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D. Summers Chap 12 Cost of Quality Slides
D. Summers Chap 12 Cost of Quality Slides
Chapter 12
Costs of Quality
Liability costs
Failure Costs
Reprocessing
Customer returns
Rejects
Warranty expenses
Extra inventory
Prevention Costs
Appraisal Costs
Non Conformance - This area covers the price paid by not having quality systems or a quality
product.
Failure Costs (Internal & External)
Intangible Costs
Failure Costs
Failure costs occur when the completed product or
service does not conform to customer requirements
Intangible Costs
Intangible costs are the hidden costs associated with
providing a nonconforming product or service to a
customer. They involve the company’s image.
Intangible costs: difficult to measure and hence
monitor & control, proxy measures/sometimes
hidden e.g. Cost of lost goodwill/loss of brand
image
Prevention Costs
Benefit
Appraisal Costs