Cost of Quality defined
Quality-linked activities are those activities performed because poor quality may or does exist. The cost of performing these activities are referred to as costs of quality. Thus the costs of quality are the costs that exist because poor quality may or does exist. This definition implies: control activities and failure activities. Control activities are performed by and organization to prevent or detect poor quality (because poor quality may exist). Thus, control activities are made up of prevention and appraisal activities. Control cost are the cost of performing control activities. Failure activities are performed by an organization or its customers in response to poor qualities (poor quality does exist). If the response of poor quality occur before delivery of the bad (nonconforming, unreliable, not durable, and so on) product to a customer, the activities are classified as internal failure activities; otherwise, they are classified as external failure activities. Failure costs are the cost incurred by an organization because failure activities are performed. Notice that the definitions of failure activities and failure cost imply that customer response to poor qualities can impose costs on an organization. The definitions of quality-related activities also imply four categories of quality costs: (1) prevention cost, (2) appraisal costs, (3) internal failure costs, and (4) external failure cost.