LIMITATION OF QUALITY COST MODELS IN AGRICULTURE

Vilija Aleknevičienė, Povilas Vanagas

LIMITATION OF QUALITY COST MODELS IN AGRICULTURE

Globalization of markets increases competitiveness in agricultural sector, so the companies and farms need to improve quality management and be able to estimate efficiency of this process. The efficiency depends on total quality costs, which have some particularities in agriculture comparable with other sectors of industry. There are two main results from this research. The first result is the identification of particularities of quality costs in agriculture. Some of failure costs are influenced by natural, climate and biological factors and are uncontrollable. For better quality costs management considering these factors the authors suggest to deploy internal and external failure costs into controllable and uncontrollable ones. The second result is proving that earlier developed quality cost models (QCM) have the limited value in agriculture. “Force major” makes more complicated the decisions making of quality costs management and linking towards minimum total quality costs. Moreover, these models are focused on the cost of optimal quality level and ignore changes of revenue. Efficiency of quality improvement process should be estimated by quality costs to sales revenue ratio.

Key words: quality, costs, non-conformance, models, improvement.
JEL Classification System: M21 – Business Economics, Q10 – General Agriculture.

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