EXPLORATORY EVIDENCE ON THE BEHAVIOR OF QUALITY COSTS

This study examines the time series behavior of quality costs reported by 49 manufacturing units of 21 companies. Analyses using both pooled annual data and plant-specific quarterly data indicate that the major ity of units in the sample achieved ongoing reductions in nonconforman ce costs while maintaining or reducing reported prevention and apprais al costs. These findings are consistent with recent quality-based lear ning and continuous improvement models which suggest that, once an eff ective quality program is established, companies can reduce nonconform ance costs over time with little or no subsequent increase in conforma nce expenditures.