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Hi sir,
I just wonder the reason why ” In the context of quality costs, warranty replacement costs and Inspecting purchased parts costs would be classified as External failure costs and Appraisal costs respectively.”As far as I am concerned, warranty replacement costs are inernal failure costs.
No – they are external failure costs. They occur because the customer was supplied with faulty goods.
I think its company’s own fault-producing faulty products , so its an internal failure cost. I just wonder where I go wrong.
It is the deficiency found after delivery?so we choose external costs, am I right?
An internal failure cost is where the customer is not affected (so, for example, waste of materials, or reworking products because they failed an inspection). These cost the company money but do not affect the customer.
External costs are costs incurred because the customer is affected. So for example, warranty/guarantee work; replacing faulty goods; lost customer goodwill.
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