Cost Flashcards
(30 cards)
Prevention Costs
Costs incurred during product design.
Appraisal Costs
Cost of measuring, testing and analysing.
Internal failure costs
Includes scrap, rework, process failure, downtime and price reductions.
External failure costs
Includes complaints, returns, warranty claims, liability and lost sales.
Prevention Costs:
Quality planning costs
Costs of developing and implementing a quality management program.
Prevention Costs:
Product design costs
Costs of designing products with quality characteristics.
Prevention Costs:
Process costs
Costs expended to make sure productive processes conform to quality specifications.
Prevention Costs:
Training costs
Costs of developing and putting on quality training programs for employees and management.
Prevention Costs:
Information costs
Costs of acquiring and maintaining data related to quality, development and analysis of reports on quality performance.
Appraisal Costs:
Inspection and testing
Costs of testing and inspecting materials, parts and products at various stages and at the end of the process.
Appraisal Costs:
Test equipment costs
Costs of maintaining equipment used in testing quality characteristics of products.
Appraisal Costs:
Operator costs
Cost of time spent by operators to gather data for testing product quality, to make equipment adjustments to maintain quality and to stop work to assess quality.
Internal Failure Costs:
Scrap costs
Costs of poor quality products that must be discarded, including labor, material and indirect costs.
Internal Failure Costs:
Rework costs
Costs of fixing defective products to conform to quality specifications.
Internal Failure Costs:
Process failure costs
Costs of determining why the production process is producing poor quality products.
Internal Failure Costs:
Process downtime costs
Costs of shutting down the productive processes to fix the problem.
Internal Failure Costs:
Price downgrading costs
Costs of discounting poor quality products.
External Failure Costs:
Customer complaint costs
Costs of investigating and satisfactorily responding to a customer complaint resulting from poor quality products.
External Failure Costs:
Product return costs
Costs of handling and replacing poor quality products returned by a customer.
External Failure Costs:
Warranty claims costs
Costs of complying with product warranties.
External Failure Costs:
Product liability costs
Litigation costs resulting from product liability and customer injury.
External Failure Costs:
Lost sales costs
Costs incurred because customers are dissatisfied with poor quality products and do not make additional purchases.
Index number
Ratios that measure quality costs against a base value.
Labour index
Ratio of quality cost to labor hours.
