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Selecting quality improvement projects and product mix together in manufacturing: an improvement of a theory of constraints-based approach by incorporating quality loss

The quality of products and processes needs to be improved continuously in today's competitive environments. Unless these improvement efforts are focused properly, companies might not achieve desirable results in terms of sales, quality and productivity. Many quality improvement (QI) approaches have a limited evaluation of the factors involved in the selection of QI projects. Theory of constraints (TOC) has been proposed by some researchers as a remedy for the better selection of QI projects. However, these TOC-based approaches do not accurately capture ongoing product quality and its long-term effects on sales. Quality loss, on the other hand, can be used as a measure of customer dissatisfaction, which in turn determines the sales. The paper proposes an improvement of a TOC-based algorithm by incorporating quality loss with it. Using two simple manufacturing examples, it demonstrates that quality losses affect the product mix and QI project selection. It provides suggestions for further research directions for wider applicability of the proposed approach.