Question

Identify the quality cost elements associated with a company. Define each of the elements and suggest how each might be quantified.

Answer 1

The quality costs associated with each company are:-

1) Prevention costs: This costs involve putting in place resources and necessary training and investing in processes to prevent any quality defect from occurring in the manufacturing process. This might involve setting up rigorous quality control cells, statistical process control and training as well as skilling of employees. This can be quantified by adding up the cost of training and the cost of investing in technologically enabled process control.

2) Appraisal costs: In this category would lie inspection costs for inspecting the input and output of the process and the expenses borne to maintain this inspection mechanism. The cost in this category would involve taking into account the inspection costs and the resources spent in doing the entire inspection process.

3) Internal failure costs: This would involve the production of a defective part and its subsequent scrapping. The costs would involve costs of destruction, production and the wastage of prevention and appraisal costs also.

4) External failure costs: This would involve a scenario wherein a defective product has been released into the market. The costs here would include costs of recalling the defective product, cost of reputational damage and all other costs involved in production and inspection of the product.