...To: James Hodges Date: 23 February 2016 From: XXXXXXXX Facility: XXXXXXXXX Subject: Quality Costs Jim, the purpose of this memo is to update you on the quality issues we’re having at the Coachella packing house. Rejection costs are mounting due to the quality deficiencies not being addressed at this location. The costs can be boiled down to: Prevention, Appraisal and Failure Costs Let’s first start off with Prevention. There are too many choice peppers making it onto the packing line, which means they’re making it to the customer. The choice peppers should be diverted to the cull buyer and not make it into the packing house. A 2-3 hour grading refresher course for both the harvesting and packing house personnel will impact production for half a day, but the benefits will outweigh the cost and inconvenience of the down time. Aweta, the manufacturer of the processing line will be contacted to come out and re-calibrate the sorting line cameras and sizers. Costs incurred will be minimal, as this is part of the maintenance contract. And this can also be done in conjunction with the grading course refresher. Downtime will be minimal. The second cost center is Appraisal. Currently we only have two quality control inspectors, we need two more. Having two additional inspectors will allow us to have one dedicated inspector in the receiving bay. This inspector will be able to halt any suspect shipments before they even make it into the packing house. This will...
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... To: Supervisor From: Management Re: Cost of Quality Cost of Quality in Manufacturing I will explain in the following the three types of costs there are when making quality decisions in our manufacturing site in regards to the cost associated in making quality products. 1. Internal failure cost - This is the cost found on defects before it is delivered to the internal or external customer. 1.1. External failure cost – This is the cost associated for defects found after they are delivered to the internal or external customer. 2. Appraisal costs – This is the cost associated in maintaining a quality standard or program. 3. Prevention costs – This is the cost associated with keeping both appraisal cost and internal/external cost to the lowest level. A great example of internal/external cost would be the impact to our internal customer in dollar terms of the quality defect, I.E machine downtime because of a bad part damaging a machine. A great example of appraisal cost would be a inspection process we maintain to ensure quality product for our external customers and the cost of the people doing the inspection. A great example of prevention costs would be in the wages we pay to the engineering team for ensuring a quality designed product. Now I will evaluate the three types of cost considering the tradeoffs within our manufacturing plant. Internal failure cost is high for failures due to the disruption that occurs to our downstream customers. You...
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...Memo: As we continue to move toward the end our quarterly objectives. I wanted to take the time to explain some of our costs. In our particular field of designing and manufacturing products, we are always engaging in ways that we can mitigate loss and improve our processes. Performing such changes will give a stronger presence in the market by allowing us to remain competitive. While we are performing our analysis on different aspects of the company, we look at the three main types of cost. When we remain devoted to improving our costs, and the faults related, we show our same devotion to our consumers. This is portrayed by the quality of products we put on the shelves. Prevention costs, appraisal costs and Failure costs are areas that we must strive to mitigate any loss from our past experiences. Prevention cost is an expense related to our efforts in quality control. If we take necessary measures to proactively identify and prevent loss from our processes, the cost associated with actions would be our prevention cost. This was recently seen by the required staffing training we implemented for all employees working on the assembly line. This was our way of making sure that we out our best foot forward and in-turn reduced potential loss seen in prior months of similar capacity. Appraisal costs are how we were able to identify the need for the previously mentioned preventative cost. Appraisal cost is the cost incurred for activates helping us to make sure we have unswerving...
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...Student: John Loyd Student ID: 000329013 Course: QHT1 Business Management Tasks Task 1 Cost Quality Relationship Product production comes with many types of costs. Four of the most common costs are prevention costs, appraisal costs, internal failure costs and external failure costs. These four costs are called quality costs and are costs that all businesses that produce products will pay. The amount of money that will go to each cost is dependent on the amount spent on the other costs. In other words, an increase in one type of cost can result in a decrease in another. Businesses need to understand the nature of each cost in order to understand for which cost to budget. The first type of cost is prevention costs. Prevention costs are the most vital costs in which to invest. Prevention costs are the costs that are acquired when the company prevents the occasions of defects in the first place. Basically, this is the cost of producing quality products. These costs include improvement in the manufacturing methods used to make the product, properly maintain the equipment that is used, maintaining a good relationship with vendors, employee training and more. Any cost that is associated with the lessening of creating faulty products is a prevention cost. For instance, a company that pays trainers to fully train each employee and offers paid training will see a decrease in the human error involved in manufacturing. A company that does not take the time to do this will...
