A cost of quality decision support model for lean manufacturing: activity‐based costing application

Purpose – The purpose of this article is to introduce a novel cost of quality (COQ) decision support model (DSM), which can help management to track the effect of changing each incorporated value added (VA) and non‐value added (NVA) activity on each other's cost as well as on the quality costs in real time. Design/methodology/approach – System dynamics (SD) is used as the modelling tool due to its dynamic characteristic and its advantages; such as the possibility of integrating qualitative factors and defining learning loops. In order to enhance the performance of the model, activity‐based costing (ABC) cost structure has been integrated. Findings – Lean manufacturing (LM) focuses on the methodologies and approaches that can help an enterprise to reduce the waste factors in its processes. Few studies have proven the capability of ABC in providing valuable cost information for LM implementation due to its activity‐oriented nature. This study is another step towards showing the advantages of ABC in controlling the COQ via using a novel SD modelling methodology. Originality/value – The model can guide management to establish an LM‐oriented quality policy and control the incorporated costs effectively.