The Costs of Guality

The costs of quality can be classified into three categories: Appraisal costs, Prevention costs and Failure costs.

Appraisal costs are costs related to ensuring quality or identifying defects by using inspections or testing. The cost could include items such as testing equipment, lab fees and inspector salaries. Appraisal costs are needed to ensure that there are no defective products or services and to detect defective products and services during all stages of production. The trade-off of not having these appraisal costs could result in a mass production of a defected product. Without inspecting and/or testing to insure quality small but significant defects could comprises the company's financials as well as its reputation.

Prevention Costs are costs related to the prevention of defects occurring. Prevention costs include training, quality improvement programs, product design as well as administration systems and planning. Prevention costs are used to try to prevent defects from happening before the product is produced. Prevention cost may also decrease costs in other areas of quality cost. The trade-off to prevention costs total failure of a product. If a product does not have a good design and proper planning it can be almost guaranteed to fail. This type of improper planning could be very expensive to the company compared to the costs of prevention.

Failure costs are costs created from a flawed service or faulty products or parts. There are two types of failure cost: internal failure cost and external failure costs. Internal failures are faulty parts or products that are found during the production process. Internal failures can include machine malfunction, employee carelessness or faulty material. Internal failure costs may included the time it make take to rework a product, acquiring new materials, possible equipment damage, and even employee injury. An external failure is faulty services or products that are discovered by the customer. External failures include inadequate service or a malfunctioning product. External costs can be very expensive due to replacements, loss of customers and even litigation. The trade -off for failure costs is that if the company is utilizing proper appraisal and prevention methods this could lessened and/or make failure costs obsolete .