Question

Which of the following is an external failure cost?

a.Field testing

b.Design reviews

c.Warranties

d.Vendor certification

Answer 1

C) External failure costs includes warrenty. The explanation to this are:

Expernal failure costs are the costs which are incurred due to product failures after they have been sold to customers.

External failure cost is a component of the cost of quality, and it is incurred if in case a defective product reaches the customer and it fails during the period of its use. Warrenty is althr most common component of these, thus we can understand as warrenty refers to a written guarantee, issued to the purchaser of an article by its manufacturer, promising to repair or replace it if necessary within specified period of time.

By this we can see rhat warrenty is the cost incurred by the company after the product is sold to the customer, which correctly defines the terms of external failure cost. Therefore, we can say that warrenties are external failure cost.

While looking on other options,

Field testing means creating, using and iterating the offering before offering it to the customers. As it is done before selling products to customers, it dies not meets the terms of external failure cost. Hence it is not the correct answer. If we look further, field testing is a critical step in the iteration cycle, helping in finding flaws in the offering. It's purpose is to minimize risk by making sure that the offering works before trying to sell it.

Moving to another option, design reviews, it is a milestone within a product development process whereby a design us evaluated against its requirements in order to verify the outcomes of previous activities and identifying issues being committed.

As we can see this process done during product development means it is done before delivering to the customers. Hence its also not the option to be selected for external failure cost.

Moving to the last option that is vendor certification partnership which is successful with the full involvement and agreement of both partners. This bond is made before the services or products are delivered. Hence its also not the correct option to be selected.

So this is obvious from the above discussion that warrenties is an external failure cost.