Question

At final inspection stage of production process, you have identified some defects in one shipment before delivering to the customers. Obviously the defected products will go through the repair process before can be sold. The cost that the company will incur in repairing these products is referred to as:

Answer 1

The cost that the company will incur in repairing the defective products is referred to as Cost of Internal failure. This is cost of quality incurred before the product is delivered to customers.

Further explanation:

Different cost of quality are:

1) Cost of maintaining good quality:

• Prevention cost is the cost incurred for maintaining defects level to a minimum. These costs quality planning, employee trainings etc.
• Appraisal cost is the cost incurred to maintain minimum quality levels. These costs are Inspection costs, Process controls, audits etc

2) Cost incurred due to poor quality

• Cost of internal failure are due to defects found before reaching final customer such as scraps, reworks, etc
• Cost of external failure are due to defects found after products are delivered to customer such as warranty claims, customer complaints etc.