Get premium membership and access questions with answers, video lessons as well as revision papers.
(i) Internal failure costs: are costs detected within the organization
before delivery to the final customer. May occur due to a variety of reasons such
as defective materials from vendors, faulty equipments and machine, incorrect methods
carelessness, faulty materials handling procedures and incorrect processing. they include; Excess capacity cost, Downtime, Cost of investigation, waste among others
(ii) External failure costs: These are costs incurred when the product fails to perform satisfactorily after being transferred to the customer. They include; Loss of goodwill, Warranty charges and Liability costs.
(iii) Appraisal costs:-are those costs associated with measuring, evaluating
or auditing products, components or purchased materials to determine their degree of
conformance to the specified standards. It relates to costs of inspection, testing and other
activities intended to uncover defective products or services, or to assure that there are no
defects. They involve; Incoming material inspection, Cost of maintaining inspection facilities, Cost of quality audits among others.
(iv) Prevention costs:-are costs incurred in planning, implementing and maintaining a
quality system. They are costs incurred in order to prevent defects from occurring. Prevention Costs include: Quality Planning, The Cost of determining product and service requirement, Data collection analysis and reporting costs, and Cost of quality improvement efforts.
NatalieR answered the question on May 9, 2022 at 11:39