It is very helpful to sort the various quality costs into the four categories of prevention, appraisal, internal failure, and external failure costs. By comparing the amounts in the various categories, managers can get some feel for what should be done. For example, if the prevention and appraisal costs are very small relative to the internal and external failure costs, it is likely that not enough is being spent to prevent and detect defects. If prevention costs are low relative to appraisal costs, it is likely that not enough is being spent on prevention relative to inspection. Moreover, by comparing results across years, managers can track the effects of their decisions and gauge the success of quality improvement programs.
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