The Cost of Quality
Following Juran’s model, we divide the cost of quality into three major categories: (a) cost of prevention. (b) cost of detection/appraisal, and (c) cost of failure. The third category, the cost of failure, is further subdivided into internal failure costs and external failure costs.
The total cost of quality is the sum of the costs in all three categories. The typical percentages of total quality costs that are estimated for each of the three categories are shown in Exhibit 61 The cost of poor quality includes detection/appraisal costs and both internal and external failure costs, and can range from 15 to 25 percent of the total cost of a product. These costs of poor quality include the more traditional, visible items such as waste, rework, inspections and recalls. as well as the often-overlooked “invisible” categories such as customer allowances, complaint handling. lost or wasted capacity and excessive overtime.