To: Gary Jansen, CCI, Inc
From: QHT1 304.1.3-04
Re: Relevant Quality Costs
Date: March 1, 2013

Sir, As a producer of tangible products, CCI, Inc must direct its focus to delivering the best possible product to our customers. This is integral not only in the nurturing of our existing relationships, but also in fostering new ones. Our systems’ audit team has successfully identified three categories of cost as they relate to the implementation of quality consideration. These three costs are appraisal costs, prevention costs, and failure costs. If we are cognizant of these of front, and incorporate them intelligently into our operations, product quality will improve, overall customer satisfaction will rise, and our profits will increase. By far, preventative cost investment is the most efficient means of increasing overall quality. These are the costs associated with pre-emptively avoiding weaknesses in our products. By beginning the quality control process during the design phase and carrying it into the production phase, we can eliminate many defects from ever occurring. Of course, this will require additional planning and resources on the front end, but we will be more than compensated via the decrease in failure costs. This will also necessitate more thorough training of employees, as well as stringent quality control procedures. It would also be wise to invest the time and effort into providing the best possible equipment and working environment for our employees. Once production has begun, we will incur appraisal costs. These are the expenditures associated with either discovering defects that have already occurred or determining that none exist. This is accomplished through product inspection and materials/ process auditing. Provided our preventative costs have been wisely and efficiently implemented, our appraisal costs will be appreciably lower.