memo To: John Doe - Supervisor | | From: | | CC: | | Date: May 2, 2013 | | Re: WGU QHT1 Task 1 | | | | There are three types of costs when quality considerations are made, appraisal costs, prevention costs, and failure costs. Failure costs include internal and external failures. An explanation of these costs are listed below: * Appraisal costs are costs that the company incurs to ensure quality or uncover defects. This includes but is not limited to costs such as testing equipment, inspection of materials, labs, quality audits, field-testing, and other inspection costs. * Prevention costs are the costs associated with preventing defects from occurring. This includes costs such as the designing a better quality product, increased maintenance on equipment, quality control procedures, training of employees, planning and administration procedures, working with vendors, and any extra time that is devoted to decreasing the probability of defective workmanship. * Defective parts or products by faulty services cause failure costs. * Internal failures are failures that are discovered during the production process or prior to the customer ever coming into contact with the product. There are many reasons the internal failures can occur including defective materials, incorrect methods or processing, or faulty equipment. * External failures are failures that are discovered after the customer has the product. This type of failure becomes very costly to the company due to increase costs of warranty work, liability, payments to customers, providing the customer with a replacement unit, and the costs of handling customer complaints.
The three types of costs are not independent from each other. There is a trade-off relationship between the costs. For example an increase in prevention and appraisal costs results in an