WHAT IS PROFIT AND HOW IT CAN BE INCREASED..??

We know that Six sigma seeks to improve the quality of the process by reducing the defects and waste.

In this way it seeks to increase the profit of the company.

So what basically profit is :-  Profit is defined as the difference between Sale and product cost.

i.e   Profit   = Sale   - Product cost

PRODUCT COST  =  Other cost  +  Quality cost

where

OTHER COST  :--        

                                      

1.)  Cost of material

2.)  Cost of labour

3.)  Cost of machine

 4.)  Cost of energy

We have no control over Other cost because it is market driven and we cannot reduce that cost.

QUALITY COST  :--

     

          1.)  Cost of failure 

                2.)  Cost of  non-failure

We can control the Quality cost because it is organization driven. 

We can control it by implementing Six sigma and Improving the Quality and reduce the defects in this way reducing the Quality cost.

;)