Assessing External Losses Caused by Rejects at Mechanical Engineering Enterprises

Abstract

A methodology for assessing external losses occurring at mechanical engineering industry enterprises is presented. Primary attention is focused on the fact how accounting for these losses promotes managing production risks. A comprehensive approach to the assessment of external losses that includes analyzing not only quantitative characteristics of defects, but also financial costs required for the elimination thereof has been proposed. Particular importance is given to plotting a Pareto diagram that makes it possible to reveal the most critical types of defects from the standpoint of economic consequences. Practical examples for applying the proposed methodology at real enterprises, as well as its impact on improving the efficiency of risk management, are considered.