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Cost of Quality = Cost of Poor Quality + Cost of Good Quality

Cost of Poor Quality = Failure Costs

Example: Rework, Delays, Re-designing, Failure analysis, Re-testing, Complaints, Repairing goods and redoing services, Warranties, Customers' bad will

Cost of Good Quality = Prevention Cost + Appraisal Cost

Prevention Costs : Prevention costs are costs of all activities that are designed to prevent poor quality from arising in products or services

Examples : Quality planning, Supplier evaluation, New product review, Capability evaluations, Quality improvement team meetings, Quality improvement projects, Quality education and training

Appraisal Costs : Appraisal costs are costs that occur because of the conformance to quality standards and performance requirements.

Examples: Checking and testing purchased goods and services, In-process and final inspection/test, Field testing
Product, process or service audits

Reference: link)

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