4 Cost of Quality Categories

-prevention, appraisal, internal failure, and external failures

Cost of good quality (prevention and appraisal) TOTAL COST OF QUALITY

Cost of poor quality (Internal Failure and External Failures)

Question: If we built a 100% conforming product, would that cost still be there?

“An ounce of prevention is worth a pound of cure”-Benjamin Franklin

Prevention costs are those costs or activities that are specifically designed to prevent poor quality (non-
conformance)

“Quality comes not from inspection but from improvement of the process”- W. Edwards Deming

Appraisal Cost- any activity specifically designed to measure, inspect, evaluate, or audit products to
assure conformance to quality requirements.

Internal Failure Cost- are any cost or activity related to any non-conformance detected prior to
shipment to the customer

External Failure Cost- are any cost or activity related to any non-conformance detected after to
shipment to the customer
What is the cost of quality? Explain the statement the optimal cost of
quality is when the company produces 100% conforming products.
(ezra)
What is cost of quality
Importance
Quality conformance
Cost of quality is a method used for determining the costs that a certain business incur in order to
ensure that their products adhere to meet the quality standards, along with the costs of producing
goods that do not meet quality standards. Moreover, it assesses the quality of an organization's
products or services that are resulted by internal and external failures. Additionally, cost of
quality enables an organization to accurately measure the amount of resources used for Cost of
Good Quality and Cost of Poor Quality. In which there are four quality cost categories, and it is
as follows: prevention cost, appraisal cost, internal failure cost, and external failure cost.
As the years progressed, the business environment is becoming more competitive than ever.
Every product that is available in the market has multiple options to choose from and due to this,
companies must maintain their price competitiveness to survive. Other companies that are at the
top value the importance of knowing their target market and keeping their products and services
of great quality with a sense of dependability. However, since business is primarily a commercial
activity, its primary goal is to profit, which makes it cost-conscious and occasionally
compromises the quality of its goods and services.
The statement the optimum cost of quality is when the company produces 100% conforming
products, is aggregable. Product quality is important because it affects the success of the
company and helps establish its reputation in customer markets. Basing it on the “making it right
the first time” perspective ensuring that the product or services offered are perfectly done every
time and meets the standards that have been established for it saves the company with so much
money and effort, preventing them from acquiring internal and external failure cost that would
add up to performing rework, refunds, and complaints from customers.
 Since one of the significant issues in