Is there a simple formula for working out quality costs from a customer complaint?

Question

Is there a simple formula for working out quality costs from a customer complaint?

Answer 1

First of all determine if the customer complaint is an individual or could be common to other customers, if that affect only one, then it is easy to calculate , although the quality costs in many cases are intangible, but can be estimated.

Suppose that the improve of quality based on one complaint could affect lot of customers and business , then you need to know all the parameters and variables, then quality cost and expected revenue could be estimated

Answer 2

Product cost - cost of servicing the product to bring it to a level where it is use full again.

There are other factors which must be considered.

Such as:

Application and performance

Cost of down time, not performing

Cost to replace vs service including travel for technician.

The significance of the customer, past sales and potential for new sales vs one time user/buyer. This one requires history and loyalty factor.

Basically, Quality Costs depends.

Application, Significance of not having the service of the product vs Cost of Service.

Also, the level of the complaint must be understood. If a customer can still use a product, but is limited vs no use and has great hardship.

You need to evaluate the extremes, put a weighting factor on these situations and a $$ value. Determine the impact and probability of occurrence. Matrix form.

Severity of impact across the top (L - R) and Probability (Top - Bottom) .

The remedial action can be determined. Based on where you determine these two characteristics lie.

Look into Taguchi - The Loss Function