Question

Please discuss the cost of quality as a combination of cost of conformance and cost of no conformance

Answer 1

Cost of Quality (COQ) is a measure that quantifies the cost of control/conformance and the cost of failure of control/non-conformance. In other words, it sums up the costs related to prevention and detection of defects and the costs due to occurrences of defects.

EXPLANATION

• Cost of Control (Also known as Cost of Conformance)
  • Prevention Cost
    • The cost arises from efforts to prevent defects.
    • Example: Quality Assurance costs
  • Appraisal Cost
    • The cost arises from efforts to detect defects.
    • Example: Quality Control costs
• Cost of Failure of Control (Also known as Cost of Non-Conformance)
  • Internal Failure Cost
    • The cost arises from defects identified internally and efforts to correct them.
    • Example: Cost of Rework (Fixing of internal defects and re-testing)
  • External Failure Cost
    • The cost arises from defects identified by the client or end-users and efforts to correct them.
    • Example: Cost of Rework (Fixing of external defects and re-testing) and any other costs due to external defects (Product service/liability/recall, etc)

FORMULA / CALCULATION

Cost of Quality (COQ) = Cost of Control + Cost of Failure of Control

where

Cost of Control = Prevention Cost + Appraisal Cost

and

Cost of Failure of Control = Internal Failure Cost + External Failure Cost