The document discusses cost of quality and its categories. It explains that cost of quality refers to the costs incurred to prevent non-conformance and the costs associated with poor quality. There are two main categories - costs of achieving good quality like prevention and appraisal costs, and costs of poor quality like internal and external failure costs. Measuring these costs helps identify opportunities to improve quality and reduce costs. It provides an example of measuring quality costs at a motor company over four years which showed prevention costs increasing and overall quality costs decreasing as quality improved.

1. Cost of quality

4. Hidden Failure Costs Scrap Warranty Rework Decreased capacity Increased inventory Shop and field downtime Management time Engineering time Customer dissatisfaction Lost sales Lost customer trust

5. Cost of quality – categories 1 - Cost of achieving good quality Prevention Costs Appraisal Costs 2 - Cost of poor quality Internal failure Costs External failure Costs Quality costs fall into two main categories:

20. Conclusion: When the cost of achieving good quality increases; cost of poor quality decreases automatically.