Personnel salary (QCs) of finishing department

End of line section Total No. of QC Average Salary of QC 5 7,950.00 39,750.00
Table 5.34: Appraisal cost of end of line section
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5.4.5 Personnel salary (QCs) of CSO

Total No. of QC Average Salary of QC 2 11681.5 23,363.00
Table 5.35: Appraisal cost of CSO
5.4.6 Personnel salary (managers) of Management

Total No. of QC Average Salary of QC 3 14,333.33 43,000
Table 5.36: Appraisal cost of Management
5.4.7 External failure cost The external failure cost is variable for each month, depending on the claims, warranty, etc. issued by the buyer.
5.4.8 Prevention cost 5.4.8.1 Pre- run For any new style which is introduced, a pre- production sampling is done, with 4- 8 shirts made for each style, depending on whether it is wash program or non- wash program. Fabric cost Trims cost CMT Total
300 67.3 100 467.3
Table 5.37: Cost per garment for pre- run
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5.4.8.2 Training The factory has in house training.

No. of Trainers Average salary Total 4 6,500.00 26,000.00
Table 5.38: Salary of trainers Machine Type SNLS Needle Feed KANSAI SNLS computerised UBT SNLS ORDINARY SNLS Needle feed ( Auto lifter ) Double needle chain stitch Make Durkopp Adler KANSAI JUKI JUKI JUKI JUKI Quantity 1 1 3 5 2 1 Total Depreciation Cost 9,208.33 4,250.00 13,812.50 23,020.83 18,416.67 16,734.38 85,442.71
Table 5.39: Depreciation cost of training machines
5.4.8.3 Depreciation cost of fabric warehouse machines

Machine Type Ramsons Checkmate Quantity 2 Depreciation Cost 25,500.00
Table 5.40: Depreciation cost of fabric warehouse machines
5.4.8.4 Depreciation cost of finishing machines The machines involved in quality improvement are included in this, namely spot guns.
Machine Type Ramsons Checkmate Quantity 4 Depreciation Cost 1,275.00
Table 5.41: Depreciation cost of finishing machines 86
5.5 Level 4
Monthly result sheet generation of all the cost factors involved in Cost of Quality This sheet shows the cumulative of the whole month. All the calculations done in section 5.3 are summed up and displayed as whole for each line. The data entered in section 5.4 are also shown here.
Figure 5.3: Snapshot of the month sheet showing the data corresponding to section 5.3
Figure 5.4: Snapshot of the month sheet showing the data corresponding to section 5.4 87
The above screenshots show glimpses of the month sheet with arbitrary data. The upper screenshot has the cells linked to the results sheet of each line and the total is the sum of each row. The lower screenshot shows the data which needs to be entered in the sheet.
5.6 Level 5
Analysis of the costs incurred by the factory using graphs The analysis sheet has the values linked from the month sheet, the following reports are generated for perusal. 5.6.1 Department cost analysis between Appraisal and Internal Failure Cost (in %) The reports are generated for the following departments o Spreading and cutting department o Sewing Department o Trim & Exam Section o EOL Section o CSO Department
Cutting Department Cost Analysis
100.00% 80.00%
60.00%
40.00% 20.00% 0.00% Appraisal Internal Failure
Graph 5.1: cutting department cost analysis(arbitrary data)
88
5.6.2 Appraisal cost analysis of each department The reports are generated for the following departments o Spreading and cutting department o Sewing Department o Trim & Exam Section o EOL Section o CSO Department
Spreading and Cutting Department Appraisal Cost
12,000.00 10,000.00 8,000.00 6,000.00 4,000.00 2,000.00 0.00 Line 1 Line 2 Line 3 Line 4 First time Inspection Re- inspection
Graph 5.2: Spreading and cutting department appraisal cost(arbitrary data)
5.6.3 Internal failure cost of each department o Spreading and cutting department o Sewing Department o Trim & Exam Section o EOL Section o CSO Department
89
Spreading and Cutting Department Internal Failure Cost

4,00,000.00 3,50,000.00
3,00,000.00
2,50,000.00 2,00,000.00 1,50,000.00 1,00,000.00 50,000.00 0.00 Line 1 Line 2 Line 3 Line 4 Re-cut Cost Part Change Cost
Graph 5.3: Spreading and cutting department internal failure cost (arbitrary data)
5.6.4 Department wise Contribution in COQ o Line 1 o Line 2 o Line 3 o Line 4
Department wise Contribution in COQ line 1

