Quality Costs

It is important to determine the impact of quality costs on company profitability. Cost assessment can be useful in evaluating not only the effectiveness of the quality system, but also criteria for internal improvement.

Costs can be divided into those for operating quality costs and those for external assurance. Operating quality costs are incurred by the company to attain and insure a specified quality level. They consist of prevention and appraisal costs (or investments) and failure costs (or losses). Prevention costs are incurred to prevent failures; some examples include ingredient sampling and analysis, equipment maintenance and design to maintain quality and food safety, and integrated pest management. Appraisal costs are incurred during testing and inspection to insure product quality; examples are laboratory testing and internal verification audits. External assurance costs are related to the demonstration and proof required as objective evidence by customers or regulatory agencies. Additional costs are opportunity costs, loss of business due to poor quality, and costs of exceeding requirements (11,12).

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