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EBTQ3203 QUALITY MANAGEMENT images - Coggle Diagram
EBTQ3203 QUALITY MANAGEMENT 
C1
A company identifies inspection expenses, rework costs, and costs due to warranty claims. How should these costs be classified based on quality cost categories?
A. Inspection expenses are part of prevention costs; rework costs and warranty claims are internal and external failure costs.
B. Inspection expenses are part of appraisal costs; rework costs are internal failure costs, and warranty claims are external failure costs. (Correct Answer)
C. Inspection expenses and rework costs are both considered prevention costs; warranty claims fall under external failure costs.
D. All identified expenses are considered appraisal costs as they evaluate the product's quality post-production.
C4
A CEO reviews a report showing that quality costs as a percentage of total sales have increased significantly over the past year. What conclusions can the CEO draw from this data, and what corrective actions should the company consider?
A. Increased quality costs indicate better product quality; the company should continue its current strategy.
B. The rise in quality costs might be due to high failure costs; the company should focus on prevention and appraisal strategies. (Correct Answer)
C. Quality costs as a percentage of sales are irrelevant to product quality and customer satisfaction.
D. The company should reduce all quality costs to align with industry benchmarks without additional analysis.
C2
A quality assurance manager uses a report showing that appraisal costs make up 15% of the total quality costs while internal failure costs are at 25%. What does this report suggest about the balance of quality costs, and how can the company use this information for improvement?
A. The company should increase appraisal costs to reduce internal failure costs, improving overall profitability.
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C. Internal failure costs being lower than appraisal costs indicate that product quality is already at its peak.
D. The company should focus on increasing external failure costs to understand the impact on customers better.
C3
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B. Invest more in prevention activities like training and process control to reduce external failure costs and improve profitability. (Correct Answer)
A. Shift focus from prevention costs to external failure costs to minimize customer dissatisfaction.
A company analyzes its quality cost distribution and finds that prevention costs are only 5% of total quality costs, while external failure costs are 40%. How can the company apply this data to improve profitability while meeting customer requirements?
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