Question

Which of the following is likely to be the most expensive cost of quality? 

A) Appraisal costs B) External failure costs C) Internal failure costs D) Prevention costs

Answer 1

Ans:- (b.) External Failure costs

Explaination:-

To understand the question, we first look at what is cost of quality and what are it's types:-

Cost of quality:- It is the cost which is incured by an organisation in order to maintain quality of a product. It is of four types:-

1. Prevention costs:- It is the cost which is spent by a company in order to prevent defects or poor quality in a product.
2. Appraisal costs:- It is the cost which is spent by a company in order to inspect or detect any defects in a product.
3. Internal Failure costs:- It is the cost which is spent by company to remove any kind of defect, if occurs, before shipping it to the customer.
4. External Failure costs:- It is the cost which is spent by company, if a product does not meet it's quality or show any defect, after shipping it to the customer.

Now, after understanding, the all types of cost, you can clearly expect that External Failure Costs, tends to be more expensive, since, the company has to rebuild it or repair it, and again ship it to the customer. And, in compliance to this it also brings dissatisfaction in the customer, which cause huge damage to the company reputation.