Question

Which of the following is the cost of quality classification for costs, such as scrap or rework, that occur before a product is shipped to a customer?

Group of answer choices

A) Appraisal costs

B) Prevention costs

C) External failure costs

D) Internal failure costs

E) Rework and wastage

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Answer 1

Cost of quality is also known as quality cost: it is the cost incurred during the prevention/removal of defects from the products. The cost of quality is based on 2 factors :  cost of good quality, cost of poor quality

Threfore Cost of quality = cost of good quality + cost of poor quality

Cost of quality is basically divided into 4 different types of categories :

1:Prevention Cost

2: Appraisal Cost

3: Internal Failure Cost

4: External Failure Cost

Prevention Cost, Appraisal Cost come under Cost of good quality.

Internal Failure Cost, External Failure Cost come under cost of poor quality.

1: Prevention Cost: It is good to remove the defects in the first place than to find them in latter stage of the product. It can cost more in latter stage. So, the cost incurred to minimize the defect at the intial stage is known as Prevention cost. Examples: Training workers, Quality Engineering, Testing and development of new product.

2: Appraisal Cost: it is cost involved in producing a better product , by following standard quality measures. Sometimes it also the cost incurred by removing the defect product before it is shipped to the client. Examples: regular quality audits, material inspections.

3: Internal Failure Cost: it is cost regarding the defects that were found before the product, could reach the customer. Examples: products that were rejected, rework cost.

4: External Failure Cost: it the cost involved when the defects were found after the product is shipped to customer/client. Examples: Complaints from customers, Due to improper packaging