The cost of reengineering the production process to reduce defect rate is an example of which of the following?
A) Internal failure cost
B) Appraisal cost
C) External failure cost
D) Prevention cost

Question

Quizplus · Accepted Answer

The cost of reengineering the production process to reduce defect rate is an example of a prevention cost. Prevention costs are incurred to prevent defects from occurring in the first place, and reengineering the production process is a proactive measure to prevent defects. Internal failure costs occur when defects are discovered during the production process, before the product is shipped. Appraisal costs are incurred to determine whether the product meets quality standards, such as examining the product for defects or conducting testing. External failure costs occur after the product is shipped and defects are discovered by customers, such as warranty repairs or recalls.

The Cost of Reengineering the Production Process to Reduce Defect