Cost of Quality

4 component of cost quality

(1) Prevention cost (2) Appraisal cost (3) Internal Failure cost (4) External Failure cost

Appraisal cost

Testing and Inspection. The cost of any activity designed to appraise, test, or check for defective products: Test and inspection of incoming materials/in-process goods, final product testing and inspection, supplies used in testing and inspection, supervision of testing and inspection, depreciation of test equipment, maintenance of test equipment, field testing

External failure cost

The cost incurred for products that do not meet requirements of the customer and have reached the customer: Cost of field servicing and handling complaints, warranty repairs and requirement, product reacalls, liability arising from defective products, returns and allowances arising from quality problems, lost sales arising from reputation for poor quality

Internal failure cost

The cost incurred whtn substandard products are produced but discovered before shipment to the customer: Scrap, spoilage, rework, rework labor and overhead, reinspection of reworked products, retesting of reworked products, downtime cause by quality problems, disposal of defectives, analysis of the cause of defects, reentering data due to keying errors, debugging software errors

Prevention cost

The cost of any quality activity designed to help do the job right the fitst time: quality engineering, quality training, quality circle, statistical process control activities, supervision of prevvention activities, quality data gathering, analysis, and reporting. Quality improvment projects, technical support provided to suppliers, audit of the effectiveness of the quality system