Cost of Quality
Cost of Quality (COQ) is the total cost incurred to ensure quality, including both the cost of conformance (prevention and appraisal) and the cost of nonconformance (internal and external failure).
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Practice it freeExplanation
Cost of Quality encompasses all costs incurred over the life of a product or project by investment in preventing nonconformance, appraising the product for conformance, and dealing with failures. It is divided into two main categories.
Cost of conformance includes prevention costs (training, documentation, equipment, and process improvements to prevent defects) and appraisal costs (testing, inspections, audits, and quality checks to identify defects before delivery). Cost of nonconformance includes internal failure costs (rework, scrap, and waste found before delivery) and external failure costs (warranty claims, liability, recalls, and reputation damage after delivery to the customer).
Investing more in prevention and appraisal (conformance costs) typically reduces failure costs significantly. The optimal total COQ is achieved when the combined cost of prevention, appraisal, and failure is minimized. This concept supports the quality management principle that it is less expensive to prevent defects than to find and fix them.
Key Points
- •COQ = Cost of conformance + Cost of nonconformance
- •Conformance: prevention costs and appraisal costs
- •Nonconformance: internal failure costs and external failure costs
- •Investing in prevention is typically cheaper than fixing failures
Exam Tip
Know the four categories: prevention, appraisal, internal failure, and external failure. Prevention and appraisal are conformance costs. Internal and external failures are nonconformance costs.
Frequently Asked Questions
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Cost Management
Practice Cost of Quality
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