Trim & Exam 6% EOL 2% CSO 6%
Sewing 22% Cutting 64%
Graph 5.4: Departments as % of CoQ (arbitrary data)
90
5.6.5 Category wise contribution of each line in CoQ

6,00,000.00 5,00,000.00 4,00,000.00 3,00,000.00 2,00,000.00 1,00,000.00 0.00 CSO Line 1 Line 2 Line 3
Trim & Exam
Trim & Exam
Cutting
Cutting
Sewing
Appraisal
Internal Failure
Graph 5.5: Category wise contribution of each line in CoQ (arbitrary data)
5.6.6 Category wise contribution of factory in CoQ
category wise contribution in CoQ in factory

External Failure 0%
Sewing
Appraisal 46%
Prevention 14%
Graph 5.6: Each category as % of total CoQ of factory(arbitrary data)
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CSO
EOL
EOL
Line 4
5.6.7 Advantages of the Intellingent Calculation Book
The calculations are done on a daily basis ensuring that the results are generated after each day of work, which keep getting modified after every subsequent entry.
Since the CoQ is calculated on a line wise basis, instead of style based therefore the readings are feasible over a long period of time. It is also not feasible to do it on style wise basis because the styles have only minor changes and the remain more or less the same.
All the other factors are also included into the book, therefore giving an entire view of the costs involved.
The book can be reused for every month, helping in keeping a record of each month, which can then be compared later on.
92
Chapter 6: Suggestions
93
6.1 Record keeping of sewing department

The records maintained in the sewing department, especially in the assembly section were not documented beyond the checkers. This meant that for further documentation notebooks from all of the 52 checkers would have to be collected and then the data would be inputted into the work book. Since the input had to be done daily, this would lead to a lot of hassles. To overcome this problem a new format was introduced, which was given to the QC of each line, entries would be made daily for all the parts section checkers and the assembly section checkers in separate copies. The report contains separate sections for all the operations, and the same sheet can be used for one month. The entries to be made are the pieces checked and pieces defective.
Figure 6.1: Snapshot of the new format
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6.2 Downtime cost

The amount of production time which is wasted due to various reasons is called downtime. The time lost has a cost associated with it called the downtime cost. One of the major reasons for downtime cost was repair, therefore the time lost due to repair and the cost associated with it needs to be accounted for. The calculations for downtime are explained in section 5.3.5. This helps in understanding the opportunity loss incurred by the factory due to no production. The suggestion was executed by making the operators enter the time spent by each of them for repair. The cumulative of the time lost by each operator in a section was then taken and the calculations were made on it.
95
Chapter 7: Analysis & Conclusion
96
7.1 Analysis
After observation of two months of data the overall CoQ of the factory was found to be approximately 4.2% of the sales turnover of a month.
Extrapolation of the sales turnover of two months into a year gives an amount of 62, 27,78,400.00 and the CoQ comes out to be 2,60,82,444.76.
CoQ as % of total sales turnover

