Total Quality Management And Cost Of Production Theory

1.1 Background:

The word quality management comes into our mind means managing quality not only improving product quality. While making a product, the needs and demands of the customers must be kept in mind and the product should be up to people’s expectations. (Simons, 2000) says Total quality management is a very popular approach as it signifies the calibration and rationalization of operating procedures to guarantee high quality and low rates. The success of this approach depends upon the evaluation of manager’s performance. (Abernethy, 2003). A concept tells that conferring to consumer’s perception, quality is, satisfying his or her needs which includes its exterior, its working capability and its dependability.

Quality control is a method

(Huston, 2006). The proper definition of Cost of production per unit can be summed up to the cost which is related to the production divided by the total number of units produced. Cost of production determines the amount of profit firm is able to make and they allow the firm to establish optimal production points (Ricardo February 22, 2005). In order to define more cost of production some researchers made it this happen and called it a cost of production theory. (Culloch, 2003). Cost-of-production theory of value is the theory that the price of an object or condition is determined by the sum of the cost of the resources that went into making it (Zailani, 2004). The cost can compose any of the factors of production (including labor, capital, or land) and taxation (Nicholas, 2000). Cost of production depends upon three costing, fixed cost that firm has to pay whether working or not. (Sasser, 2001) Than comes variable cost that firm uses in their inputs and the last total cost which is the sum of fixed and variable. (Cavazos, 2005). However in order to know about the impact of quality management on cost of production the researchers focuses first on the relationship of quality management with productivity. Improvement of quality requires additional resources and efforts with no increase in the output that the firm sets out to manufacturer. The techniques of improving quality and product are generally not