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Quality Management: Cost Types

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Identify three relevant costs when considering quality.

Consider these costs when either manufacturing or providing a service.

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Solution Summary

The cost types are examined for quality management. The expert identifies three relevant costs when considering quality.

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COSTS OF QUALITY

1. Types of costs when quality considerations are made with corresponding examples:

A. Prevention costs. These are costs incurred in relation to activities conducted with the purpose of preventing the production of poor quality products and services. This is therefore a proactive measure, that is, solving the problem before the problem on quality occurs. Examples are the costs of: new product review, quality planning, supplier capability surveys, process capability evaluations, quality improvement team meetings, quality improvement projects, quality education and training, and other related activities.

B. Appraisal costs. The costs associated with measuring and evaluating products or services to assure conformance to quality standards and performance requirements. The assumption at this point is the presence of a well studied and determined standards or criteria of quality products and services.
These include the costs related to inspection/test of purchased material; in-process and final inspection/test; product, process or service audits; and calibration of measuring and test equipment. What is assured ...

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  • Master in Business Administration, Saint Mary's University
  • Doctor of Philosophy in Education, University of the Philippines
  • Doctor in Business Adminstration (IP), Polytechnic University of the Philippines
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