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problem1) Discuss the role that efficient logistics system plays in encouraging a high level of foreign trade.

problem2)(a) Distinguish between standards and benchmarks in Manufacturing management.

(b) “Customer is sole centre of any TQM process.”Comment.

Section – B Case Study

Siddhi Pharama is the leading manufacturer of different pharmaceutical formulations like tables, capsules, syrups etc. Besides generic formulations, a number of products in their brand name are also produced. Though a young company, Siddhi Pharma has made significant achievements in the pharmaceuticals industry. This is the result of their focus on quality.

Siddhi Pharama was established in the year 1990 to manufacture quality pharmaceutical formulations. Its Directorss, who are Pharmacy graduates, back the organization. With the knowledge base and the firm’s dedicated efforts, firm’s product range has been expanded and quality has been improved upon. Objective is to make products market friendly in India. The main markets of the Siddhi Pharama in India are the supplies to DGS&D. The firm is also supplying to marketers who are further controlling the distribution system. Due to increased competition the company is planning to go in for export market.

Hence, Siddhi Pharama is today a growing firm. Company’s manufacturing facility is strategically located in the backward area of U.P. All the main inspecting authorities like the Drugs Control Department of Director General of Health Services have approved their manufacturing facilities. For quality control and development of products company has their own in-house and well-equipped laboratory, duly approved by abovementioned inspecting authorities. Besides, well-equipped testing laboratory, Siddhi has the following sections.

Tablet section for manufacturing of uncoated tablets, sugar coated tablets, film coated tablets. Liquid syrup section for manufacturing of various syrups, suspensions and solution etc.

As far as quality related costs are concerned at Siddhi Pharama, the awareness among the Director, related to the topic is very less. The Company does’nt have any organized structure to deal with the problem. The Company does’nt work open it, but yes, they come to know about the cost of poor quality or cost of non-quality when the whole of the batch of medicines or syrups is rejected in any stage of the supply chain and the debit note is raised in favour of them.

Quality assurance has long been a tradition with Siddhi Pharama Quality is the priority in all activities carried out in the company. This can very well be understood while looking at their operations deeply. The company has a well equipped testing laboratory comprising of machines like HPC testing machine, UV machine for raw material. DT machine (disintegration time). PH meter to check acid content.

Prevention costs: This cost can very well the understood by looking at the internal environment of the company. The company has a structured way to provide a dust free environment, which is ultimately reflected in their products when they clear every stage of inspection. The company pro-videos quality training to its staff members in order to deal with the problem and to prevent costs of poor quality. The company has a proper maintenance department to ensure smooth working of machine.

Appraisal costs: This cost can be looked upon in their well-equipped testing laboratory. Each of the tests performed in the Lab are to avert any kind of cost, which can arise in future. For e.g., UV machine in the Lab is to check raw material and the absence of this machine can set up huge costs for them when the whole batch of tablets is found defective in further tests. Thus we can see that the company has invested in the appraisal cost but this all is to save future costs which the company will have to bear in the absence of the well-equipped laboratory.

Internal Failure: The costs related to internal failure are very high if the batch is found Defective. For e.g., if medicine is found defective in the later stages but inside the factory and costs could be very high because then the whole lot has to be scrapped. But if defect is found in the initial stage, the costs attached to it could be less. So the costs attached to internal failure completely depend upon which stage the defect is detected.

External Failure: External failure means a lot to the company because this mean loss of image and goodwill. Company’s representative continuously visits the medical practitioners and if any patient comes with the complaint then this completely destroys the company’s image in the market and the company could have to invest a lot again to build goodwill. External failures could also be looked into when the whole of the batch is rejected at the customers place and the company have to invest a lot to come out of the problem.


1. Analyse the case in the light of quality cost implementation.

2. What are the improvements you can suggest to the company for expansion.

Management Theories, Management Studies

  • Category:- Management Theories
  • Reference No.:- M93182

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