Quality Gate Placement Comparator

How this works

An inspection gate placed earlier catches defects before more value gets added to them, cheaper to scrap or rework, but running an inspection point costs something per unit passed through it, at every unit, defective or not. A gate placed later inspects fewer points, cheaper per unit, but a defect caught late has more sunk cost riding on it. This engine prices both effects together instead of comparing inspection cost alone.

Key terms

• Inspection cost: the per-unit cost of running a gate, applied to the full volume, since every unit passes through before you know which are defective.
• Downstream cost multiplier: how many times more expensive a defect is once it is caught later in the process instead of earlier.

Assumptions

• One defect rate applies regardless of gate placement
• Inspection catches every defect that reaches the gate

Limitations

• Two gate placements only, not a multi-gate process map

Sources

Standard cost-of-quality treatment (Crosby, Quality Is Free; Juran, Juran's Quality Handbook), the principle that a defect's cost rises the further it travels through a process before detection.

Worked example

At 1,000 units, a 5% defect rate, and a $20 defect cost caught early, the late gate's cheaper $0.20/unit inspection versus the early gate's $0.50/unit looks like the obvious savings. But a 6x downstream cost multiplier means a defect caught late costs $120 instead of $20, pushing the late gate's total to $6,200 against the early gate's $1,500. The cheaper inspection point is not automatically the cheaper overall choice.

Common use cases

• Deciding where in a process to add or move an inspection point
• Checking whether a cheaper late-stage inspection is actually saving money once defect cost is priced in
• Continuing from Scrap Cost Decision's defect economics into a process-placement decision