The company with the highest ratio of costs of conformance to total costs of quality is the most likely to succeed.

Question

Quizplus · Accepted Answer

The ratio of costs of conformance to total costs of quality represents the portion of total quality costs that are spent on preventing defects or ensuring compliance, while the remaining portion is spent on detecting and correcting defects. While minimizing costs of conformance is important, it is equally important to minimize costs of non-conformance (i.e. defects and failures). Therefore, the company with the highest ratio of costs of conformance to total costs of quality may actually be spending too much on prevention and not enough on detection and correction, which could lead to problems going unnoticed and unresolved. Ultimately, a balance between prevention and detection/correction is necessary for success.

The Company with the Highest Ratio of Costs of Conformance