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    Cost

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    hsWS
    The cost of quality refers to the costs associated with preventing poor quality, appraising quality, and failures to meet quality standards. It includes costs like reworking products, retesting processes, and correcting errors. Quality costs fall under three categories: prevention costs for activities that avoid defects, appraisal costs for inspection and auditing, and failure costs that result from internal defects before delivery or external defects after delivery. Reducing the costs of poor quality requires focusing on prevention rather than remediation.

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    Cost

    Uploaded by

    hsWS
    116 views2 pages
    The cost of quality refers to the costs associated with preventing poor quality, appraising quality, and failures to meet quality standards. It includes costs like reworking products, retesting processes, and correcting errors. Quality costs fall under three categories: prevention costs for activities that avoid defects, appraisal costs for inspection and auditing, and failure costs that result from internal defects before delivery or external defects after delivery. Reducing the costs of poor quality requires focusing on prevention rather than remediation.

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    MBA Cost of Quality

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    The cost of quality refers to the costs associated with preventing poor quality, appraising quality, and failures to meet quality standards. It includes costs like reworking products, retesting processes, and correcting errors. Quality costs fall under three categories: prevention costs for activities that avoid defects, appraisal costs for inspection and auditing, and failure costs that result from internal defects before delivery or external defects after delivery. Reducing the costs of poor quality requires focusing on prevention rather than remediation.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    116 views2 pages

    Cost

    Uploaded by

    hsWS
    The cost of quality refers to the costs associated with preventing poor quality, appraising quality, and failures to meet quality standards. It includes costs like reworking products, retesting processes, and correcting errors. Quality costs fall under three categories: prevention costs for activities that avoid defects, appraisal costs for inspection and auditing, and failure costs that result from internal defects before delivery or external defects after delivery. Reducing the costs of poor quality requires focusing on prevention rather than remediation.

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    Cost of Quality

    It’s a term that’s widely used – and widely misunderstood. The “cost of quality” isn’t the
    price of creating a quality product or service. It’s the cost of NOT creating a quality product
    or service. Every time work is redone, the cost of quality increases. Obvious examples
    include:
    • The reworking of a manufactured item.
    • The retesting of an assembly.
    • The rebuilding of a tool.
    • The correction of a bank statement.
    • The reworking of a service, such as the reprocessing of a loan operation or the
    replacement of a food order in a restaurant.

    In short, any cost that would not have been expended if quality were perfect contributes to
    the cost of quality.

    Total Quality Costs:


    As the table below shows, quality costs are the total of the cost incurred by:
    • Investing in the prevention of nonconformance to requirements.
    • Appraising a product or service for conformance to requirements.
    • Failing to meet requirements.

    Quality Costs—general description:


    Prevention Costs:
    The costs of all activities specifically designed to prevent poor quality in products or
    services.
    Examples are the costs of:
    • New product review
    • Quality planning
    • Supplier capability surveys
    • Process capability evaluations
    • Quality improvement team meetings
    • Quality improvement projects
    • Quality education and training

    Principles and practices of management | Organisational Behaviour | Accounting for management | Managerial Economics
    Business Communication | Business law | Production and operation management | Financial management
    Human Resource management | Strategic management | Management Information system | Personnel administration
    HR development and training | Industrial relations and labour laws | Organisational development
    Performance and potential management | Total Quality management | Quantitative techniques | Business Environment
    Marketing management
    Appraisal Costs:
    The costs associated with measuring, evaluating or auditing products or services to
    assure conformance to quality standards and performance requirements.
    These include the costs of:
    • Incoming and source inspection/test of purchased material
    • In-process and final inspection/test
    • Product, process or service audits
    • Calibration of measuring and test equipment
    • Associated supplies and materials

    Failure Costs:
    The costs resulting from products or services not conforming to requirements or
    customer/user needs. Failure costs are divided into internal and external failure
    categories.

    Internal Failure Costs: Failure costs occurring prior to delivery or shipment of the
    product, or the furnishing of a service, to the customer.
    Examples are the costs of:
    • Scrap
    • Rework
    • Re-inspection
    • Re-testing
    • Material review
    • Downgrading

    External Failure Costs: Failure costs occurring after delivery or shipment of the product
    and during or after furnishing of a service to the customer.
    Examples are the costs of:
    • Processing customer complaints
    • Customer returns
    • Warranty claims
    • Product recalls

    Principles and practices of management | Organisational Behaviour | Accounting for management | Managerial Economics
    Business Communication | Business law | Production and operation management | Financial management
    Human Resource management | Strategic management | Management Information system | Personnel administration
    HR development and training | Industrial relations and labour laws | Organisational development
    Performance and potential management | Total Quality management | Quantitative techniques | Business Environment
    Marketing management

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