CoQ 4.19%
The appraisal and internal failure costs were the major contributors in CoQ. The appraisal cost was 46% of the total CoQ in February and 43% of the total CoQ in March. The internal failure cost was 45% of the total CoQ in February and 50% of the total CoQ in March.
The major contributor of appraisal cost was sewing department, where the first time inspection cost had the maximum contribution with approximately 97% of the share.
The major contributors of internal failure cost were cutting and sewing department. In cutting, the major share of 70% of the cost was incurred in parts changing process, whereas in sewing the major share of 80% was due to inline rejection.
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7.2 Conclusion
The Intelligent Calculation Workbook will help the factory in measuring the Cost of Quality on a regular basis. The graphs generated will help in seeing any sporadic changes, which can then be monitored in the factory. Since, the input and output of the data is separate for all the lines, the results can be monitored for each of the lines. The CoQ of the factory is fairly low, and so the efforts are to keep the CoQ stabilized.
98
Chapter 8: Limitations and Scope
99
8.1 Limitations
The project was for duration of three months, so in depth research of all the models of Cost of Quality like Opportunity cost, ABC costing, etc. was not possible. This would have led to a better costing than PAF model. The factory does not have a trims store, so quality cost of trims was not possible.
8.2 Scope
The project can be further applied to Factory 2 in the company. It can also be extended to the head office. This would give Cost of Quality of the whole company The integration of all the models of Cost of Quality can be done after an extensive research of the other models. The integration of the models would give a clearer picture of the costs involved and all the hidden costs would also be highlighted.
100
Chapter 8: Bibliography
101
Books and Journals Crosby, P.B. (1979), Quality is Free, New York: McGraw-Hill Dale, B.G. and Plunkett, J.J. (1995), Quality Costing, 2nd edition, Chapman and Hall, London Dale, B.G. and Plunkett, J.J. (1999), Quality Costing, 3rd edition, Gower Press, Aldershot Juran, J.M. (1951), Quality Control Handbook, 1st edition, McGraw-Hill, New York Feigenbaum, A.V. (1956), Total quality control, Harvard Business Review, Vol.34 Albright, T.L. and Roth, H.P. (1992), The Measurement of Quality Costs: An alternative Paradigm, Accounting Horizons, June, p.15 Plunkett, J.J. and Dale, B.G. (1987), A review of the literature on quality related costs, International Journal of Quality and Reliability Management, Vol.4, No.1, p.40 Porter, L.J. and Rayner, P. (1992), Quality costing for total quality management, International Journal of Production Economics, Vol. 27, p.69 Purgslove, A.B. and Dale, B.G. (1996), The influence of management information and quality management systems on the development of quality costing, Total Quality Management, Vol.7, No.4, p.421 Schiffauerova, A. and Thomson, V. (2006), A review of research on cost of quality models and best practices, International Journal of Quality and Reliability Management, Vol.23, No.4
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Tsai, W.H. (1998), Quality cost measurement under activity-based costing, International Journal of Quality and Reliability Management, Vol.15, No.6, p.719 Whitehall, F.B. (1986), Review of problems with a quality cost system, International Journal of Quality and Reliability Management, Vol.3, No.3, p.43
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To Calculate The Cost of Quality. 2. To Develop An Intelligent Calculation Book For The Further Measurement of Coq of The

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Abstract

Chapter 1: Literature Review

Quality is fitness for use. - J.M. Juran

Quality is conformance to requirements.-P.B. Crosby

1.3 Importance of Quality

1.4 Concepts of Quality cost

Figure 1.1: Components of Cost of Quality

1.5 Evolution of Cost of Quality

1.6 Primary Theories and Historical Background

Figure1.2: Model for optimum quality

Figure 1.3: New model for optimum quality

1.7 Various COQ models

Internal Failure Costs

Scrap Rework Re-inspection Re-testing Material review Downgrading

External Failure Costs

Processing customer complaints Customer returns Warranty claims Product recalls

1.8 Cost of Quality Studies in the Indian Apparel Industry

Table 1.1: Total CoQ as % of sales turnover of each factory

Prevention Cost as % of Total COQ

Factory 1 Factory 2 Factory 3 Factory 4 Factory 5 Factory 6

0.43 0.11 0.89 1.21 0.37 5.26

Table 1.2: All categories of CoQ as %of total CoQ

Table 1.3: Each category of CoQ as % of sales turnover

Chapter 2: About the Factory

2.2 Fabric warehouse

2.3 Spreading and cutting department

2.4 Sewing department

2.5 Finishing department

Chapter 3: About the Project

3.1 Research Methodology

Understanding the Research Design

Identifying the cost centers of the departments contributing to COQ

Apportionment of costs to each activity

Suggestions for better capturing of data for further calculation

Development of system for measurement of COQ on regular basis

Table 3.1: Phases of data collection

3.3.2.5 Customer satisfaction office Inspection at AQL 1.5 of the PO quantity.

Re- inspection cost Repair cost

Re- inspection cost Sewing cost

Pieces inspected First time inspection

Re- inspection cost Repair cost

PO quantity Customer Satisfaction Office

Quantity checked POs failed

Labour cost Labour cost Labour cost

3.3.5.3 Finishing department

3.3.5.3.1 Trim & exam section

Cost-centre # 12: Re- inspection Calculation:

3.3.5.3.2 End of line section

3.3.5.4 Customer satisfaction office

Cost-centre #19: CSO audit re-inspection

Collar Collar Band Cuff

02:56 01:12 02:13

03:01 01:14 02:35

02:46 01:25 02:31

02:57 01:17 02:26

02:49 01:20 02:27

14:29 06:28 12:12

02:53 01:17 02:26 02:12

Table 3.5: Time study of the re- cutting process

Collar Back Cuff Front Sleeve

03:17 03:19 02:41 03:27 03:56

03:29 03:16 02:35 03:42 03:32