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...TO: John Smith, Supervisor FROM: SUBJECT: Three types of cost when quality considerations are made Given the highly competitive nature of today’s markets we as a company must provide high quality products to survive. Quality itself has become a major competitive factor and in many ways is a contributing factor in success or failure. The intent of this memo is to identify, explain and evaluate the three types of cost associated with quality. The three types of cost of quality are Prevention costs, Appraisal costs and Failure cost (Both internal and External) (Stevenson, 2009 pg. 421) The first type of cost is Prevention costs. Prevention refers to all costs associated with preventing the failure or non-conforming product or service occurring in the first place. Some specific examples of prevention costs are development of equipment, maintenance and calibration of inspection tools, audits of supplier materials, quality training of employees and the development and implementation of quality control processes. Although initial investments are required to implement prevention costs, they are often considered to be the least expensive cost of quality as many preventive costs and / or processes are repeatable with minimal reoccurring expense. The second type of cost is Appraisal cost. Throughout the process of a product or service being produced an inspection of that product or service must be performed in order to make sure that it is conforming to the quality standard set...
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...Memo TO: John Doe – Supervisor FROM: Jennifer Crawford Date: May 20, 2015 Re: WGU GHT1 Task 1 There are three types of costs when quality considerations are made, appraisal costs, prevention costs, and failure costs. Failure costs also include external failure and internal failure. A detailed explaination is included below: Appraisal costs are costs that the company incurs to ensure qaulity or uncover defects. This includes but is not limited to costs such as testing equipment, inspections of materials, labs, quality audits, field-testing, and other inspections costs. Prevention costs are the costs associatied with preventing defects from occurring. This includes costs such as designing a better quailty product, increased maintenance on equipment, quality control procedures, training of employees, planning and administration procedures, working with vendors, and any extra time that is used that is devoted to decreasing the probablilty of a defective workmanship. Failure costs are incurred bye defective parts or products or by faulty services. Internal failures are failures that are discovered during the production process or prior to the customer ever coming into direct contact with the product. There are many reasons that internal failures may occur which range from defective materials, incorrect methods or processing, or faulty equipment. External failures are failures that are discovered after the customer has the product. External failutres can become...
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...Memo To: | Supervisor, ABC Company | From: | Jenna Skinner | cc: | Assistant Supervisor, ABC Company | Date: | June 22, 2016 | Re: | Quality Considerations | | | As you are aware, our consumers expect a certain level of quality from the products that we produce. This level of quality helps gain an advantage over our competitors and keeps our business growing. In order to maintain this level of quality we have come to be known for, we must consider the three main costs associated with producing quality products. The three types of costs associated with quality consideration are appraisal costs, failure costs, and prevention costs. I would like to bring these to your attention and explain more about each of these costs. I will also explain my analysis for potential trade-offs for costs incurred in these categories. Failure costs can be both internal and external. Internal failure costs occur when defects are discovered and corrected prior to our product reaching the customer. These costs arise when our quality of work fails to reach the standards our customers require and need to be corrected. There are a number of factors that contribute to internal failures such as reworking the product and starting over, cost of finding the issue, employee injuries , etc. External failure costs are ones that are uncovered after the product has reached our customer, and are much more damaging in terms of costs. These external failure costs include customers returning...
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...QHT1: Business Management Tasks Task 1: 304.1.3-04 2015 interoffice memorandum to: | Supervisor of XYZ Inc. | from: | | subject: | Quality consideration costs | date: | September 1, 2015 | | | | | Looking over our products, there are three types of costs to utilize when quality considerations are made. These consist of appraisal, prevention, and failure costs. To ensure and achieve good quality and fix any defect before our product reaches the consumer, we must consider appraisal costs. Appraisal costs include the measuring and evaluating of our products to assess compliance with standards. The costs of measuring and evaluating will come from inspections (which will also include the inspectors to conduct the inspections), and testing, which will include the equipment to conduct tests, labs, quality audits, and field testing. Importantly, appraisal costs have the potential to significantly lower any future failure costs that may be incurred. The trade-off for the cost of taking the time and effort to inspect, audit, and conduct field testing will give viable information for not only the company but to the consumer as well that we produce and believe in quality products; resulting in a higher return of quality. To prevent the possibility of defects occurring we must invest in prevention costs. These costs will ultimately aid in consumer satisfaction and decrease products returned on account of defective workmanship by paying an exuberant...
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...memo To: John Doe - Supervisor | | From: | | CC: | | Date: May 2, 2013 | | Re: WGU QHT1 Task 1 | | | | There are three types of costs when quality considerations are made, appraisal costs, prevention costs, and failure costs. Failure costs include internal and external failures. An explanation of these costs are listed below: * Appraisal costs are costs that the company incurs to ensure quality or uncover defects. This includes but is not limited to costs such as testing equipment, inspection of materials, labs, quality audits, field-testing, and other inspection costs. * Prevention costs are the costs associated with preventing defects from occurring. This includes costs such as the designing a better quality product, increased maintenance on equipment, quality control procedures, training of employees, planning and administration procedures, working with vendors, and any extra time that is devoted to decreasing the probability of defective workmanship. * Defective parts or products by faulty services cause failure costs. * Internal failures are failures that are discovered during the production process or prior to the customer ever coming into contact with the product. There are many reasons the internal failures can occur including defective materials, incorrect methods or processing, or faulty equipment. * External failures are failures that are discovered after the customer has the product. This type of failure...
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