Supply Chain Concepts
Cost of quality
Major Topic Area: quality concepts
Organizations spend money on a variety of things associated with quality. These costs can be categorized into one of four major groups. These groups, together with some typical industry examples are summarized in the following table.
| Category | Example |
| internal failures - defects that are detected and resolved prior to the product being purchased by a customer | rework, scarp costs |
| External failures - defects that are detected by the customer. | product recall, law suits, lost customers |
| Appraisal costs - costs associated with measuring quality | quality audits, SPC Charts, measuring devices |
| Prevention costs -- costs associated with preventing failures from occurring. | training, operating procedures. |
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