Classification of quality cost:01.Prevention cost
A .Design review
B. Supplier evaluation
C. Quality audit
D. Field trials
E. Internal repair cost
02. Appraisal cost
B. Out side endorsement
C. Depreciation of Testing Equipment
03.Internal failure cost
A. Net scrap/Scrap only
B. Down time work
C. Design changes
E. Disposal of defective Products.
04. Out of Pocket/External failure Cost
A .Product recall
B. Repair cost
Quality cost formula
01.Calculation of lost of profit
Profit lost by selling units as defective:-
=(Total defective units-no of units reworked)*(profit for goods units- profit for defective units)
02.Rework cost
= (No of units rework* cost of rework defective units )
03.Cost of processing customers return
= (No of customer return* cost of return)
04. Total failure cost
=(Profit lost by selling defective units +rework cost(internal+external)+cost of processing customers return)
05.Total quality cost
=(Defective control cost+total failure cost+Opportunity cost)
06. Defective control cost
=(Prevention cost+Appraisal cost)