The Cost of Quality: Understanding Internal Failure Costs
What is an 'internal failure' cost of quality?
Which of the following describes an 'internal failure' cost of quality?
- Inspection and testing.
- Scrap and rework.
- Training personnel in quality procedures.
- Responding to warranty claims.
- Cost related to reengineering a production process.
Answer:
An 'internal failure' cost of quality refers to the expenses incurred when a defect or error is detected within the organization before the product or service is delivered to the customer.
Out of the options provided, the correct choice that describes an 'internal failure' cost of quality is: 2. Scrap and rework.
Scrap refers to the waste or unusable products that are discarded due to defects or errors. Rework involves correcting or repairing defective products to bring them up to the required quality standards. Both scrap and rework are examples of internal failure costs as they occur within the organization and can be a result of quality issues in the production or manufacturing process.
For example, if a company produces electronic devices and some devices are found to have faulty components during the production process, the company will incur costs associated with scrapping the defective devices and reworking them to fix the issues before they can be sold.
Other options provided do not specifically represent internal failure costs:
- Inspection and testing: Inspection and testing costs fall under prevention costs, not internal failure costs.
- Training personnel in quality procedures: Training costs are part of prevention costs.
- Responding to warranty claims: Costs related to warranty claims usually fall under external failure costs.
- Cost related to reengineering a production process: This cost is associated with redesigning or improving the production process.
By understanding the different types of quality costs, organizations can identify areas where improvements can be made to reduce internal failure costs and enhance overall product or service quality.