Three-Stage Process Cost Model of Total Quality Management Practice in a Decentralized Firm

Abstract

In today’s tough competitive economy, Total Quality Management (TQM) is one of the management strategies that helps to keep organizations on track. This management philosophy integrates everyone in an organization on the bases of continuous improvement efforts. This approach empowers the managers to lead, communicate, reward, recognize, and make decisions as well as tracks how accurately costs of quality are accounted for and managed on a continuous improvement basis for the satisfaction of both employees and customers. This aim of this paper is to present a three-staged process cost model in a decentralized system firm. The quality-centered, customer-focused, fact-based, team-driven, senior-management-led process to achieve an organization’s strategic imperative through continuous (Abdullahi, 2011). process improvement The objective of this paper is to model a threestage process cost model as it’s relates to TQM in a decentralized firm. It presents organizational benefits of TQM by examining quality decisions within a decentralized firm. Specifically, the study investigates whether quality decisions can be made in a decentralized manner, and if TQM principles can improve firm competitiveness. The researcher assumed a serial production system with a decentralized decision making as obtained cost model can be compared favorably with the two-stage process formulation but this approach improves on the previous by adding a stage ahead.