Question

Which of the following quality costs is likely to be higher?

a) Prevention costs

b) External costs

c)Internal cost

d) Total cost of quality

Answer 1

Option b) External costs

External cost occurs when a defective product reaches the customer and the defect has been identified. Such cost includes recalling cost, product warranty, repairing services, legal costs in case of suit against the company and finally loss of goodwill.

In case of prevention cost, defective products are avoided, internal costs avoid loss of customers and total cost of quality remains low if prevention techniques are implemented successfully.