Abstract
Many companies struggle with justifying the cost of quality within their supply chain. Outsourcing suppliers to countries such as China has become popular in recent years due to the fact it appears to be more profitable. These outsource decisions do not effectively determine the impacts of quality defects. In this paper we demonstrate a method for evaluating the systemic supply chain risk of poor quality. We introduce a multi-objective stochastic model that uses Six Sigma measures to evaluate financial risk. Results from modeling suggest quality, profit, and customer satisfaction can be evaluated.
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