Cost of Poor Quality (COPQ) can be classified as Tangible (Visible) Costs and Hidden Costs.

The statement is true. The Cost of Poor Quality (COPQ) is often conceptualized using the "iceberg model." In this model, tangible or visible costs are the "tip of the iceberg"—they are easily measured and tracked, such as scrap, rework, and warranty claims. However, the larger and more significant portion of COPQ is submerged and consists of hidden or intangible costs. These are difficult to quantify but have a substantial impact, including lost sales due to poor reputation, decreased customer loyalty, and costs associated with redesign efforts. This classification helps organizations understand the full financial impact of quality issues beyond what is immediately apparent in accounting reports.

B. False: This is incorrect because classifying COPQ into visible (tangible) and hidden costs is a well-established and widely used concept in quality management to illustrate the total impact of poor quality.

1. Munro

R. A.

Ramu

G.

& Zrymiak

D. J. (2015). The Certified Six Sigma Green Belt Handbook (2nd ed.). ASQ Quality Press. In Chapter 4

Section "Cost of Poor Quality (COPQ)

" the text explains

"COPQ is often referred to as the 'hidden factory'... The iceberg model is often used to illustrate the hidden costs of poor quality" (p. 61).

2. Purdue University. (n.d.). Cost of Quality. MET 452 Courseware

Purdue University School of Engineering & Technology. Slide 10

titled "The Iceberg Model

" visually depicts "Visible Costs" (e.g.

scrap

rework

warranty) above the waterline and "Hidden Costs" (e.g.

lost sales

customer dissatisfaction

late delivery) below it.

3. 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 Costs: The Financial Language of Quality

" discusses the concept of hidden costs

noting that traditional accounting often fails to capture the full financial impact of poor quality

which includes customer dissatisfaction and loss of reputation.