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Quality Cost Analysis for Managers

The document discusses the different types of costs associated with quality: prevention costs, appraisal costs, internal failure costs, and external failure costs. It then provides data on the quality cost categories for three quarters - external failure, internal failure, appraisal, and prevention costs. The percentages of total quality costs for each category are shown to fluctuate between quarters. Management should analyze trends in the cost categories over time to understand impacts on quality and identify improvement opportunities.

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SoorajKrishnan
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447 views13 pages

Quality Cost Analysis for Managers

The document discusses the different types of costs associated with quality: prevention costs, appraisal costs, internal failure costs, and external failure costs. It then provides data on the quality cost categories for three quarters - external failure, internal failure, appraisal, and prevention costs. The percentages of total quality costs for each category are shown to fluctuate between quarters. Management should analyze trends in the cost categories over time to understand impacts on quality and identify improvement opportunities.

Uploaded by

SoorajKrishnan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Cost of Quality

 Prevention cost
 Appraisal cost
 Internal Failure Cost
 External Failure Cost
Quality planning costs
Process control costs
Information system costs
Training & general management costs
Test and inspection costs
Instrument maintenance costs
Process measurement and control costs
Scrap and rework costs
Cost of corrective action
Downgrading costs
Process failures
Costs due to customer complaints and returns
Product recall costs and warranty claims
Product liability costs
prevention
and
failures appraisal
 Analyze the following cost data for a product. What are the
implications of these data for management?

Quarter 1 Quarter 2 Quarter 3

Total sales 10, 00,000 9, 00,000 12, 00, 000

Quality Cost Categories

External failure 25% 15% 10%

Internal failure 30% 30% 25%

Appraisal 42% 45% 40%

Prevention 3% 10% 25%

Total quality costs 2, 10, 000 1, 62, 000 1, 44, 000


 The following data is available for a printing company. Calculate the various quality cost categories.

Cost element Amount(`)


Customer complaint remakes 28, 000
Printing plate revisions 28, 000
Quality improvement projects 14, 000
Gauging 1,00,000
Other waste 39, 000
Correction of typographical errors 2, 10, 000
Proofreading 4, 50, 000
Quality planning 57, 000
Press downtime 2, 85, 000
Bindery waste 53, 000
Checking and inspection 42, 000

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