Automotive Headlight Manufacturing: Cost Analysis

Direct Costs

These are costs that can be directly evaluated; that is, it is possible to calculate their economic value.

Controllable Costs

These are all derived from actions that the company undertakes to prevent possible defects.

Costs Arising

These are costs that occur due to faulty production.

Indirect or Hidden Costs

These are costs that are difficult to calculate, and in many cases, not even perceived, but they exist.

Client-Side Costs

These cover the cost of replacement or compensation for defective products or poor services rendered.

Cost of Customer Dissatisfaction

This refers to when a customer pays for a product or service expecting minimum requirements to be met, and when they are not, it creates dissatisfaction.

Cost of Loss of Reputation

The effects of poor quality spread quickly in the market, and customers may lose confidence in the company.

Cost of Prevention

These are all costs caused by wanting to operate properly.

• Training costs
• Defining a strategy for the company
• Implementation of ISO 9000
• Monthly costs of prevention:
  • Building maintenance plans
  • Ensuring the quality of providers
  • Reviewing the design and prototyping
  • Derivative actions to try to detect anything that does not satisfy the customer

Cost Assessment

These are costs caused by trying to ensure that an activity is done well.

• Cost-control of the production quality itself
• Control of materials delivered by suppliers
• Other costs:
  • Performance review of equipment (calibration)
  • Certifications and approvals of new products
  • Reviewing measurements of pieces

Cost of Internal Errors

These are all costs incurred because of poor quality that are detected *before* the product reaches the customer.

• Defective parts
• Recovered parts
• Hidden costs

Cost of External Failures

These are all costs derived from defective parts that have been delivered to the customer.

• Guarantees
• Discarded by-products
• Line stoppages
• Lawsuits
• Hidden costs

Optimum Value

In the first case, all costs arising from working correctly must be borne. In the second case, the consequences of not working properly would have to be borne.

• The cost of quality control
• Optimal value and total cost