Which type of quality cost deals with scrap, rework and repair?
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Costs of quality or quality costs does not mean the use of expensive or very highly quality materials to manufacture a product. The term refers to the costs that are incurred to prevent, detect and remove defects from products. Quality costs are categorized into four main types. Theses are: These four types of quality costs are briefly explained below: It is much better to prevent defects rather than utilizing additional resources in finding and removing them from products. All costs that are incurred to avoid or minimize the number of defects at first place are known as prevention costs. Some examples of prevention costs are improvement of manufacturing processes, workers training, quality engineering,
statistical process control and technical support for suppliers etc. Appraisal costs (also known as inspection costs) are those costs that are incurred to identify defective products before they are shipped to customers. All costs associated with the activities that are performed during manufacturing processes to ensure required quality standards are also included under this category. Identification of defective products involves
the maintaining a team of inspectors which may prove very costly for some organizations. Internal failure costs:Internal failure costs are those costs that are incurred to remove defects from the products before shipping them to customers. These costs should not be confused with the appraisal costs described above, because appraisal costs are the result of identification of defects issues in the products whereas internal failure costs are the result of actually removing the defects from products. Examples of internal failure costs include cost of rework, rejected products, scrap and debugging software errors etc. External failure costs:If defective products have been shipped to customers, external failure costs arise. External failure costs include warranties, replacements, lost sales because of bad reputation, payment for damages arising from the use of defective products etc. The shipment of defective products can dissatisfy customers, damage goodwill and reduce sales and profits. More examples of quality costsExamples of prevention cost
Examples of appraisal cost
Examples of internal failure cost
Examples of external failure cost
Quality Costs Quality Costs - Costs incurred to ensure that a product / service is defect free and conforming to customer specifications. Following are its components. 1. Prevention Cost - The costs incurred to avoid or minimize the number of defects at first place. E.g. - improvement of manufacturing processes, workers training, quality engineering, statistical process control etc. 2. Appraisal Cost - Costs that are incurred to identify defective products before they are shipped to customers. These are also called 'Inspection Costs'. E.g. - QA cost, QC cost. 3. Cost of Poor Quality - is defined as the cost of 'not doing it right the first time' or it is the cost incurred to correct the defects in a product/service. It can be of two types. a. Internal Failure Cost - cost of rework / corrections before the
product or service is delivered to client. An application oriented question on the topic along with responses can be seen below. The best answer was provided by Raghavendra Rao on 15th November 2017. Under which category of quality costs does scrap rework classify?Internal Failure Costs:
Expenses incurred to remedy defects discovered before the delivery of a product or service. Examples include scrap, rework, re-inspection, re-testing, material review, material downgrades.
Is scrap a cost of quality?Scrap and rework is defined as material that is added into production but is not part of a finished product. Because the cost of this scrap material does not add value to the organization, it gets included in the calculation for the total cost of quality, or poor quality.
What are the four types of quality costs?The four major types of quality costs are prevention, appraisal, internal failure, and external failure. Prevention costs are the costs created from the effort to reduce poor quality.
Is rework an internal cost?Examples of internal failure costs are failure analysis activities, product rework costs, product scrapped (net of scrap sales), and throughput lost. Internal failure costs are one of the four costs of quality. The other three costs are preventive costs, appraisal costs, and external failure costs.
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