& $ # E § fS r and Cost of Quality
Every mistake costs money.7 The
mistake and its attendant costs may
be preventable through increased
employee training, market research,
or improved product or service features.
The cost of error refers to the
cost associated with an error after it
occurs, and falls into two categories:
recovery cost and opportunity cost.
Recovery costs, which include rework,
scrap, and warranty, can comprise
anything from the extra time
employees spend fixing an error to a
rebate given to mollify a guest. Recovery
costs can be further broken
down into hard costs and soft costs.
Hard costs refer to expenses that are
normally accounted for, such as a
complimentary bottle of wine to
appease an irate guest. Soft costs refer
to costs that are incurred but are
typically not measured—for instance,
the time it takes for a server to return
a dinner that was improperly
prepared and deal with the unhappy
customer, and the time it takes the
chef to prepare a new meal.