From the course: Operations Management Foundations
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Understanding costs of quality
From the course: Operations Management Foundations
Understanding costs of quality
- Managing quality requires a vigilant commitment to monitoring quality, identifying problems at different stages in the supply chain, finding root causes, and then devoting resources to fix those root causes. One very helpful way of seeing the cost of quality at different stages of the supply chain is by categorizing quality costs into four categories. As we walk through these four costs, notice how the longer you wait in the supply chain to address the problems, the more expensive the quality costs are to the organization. The first cost of quality category is internal failure costs. These are quality problems that are found and fixed within the supply chain before they reach the consumer. These types of costs would include resources wasted to produce the defective item, disposal of the damaged good, and possibly, the cost of work and material required to repair the damaged or defective item. While having high internal…
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