Internal failure costs:- There are the costs which are incurred because of defects in the product before its shipment to a customer.


These include:

–          Scrap and rework.

–          Downtime costs,


b)        External Failure Costs:- There represent all costs incurred on defective products after it is deliberated to a customer.

–          Investigating and solve problem

–          Liability and penalties costs.


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