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Categories Of Costs
There are four Categories Of Costs:
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Internal failure costs
(costs associated with defects found before the customer receives the product or service).
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External failure costs
(costs associated with defects found after the customer receives the product or service)
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Appraisal costs
(costs incurred to determine the degree of conformance to quality requirements)
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Prevention costs
(costs incurred to keep failure and appraisal costs to a minimum). The failure costs contribute major expenses whereas appraisal cost is the second level when compared for expenses. Prevention costs have least expenses. The costs of activities specifically designed to prevent poor quality in products or services. The following table indicates elements that may be included in the four major cost categories:
| Applicant screening | Equipment repair | Job descriptions |
Procedure reviews |
Surveys |
| Capability studies | Field testing |
Market analysis |
Procedure writing |
Time and motion studies |
| Controlled storage | Fixture design and fabrication |
Personnel reviews |
Prototype testing |
Training |
| Design reviews | Forecasting |
Pilot projects |
Quality design |
Vendor evaluation |
| Equipment maintenance | Housekeeping |
Planning |
Safety reviews |
Vendor surveys |
Appraisal costs:
The costs, associated with measuring, evaluating, or auditing products/services to ensure conformance to quality standards and performance requirements.
| Audits |
In-process inspection |
Personnel testing |
| Document checking |
Inspection and test |
Procedure checking |
| Drawing checking |
Inspection and test reporting |
Prototype inspection |
| Equipment calibration |
Laboratory testing |
Receiving inspection |
| Final inspection |
Other expense reviews |
Shipping inspection |