Quality Control -Cost of Quality

1. JF 608 - QUALITY
CONTROL
TOPIC : QUALITY COST
Copyright By : Pn. Wan Asmalinda BtWan Aziz

2. • Learning Outcomes:
 Describe quality cost in quality control
 Explain the relationship between cost and quality
 Explain types and categories of cost
i. preventive cost
ii. appraisal cost
iii. internal failure cost
iv. external failure cost

3. Quality Cost in Quality Control
• Preventing, detecting and dealing with defects cause costs that are
called quality costs or costs of quality. The term quality cost refers to all
of the costs that are incurred to prevent defects or that result from
defects in products.
• Quality costs can be broken down into four broad groups. These four
groups are also termed as four (4) types of quality costs.

4. Types of Quality Cost
i. preventive cost
ii.appraisal cost
iii.internal failure cost
iv.external failure cost

5. Prevention Costs:
• Prevention costs are the cost of all activities whose purpose is to prevent and
reduce the number of defects in deliverable product.
• Example: Cost of statistical process control, quality engineering, training,
field trial or marketing research etc

6. Appraisal Costs
• Appraisal costs are incurred to identify defective products before the
products are shipped to customers.
• Examples: Cost of testing, inspection (machine, inspector, tools)

7. Internal failure Costs
• Internal failure costs are cost related to failure or defects that occur before
the products are shipped to customers.
• Example: scrap, rejected products, reworking of defective units, retest and downtime caused
by quality problem.

8. External Failure Costs
• External failure costs are cost related to failure or defects which
is found after the products has been delivered to customer.
• Example: returned goods, warranty, repairs and replacements, product recalls,
liability arising from legal actions against a company, and lost sales arising
from a reputation for poor quality

9. Optimum cost of poor quality
The figure shows an economic model for the cost of
quality.
i. Quality conformance improves and approaches 100%,
failure cost are reduced to zero defects. No cost for
failure if the product is perfect.
ii. The model shows that if the quality increases, the cost
of poor quality will be decreased.

10. The relations between cost and quality
i. A good quality will improve productivity and will reduce the cost for
warranty and repairing.
ii.A good quality and reduced of cost will give more profit to the
company
iii.If the cost for a good quality product is higher, so the cost for bad
quality products will be decreased.