Cost-Quality Relationship - Essay Example

The prevention cost therefore works towards trying to control the reduction of possible defects that can be experienced that may have effect on the quality and hence making it difficult to implement the required costs that will work well towards making the organization to grow. Prevention cost tries to employ prevention of defects by enabling companies to employ various techniques such as statistical process control, personnel training or even quality engineering (Festinger, 2001). Under this kind of cost that regards quality for its operations, there are activities that relate to quality circles as well as the statistical process control.

In this regard, the quality circles under this program talk greatly in detail about small numbers of employees that will always have a meeting regularly to discuss the initiatives to select that will help them improve on quality. These circles often include both the employees as well as the management. Some firms tend to provide various forms of technical support to suppliers so as to avoid and prevent defects that could occur in the company. In JIT (just in time) systems for example, there are deliveries of parts from the suppliers in good time as well as in good quality.

Parts that have defects can not be accepted and hence the supplier is expected to use sophisticated programs of quality control to enable them supply good parts that lack defects (Festinger, 2001).A company should have adequate programs for the identification of defects in good time within the production process. The appraisal costs are the ones that are set aside for that effect. They are the costs incurred in the endeavor to identify products that are defective before they are actually transported to the consumers.

However, maintaining an up to date system of appraisal could be quite expensive as they are for problems that will always be there. The employees are therefore given the responsibility of being responsible for their departments and the products involved so as to avoid much spending on the same mistake continuously. The management that lacks insight may always prefer keeping things in order only when they go wrong and such firms are the kinds that are mostly interested in this kind of cost. The other type of firms is the ones that use fewer funds to control a defect and use the idea to avert future issues that are similar (Festinger, 2001).

External Failure Cost:This is the third type of cost that can be applied in the real sense to facilitate quality of services offered in a company. This is mostly applicable in instances whereby the product has already left the company premises and has reached the consumer of the product. This kind of cost includes the provision for repairs, products recall, warranty, replacement or even costs that arise from the legal actions lodged against a company. The warranty, for example, is implemented to pay for any form of defect that may be witnessed in a product within a given period of time, mostly a year or so.

Such kinds of problems can decimate the profits of a company (Festinger, 2001). Some managers have in the past embraced the notion that they should supply