Description

Total Quality Management

Dec 2026 Examination

 

Q1 A food processing facility is concerned about escalating costs due to frequent rework, rejected batches, and warranty service for defective products. A detailed review of cost of quality (COQ) reveals a disproportionate focus on appraisal and failure costs, with limited investment in prevention activities. Management decides to implement activity-based costing (ABC) to trace quality-related expenses to specific processes and identify opportunities for cost optimisation. How should management integrate activity-based costing data with cost of quality categories to prioritise preventive quality investments? Demonstrate how this combined approach can inform strategic decisions for resource allocation and sustainable cost reduction. (10 Marks)

Ans 1.

Introduction

Rework, rejected batches, and warranty service are not random bad luck for this food processing facility, they are the visible symptoms of a cost of quality structure tilted heavily toward appraisal and failure, with prevention left underfunded. Activity-based costing gives management a genuinely reliable way to trace these quality-related expenses down to the specific processes actually generating them, turning a vague sense that quality costs too much into a precise, actionable map of where preventive investment would pay off most.

Concept and Application

Revisiting the Four Cost of Quality Categories

Cost of quality splits naturally into prevention, appraisal, internal failure, and external failure,

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Q2 (A) A startup consumer electronics brand is planning to launch a smart home hub aimed at young professionals in metro areas. To accelerate time-to-market, the company’s R&D team plans to streamline the product design by benchmarking only against technical features offered by leading competitors. However, after a pilot launch, user feedback highlights dissatisfaction with voice command accuracy and device compatibility, factors not prioritized during development. The CEO is now considering the introduction of QFD to ensure true customer needs are incorporated, but worries about the financial and resource impact on a lean startup. Assess the strategic trade-offs between a competitor-focused design process and customer-centric deployment through QFD. Evaluate how effective QFD implementation, even with limited resources, could improve customer satisfaction and the startup’s market position. Provide a justified recommendation for the CEO. (5 Marks)

Ans 2(A).

Introduction

Benchmarking only against competitor features let this startup ship a smart home hub fast, but speed came at the cost of the very customer needs the pilot launch revealed were missing. Voice command accuracy and device compatibility were never on the competitor feature checklist, yet they turned out to matter most to actual users, which is exactly the gap Quality Function

 

Q2 (B) ‘GreenHarvest Foods’ is contemplating a transition from a transactional supplier model to a partnership-based approach. Currently, GreenHarvest sources fresh produce from the cheapest suppliers available, leading to frequent supplier changes, inconsistent quality, high inspection costs, and occasional supply shortfalls. The leadership is concerned about risks but hesitates to invest in supplier development due to potential increases in initial costs and resource demands. At the same time, the competitive market is emphasizing traceable, high-quality sourcing. Evaluate the sustainability, risk, and brand implications of GreenHarvest’s current transactional supplier policy versus a proposed long-term partnership model. Assess which model offers superior value in the context of total quality management, justifying your recommendation with areas for further improvement. (5 Marks)

Ans 2(B).

Introduction

GreenHarvest Foods built its supply base on short-term transactional contracts, awarding orders to whichever supplier quoted the lowest price for that cycle, a model that kept input costs down but left quality, consistency, and sustainability almost entirely outside the company’s control. Shifting toward partnership-based supplier relationships, grounded in total quality management principles, would let GreenHarvest influence the very conditions that determine product quality