Cost of quality
In one sentenceThe total a business spends to prevent and detect defects, plus what it loses because of defects before and after the product reaches the customer.
Simply put
It is divided into four types: prevention, such as training; appraisal, such as inspection; internal failure, such as rework before sale; and external failure, such as returns and warranty.
Spending on prevention and appraisal usually reduces failure costs, which are the most expensive because they also damage your reputation.
Worked example
A food factory added up its quality costs for one year.
Prevention costs (training and preventive maintenance)10,000 SAR
Appraisal costs (inspection and tests)15,000 SAR
Internal failure (rework and disposal)25,000 SAR
External failure (returns and compensation)30,000 SAR
Total cost of quality (of which 55,000 is failure)80,000 SAR
Formula: Prevention + appraisal + internal failure + external failure
Don't confuse it with
Defective unitsDefective units are just one part of internal failure costs, and the cost of quality is broader.