Acceptable quality level versus zero-defects: some empirical evidence

Within the literature on quality control there is a debate between two competing views of the cost of quality control. The first of these is the concept of an acceptable quality level as put forth by Juran and later, by Taguchi using the well known Taguchi Loss Function. This view proposes that an optimal level of quality exists for a firm wherein it balances the cost of conformance to quality standards against the cost of non-conformance. The second view is that of zero-defects as expounded by Schneiderman, Crosby and others. Here it is argued that optimal quality exists only at the zero-defect level and total cost of quality continue to fall as the zero-defect level is approached. In this research we demonstrate under fairly mild conditions that these two apparently contradictory views of quality can be complementary to each other. The research develops a model of total quality costs wherein the short-run quality control problem is consistent with the acceptable quality level view while the long-run quality control problem is consistent with the zero-defect view. The consolidation of these two views is similar in form to the traditional model utilized in economics wherein a firm at a point in time operates on a short-run average cost curve while simultaneously following a long-run average cost curve over time.