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The purpose of this paper is to explore the impact of the cost of quality (COQ) expenditure allocations on a capacitated supply chain (SC) network.Design/methodology/approachThis paper proposes a non-linear optimization model which integrates the opportunity cost (OC) (i.e. customer satisfaction cost), into the COQ with consideration of the QL in the supply chain network design decisions. In addition, it examines the effect of considering an investment at each SC echelon to ensure the best overall QL. A numerical example is presented to illustrate the behavior of the model.FindingsThe results show how the QL, COQ and facility location decisions change when incorporating the OC, investments and transportation costs into the SC model.Originality/valueThe novelty of this paper is that it considers the effect of OC, investment at each echelon and transportation costs on SC design by minimizing the overall spending on the COQ. These issues have not been explored, and for that reason, this paper contributes to the understanding of the critical factors that optimizes the SC COQ.
The TQM Journal – Emerald Publishing
Published: Apr 24, 2019
Keywords: Cost of quality; Investment allocation; Quality level; Supply chain network design
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