A research on the measurement of quality costs in the Turkish food manufacturing industry

Abstract

The measurement of quality costs is a good indicator of the quality and the overall performance of a firm. There have been many attempts to measure quality costs in both theoretical and empirical research. However, there is a lack of research about the measurement of quality costs as far as the food industry is concerned. Therefore, the purpose of this study is to measure quality costs with specific reference to the Turkish food manufacturing industry. In contrast to many previous studies made with cross-section or time series regression, panel regression method has been used to analyse the relation between conformance costs and non-conformance costs in seven leading Turkish food manufacturing firms, for the period 2000–2005. It has been found that when the conformance costs are increased by 1%, the non-conformance costs decline by 0.83%. This also means that the basic premise of the traditional quality cost model has been confirmed. That is to say, there is a trade-off between conformance and non-conformance costs and the non-conformance costs can be reduced by increasing conformance expenditures. In conclusion, the negative relation found between conformance and non-conformance costs can rather be attributed to external failure costs than internal failure costs.

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