Summary of Learning Objectives
1. Identify and describe the four types of quality costs.
To understand quality costs, it is first necessary to understand what is meant by quality. There are two types of quality: quality of design and quality of differences that arise for products with the same function but different specifications. Quality of conformance, on the other hand, concerns meeting the specifications required by the product. Quality costs are incurred when products fail to meet design specifications (and are, therefore, associated with quality of conformance). Quality costs are divided into four categories: prevention, appraisal, internal failure, and external failure. Prevention costs are those incurred to prevent poor quality. Appraisal costs are those incurred to detect poor quality. Internal failure costs are those incurred when products fail to conform to requirements and this lack of conformity is discovered before an external sale. External failure costs are those incurred when products fail to conform to requirements after an external sale is made.