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A manufacturing company wants to determine its cost of quality. (a) Classify each of the costs below as prevention, appraisal, internal failure or...

A manufacturing company wants to determine its cost of quality.

(a) Classify each of the costs below as prevention, appraisal, internal failure or external failure.

(b) Total the costs in each category.

(c) Calculate the total cost of quality.

(d) What percentage of quality costs fall in each category?

(e) Represent your result in Pie chart and Pareto

(e) What conclusions do you draw?

Type of Cost
Amount ($)

Customer quality survey
40,000

Penalty payments to customers – late shipments
30,000

Materials and products scrapped
150,000

Raw material inspection
90,000

Quality training for employees
30,000

Losses due to defective products returned by customers
300,000

Finished goods inspection
250,000

Repairs to defective products before they leave the plant
140,000

Quality software and information systems
20,000

Overtime labor due to machine downtime
60,000

Product repairs under warranty
100,000



This question was asked on Mar 29, 2010.

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