What is a prevention cost? How can it be recognized? Describe where prevention costs can be found
What will be an ideal response?
Prevention costs are those costs that occur when a company is performing activities designed to prevent poor quality in products or services. Prevention costs are often seen as front-end costs designed to ensure that the product or service is created to meet the customer requirements. Examples of such costs are design reviews, education and training, supplier selection and capability reviews, and process improvement projects. Prevention activities must be reviewed to determine if they truly bring about improvement in the most cost-effective manner.
Prevention efforts try to determine the root causes of problems and eliminate them at the source so reoccurrences do not happen. Preventing poor quality stops companies from incurring the cost of doing it over again. Essentially, if they had done it right the first time, they would not have to repeat their efforts. The initial investment in improving processes is more than compensated by the resulting cost savings.
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