Cost of Poor Quality

Traditionally, the cost of poor quality has been divided into three basic categories.

Prevention Costs:

These are costs that are incurred for activities designed to prevent poor quality in products and services. When companies first begin to track the cost of poor quality, they are usually surprised to find that prevention costs are a small percentage of the total

Appraisal Costs:

These are the costs that we incur by testing, measuring, and auditing products and services. Appraisal costs are basically the cost of any activity required to assess whether or not the product or service meets the requirements

Failure Costs:

these are the costs we incur because the product or service fails to meet the needs of the customer. Failure costs are usually divided into internal failures and external failures

- Internal failure costs - are the failures costs that occur prior to the delivery of the product or service to the customer

- External failure costs - are the failure costs that occur after the delivery of the product or service to the customer