How are quality costs used for decision-making?

Question

What will be an ideal response?

Answer 1

Quality costs can be used as justification for actions taken to improve the product or service. Typically, investments in new equipment, materials, or facilities require the project sponsor to determine which projects will provide the greatest return on investment. These calculations traditionally include information on labor savings, production time savings, and ability to produce a greater variety of products with better quality. The "better quality" aspect of these calculations can be quantified by investigating the costs of quality, particularly the failure costs. It is important to determine the costs of in-process and incoming material inspection, sorting, repair, and scrap, as well as the intangible costs associated with having a nonconforming product or service, reach the customer. Making a decision with more complete quality information, such as product appraisal costs, can help determine the true profitability of a product or service. Identifying and quantifying quality costs has a twofold benefit. Cost savings are identified and quality is improved. By improving the quality performance of a company, the company also improves its quality costs.