Assignment 6 Cost of Quality

Objective

This assignment examines the importance of the cost of quality to an organization. We will gain a better understanding of how we can measure the cost of quality in an organization and what benefits can be gained from the cost of quality.

Scenario

This is a story that has been in the news since October 2018. Boeing is the world's largest manufacturer of commercial jetliners, aerospace, defense and security systems. One of Boeing's newest jets is the Boeing 737 Max passenger airliner, which was involved in two fatal and tragic crashes. The first was Lion Air Flight 610 on October 29, 2018, and the other, Ethiopian Airlines Flight 302 on March 10, 2019. There were Three hundred and forty-six (346) causalities in the crashes. Subsequently, all the 737 Max airliners were grounded from March 2019 to December 2020. The plane was grounded because the FAA had found evidence that showed similarities in the two incidents.

More details are readily available online.

The Story

Boeing has been the premier manufacturer of commercial jetliners for decades. Today, the company manufactures the 737, 747, 767, 777 and 787 families of airplanes and the Boeing Business Jet range. New product development efforts include the Boeing 787-10 Dreamliner, the 737 MAX, and the 777X. More than 10,000 Boeing-built commercial jetliners are in service worldwide, which is almost half the world fleet. The company also offers a complete family of freighters, and about 90 percent of the world's cargo is carried onboard Boeing planes.

The Challenge

In November 2018, a week after the first accident (Lion Air), Boeing issued a bulletin supplementing the flight operations manual to warn that the MAX could pitch down automatically when a sensor fails and gives further instructions on how pilots should respond to the automatic pitch down. The FAA supported this. However, after the bulletin was issued, there was a second accident. At this time, both Boeing and FAA were under extreme pressure to resolve the nose pitching issue. It was later found that both Boeing and FAA purposely did not mention in the bulletin that the new Maneuvering Characteristic Augmentation System (MCAS), which was the cause of the nosedives, was not included by Boeing and not included in crew manuals and training. Boeing's pressure from customers, world governments (US Congress) and pilots' association, etc., was dramatically increasing. Boeing was under investigation by the US Congress, Transportation Department, FBI, NTSB, Inspector General and special panels.

The Response

Engineers from FAA, Boeing and NTSB, uncovered other design problems with the flight computers and cockpit displays. This was over and above the MCAS system. Lion Air and Ethiopian Airlines found the crashes were due to aircraft design, maintenance issues and pilots' actions, in their investigations.

Maintenance issues and pilot actions, were due to inadequate training by Boeing for the 737 Max.

With this increasingly accelerating pressure on Boeing and the FAA, in August 2020, they published the requirements for upgrading the aircraft and improving pilot training. This was a 20-month grounding that caused Boeing an estimated $20 Billion US in fines, compensation, and legal fees. This also caused Boeing to have orders of 1,200 737 Max, cancelled; costing Boeing $60 Billion US in lost sales. Once Boeing upgraded the planes and provided the necessary training, starting in November 2020, the 737 Max began to return to service, and Boeing was able to complete orders for approximately 400 737 Max, which had been placed on hold.

Analyze the above scenario using these 4 Costs of Quality:

Prevention cost

Appraisal cost

Internal failure cost

External failure cost

Your detailed analysis and report should consider and reflect on:

The root cause(s) of the issue?

What should have been done to prevent the current situation?

What was done to turn the situation around?

How did Boeing manage this crisis?

Cost of human life.

Cost to improve the flight control system.

Defense and settlement of legal claims against the company.

Cost associated with the loss of further orders.

Cost of damage to the companys brand.

Constraints

Follow all reporting and assignment guidelines. Do not produce a Q & A format report. Instead, logically embed the answers in your report.

Length minimum 1000 words.