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# Costing Calculation for Inspection Activity

ianchan

Costing Calculation for Inspection Activity | 21 April, 2002

Hi Mates,

Previously posted below question, in another thread, but it din get any reply, so posted afresh in a hope some kind folk can shed some light...

***extract commencement*** Out of curiousity and in the name of learning new stuff, can you share with us how does your team, calculate the cost of inspection? Is inspection an additional chargable item in the quotation sheet?

To quote your posting : "Just a side note, one of the most expensive downsides of the 'mass inspection' is when the inspector over-specifies the inspection (inspects to a higher level than your customer will pay for) and causes expensive 'rework' that eats into profits but benefits no one."

Am very interested to learn how to define and establish the quality level (in terms of \$ and cents) that the customer pays? Any formulae or calculation basis to determine this?

For our side quotations, we only have a fixed costing based on processes (machine/manual) performed to produce the product. Dun think inspection cost (apart from ICT and X-RAY) is factored in? I believe majority of customers these days take it that QC inspection is a inherent factor into any process run for their product (therefore should not be a seperate chargeable cost?).

What do the other folks, in the shoes of a customer, think? Kindly share! ***extract ends here***

Costing Calculation for Inspection Activity | 24 April, 2002

We define and establish the quality level that the customer pays by defining inspection requirements and criteria. We determine the costs of doing that amount of work, as we do other work => * Determine the separate things you have to accomplish. * Count the number of times you need to do those things. * Price the amount of work.

If you need to inspect your work to meet your customer expectations, then inspect your work. [Some of our clerks type text without errors. Other clerks make errors and have to check their work.] Your customer should: * Not be concerned whether your inspect work or not. * Be concerned about a supplier that provides the expected product at the lowest total cost.

If I were your customer, I�d expect you to bill for deliverable items that are listed on my PO. If you deliver [and invoice] something other than what�s on my PO, I�m not going to pay for it and may even return it to you.