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A quality risk model based on supply chain perspective

Supply chain is a dynamic system and there are a lot of uncertainties in supply chain operations. Quality risk transmits through the supply chain when quality issues are not managed and control appropriately. This may result in increasing Cost of Quality (COQ) and effecting customer satisfaction level. To reach a win-win situation, suppliers need to determine their quality risk management level by considering not only their current COQ, but also the potential future recalls, which affect other partners' interest. Based on the current literature, quantitative models which can simulate the risk transmission along supply chain are seldom used. The contribution of this paper is to quantify the quality risk and analyze risk transmission along supply chain. This paper provides mathematical models to simulate the risk transmission, thus helping suppliers to determine the optimal quality risk management level. In the end, we apply this model in a case company to validate its accuracy.