A product that meets or exceeds its design specifications and is free of defects is said to have high quality of conformance. Preventing, detecting and dealing with defects cause costs that are called quality costs or costs of quality
Categories of Cost of Quality
Internal Failure Costs
The costs of deficiencies discovered before delivery. We associate deficiencies or nonconformities with the failure to meet explicit requirements or implicit needs of external or internal customers.
Internal failure costs come from deficiencies discovered before delivery. These include all the costs associated with the failure (nonconformities) to meet the needs of your external and internal customers. ...view middle of the document...
• Allowances: The costs of concessions made to customers due to substandard products accepted by the customer. Customer chose to use the product as is.
The costs incurred to determine the degree of conformance to quality requirements. For example inspection cost is an appraisal cost.
Appraisal Costs are quality cost that determines the quality of a product. These costs are normally associated with inspection. This includes inspection on receipt, inspection at the source.
• Incoming inspection and test:
• In-process inspection and test:
• In-process evaluation of conformance to requirements.
• Inspection and test materials and services
When collecting these costs, decide upon the kind of work done and not the department name (the work may be done by chemists in the laboratory, by sorters in Operations, by testers in Inspection, or by an external firm engaged for the purpose of testing).
The costs incurred to keep failure and appraisal costs to a minimum. For example product design, prevention costs are one of the four elements of cost of quality.
When implement and tracking a cost of quality system within a company, management typically focuses on internal and external failure costs. Management studies the costs due to defects and not the cost to prevent the defects. Costs of prevention focuses on the actions taken to prevent the...