Cost of Prevention
Costs of prevention, by definition. are those costs incurred by an organization in its effort
to prevent defective goods and services from being produced. Included in this category are investments in machinery, technology, as well as education and training programs, which are designed to reduce the number of defects that the process produces. Also included in this category are the costs to administer the firm’s quality program, data collection and analysis, and vendor certification. All of the quality gurus strongly support investments in this category because the returns are so high, including the benefits gained from increasing customer satisfaction and reducing scrap losses and rework expenses.