Abstract

Most privately owned businesses are formed to generate profits. Every year, manufacturers loose a portion of potential profits on covering warranty claims. To minimize warranty costs companies focus on product quality improvements. In this project real historical warranty data of three electronic sensors have been analyzed. Two-parameter Weibull distribution to measure sensors’ reliability have been used. Monte Carlo simulations have been implemented to calculate Total Quality Costs (TQC). The results show that cost of improved products may have an adverse impact on business profit – the main business objective. It has been demonstrated how reliability and TQC interact with each other and specified optimum business solutions. A new ratio representing combined business and customer objectives was introduced – Quality Cost Ratio (QCR). A new term has been proposed – Excessive Quality Cost (EQC). Improved process of selection parts and materials were proposed.