A company incurred the following quality costs last month. Incoming material inspection $5,000 Process scrap $3,000 In-process rework S450 Control…

External failure costs are incurred when a nonconforming product or service reaches the customer. These costs are associated with defects found after delivery. Based on the standard Cost of Quality (COQ) model, the external failure costs from the provided list are Warranty, Customer complaints, and Product liability.

The total external failure cost is calculated as follows:

Warranty: $2,000

Customer complaints: $6,000

Product liability: $1,000

Total = $2,000 + $6,000 + $1,000 = $9,000.

A. $6000: This amount incorrectly omits the costs for warranty ($2,000) and product liability ($1,000), including only the cost of customer complaints.

B. $8000: This total incorrectly excludes the product liability cost ($1,000), which is a clear and significant component of external failure costs.

D. $9450: This figure incorrectly includes costs from other categories, such as in-process rework ($450), which is an internal failure cost.

1. ASQ Quality Press. (2017). The Certified Quality Engineer Handbook (4th ed.). In Chapter 5

"The Quality System

" the section on "Cost of Quality (COQ)" explicitly categorizes costs. It defines external failure costs as those found after customer receipt and lists "Warranty charges

" "Complaint adjustment

" and "Liability costs" as primary examples (pp. 58-59).

2. Juran

J. M.

& De Feo

J. A. (2010). Juran's Quality Handbook: The Complete Guide to Performance Excellence (6th ed.). McGraw-Hill. Chapter 8

"Quality and Costs

" provides a detailed breakdown of the PAF (Prevention

Appraisal

Failure) model. It classifies warranty

complaint handling

and product liability as external failure costs (Section 8.6).

3. Mitra

A. (2016). Fundamentals of Quality Control and Improvement (4th ed.). Wiley. Chapter 1

"Introduction to Quality Control and the Modern Quality Engineer

" discusses the cost of quality. Table 1.3

"Classification of Quality Costs

" lists "Warranty costs

" "Costs of responding to complaints

" and "Product liability costs" under the External Failure Costs category (p. 18).