You are employed by a firm that produces tangible products. These products are then sold to a consuming populace that is unaffected by place, income, sex, race, age, or any environmental concerns. These products are acquired and used across the spectrum of consumers.
Prepare a memo (1-3 pages) to your supervisor that addresses the following:
A. Identify the three types of costs when quality considerations are made.
1. Appraisal – appraisal cost relate to inspecting, testing and other activities intended to uncover defective products or services, or to assure that there are none.
2. Prevention – relates to attempts to prevent defects from occurring.
3. Failure – There are two types of failure costs. Internal failure cost which are costs associated with defects found before the customer receives the product or service. Second, External failure which are costs associated with defects found after the customer receives the product or service.
B. Explain each of these types of costs using examples.
1. Appraisal cost include to cost of inspectors, testing, test equipment, labs, quality audits, and field testing.
2. Prevention cost examples are: planning and administration systems, working with vendors, training, monitoring, quality control procedures, and extra attention in both the design and production phases to decrease the probability of defective workmanship.
3. Failure cost examples are: cost of rework, problem solving, downtime, rejected products, scarp, returned goods, liability claims, etc.
C. Evaluate the three types of costs considering the trade-offs within manufacturing a product and/or producing a service.
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