Question

Swingtime Enterprises manufactures and sells a line of outdoor pool and patio furniture. Production supervisors have been concerned about the number of products that have had to be reworked or scrapped due to the discovery of defects.

You are having coffee with the president and she has heard of the Cost of Quality Report. Looking for free advice, she asks you to give her specific examples of types of quality costs at Swingtime. Complete the questions below clearly and specifically in relation to the pool and patio furniture manufacturing company.

Give an example of a prevention cost Swingtime Enterprises might incur as it manufactures pool and patio furniture.

Give an example of an appraisal cost Swingtime Enterprises might incur as it manufactures pool and patio furniture.

Give an example of an internal failure cost Swingtime Enterprises might incur as it manufactures pool and patio furniture.

Give an example of an external failure cost Swingtime Enterprises might incur as it manufactures pool and patio furniture.

Answer 1

Prevention Cost-

The costs incurred to avoid or minimize the number of defects at first place are known as prevention costs .Some examples of prevention cost are Training workers to various process of manufacturing to reduce defects, Forming Quality circles to involve the employees for maintain quality standards, Providing support to suppliers to get raw materials of the highest quality, etc.

Appraisal Cost-

Cost that are incurred to identify defective products before they are shipped to customers are called as appraisal cost.Some examples of appraisal cost are Testing and inspection of the raw materials, Testing and inspection of the final product, etc.

Internal failure cost-

Internal failure costs are those costs that are incurred to remove defects from the products before shipping them to customers.Some examples are Rework of finished products, Scrap and defective cost, Re-testing and Re-inspection of reworked products,etc.

External failure cost-

Cost arising due to shipping of defective products to the customer is called as External failure cost. Some examples of this are Warranty repairs and replacements, Sales lost due to loss in reputation, Product recalls, Liability arising from defective products,etc.