Question

Q2

Briefly describe various quality costs. How do quality costs differ between manufacturing and service organization? [3 Marks]

PLEASE USE WORD FORMAT - DO NOT WRITE THE ANSWER.

Answer 1

Quality costs

There are four types of quality costs. They are:

1. Prevention cost- for preventing the occurance of any type of quality problem this type of cost is incurred. It includes training of employees in proper way for product assembling.
2. Appraisal cost- this type of cost also prevents quality problem. In this type of cost the inspections is done of the incoming and outgoing products.
3. Internal failure cost- this type of cost is incurred if there is any defect in the product.
4. External failure cost- this type of cost is also incurred if there is any defect in the product but in this type the cost is more extensive.

Quality cost difference between manufacturing and service organizations.

Basically the main difference between the manufacturing and service organization is out tangibility. The service is said to be of high quality when the service provided by the manufacturers satisfies the customers desire. It is positive when the customers expectations are met properly. The quality of the product is said to be high when it satisfies the customers needs being a low cost product.