Western Governors University
TO: John D. Doe, Department Supervisor
FROM: Zeav Mor, Quality Assurance
DATE: April 1st, 2012
SUBJECT: Costs of Quality
An important aspect for our consideration includes the costs of quality. Considering our product is not affected by place, income, sex, race, age, or any environmental concern, the profit margins should be considered higher. However, it is crucial to recognize three costs of quality to ensure our product achieves the highest profit margins with little room for the unexpected.
The three costs of quality to consider:
● Appraisal costs
● Prevention costs
● Failure costs
The first costs to consider are appraisal costs. Appraisal costs are those which relate to inspecting, testing and any activities designed to uncover defects, or ensure there are none, as illustrated on page 420 of “Operations Management” by Stevenson, W. J. (2009.) The second type of costs includes those of prevention. In other words, any attempts our company would make preventing defects from actually occurring. This may include better planning, training or quality control procedures. The third is failure costs, which are “incurred by defective parts or by faulty services.” All internal failures discovered during the production process, or external failures (those discovered after delivery to our customers.)
Appraisal Costs Appraisal costs usually occur in the inspecting part of the process, usually during production. An example of this would include when Apple inspects the Apple iPad™ to ensure the device’s chassis, or casing is unharmed by the assembly process.
Prevention Costs Prevention costs also occur during the production process. This ensures a company prevents any potential defects. We’ll use Apple once again, for their inspection of the Apple iPad™: Apple likely confirms all devices actually power on completely before installing the chassis, or casing