Wgu Qht1 Task 1

863 Words Jan 9th, 2015 4 Pages
Student: John Loyd
Student ID: 000329013
Course: QHT1 Business Management Tasks
Task 1
Cost Quality Relationship
Product production comes with many types of costs. Four of the most common costs are prevention costs, appraisal costs, internal failure costs and external failure costs. These four costs are called quality costs and are costs that all businesses that produce products will pay. The amount of money that will go to each cost is dependent on the amount spent on the other costs. In other words, an increase in one type of cost can result in a decrease in another. Businesses need to understand the nature of each cost in order to understand for which cost to budget.
The first type of cost is prevention costs. Prevention
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These costs are associated with the process of checking for faults that may have slipped through despite the prevention measures. Products are made by human and humans make errors. Even when a product production is made efficient and every precaution is made, some products still are defective. An appraisal process is needed before sending products to the public. Appraisal costs include the cost of running tests on products, labs, audits for quality, inspection of the materials used to make the products, field testing and more. As an example, many companies conduct research studies on new products. A small group of consumers from various walks of life are gathered and asked to use and give feedback on the product. Usually those consumers are compensated monetarily. Any defects in the design or problems with using the product can be reported. Other examples include hiring scientists to test product in a lab before it is sold on the market. Costs associated with appraisal can keep companies from having failure costs. A trade off associated with this type of cost can also lead to decreased time on the market. Opening up review and analysis to committee and decrease a products time on the shelf. Another trade off might be the costs associated with too many appraisals in order to find the perfect product. Analysis can be expensive, so it is important to know when the search for the perfect has become the enemy of the good.

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