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2. Cost Of Poor Quality (COPQ)
2.1 Introduction to COPQ

COPQ is composed of costs, which are incurred by producing defective material. This cost consists of cost involved in perfecting the gap between desired and accrual product or service quality. It also includes the cost of lost opportunities due to loss of resources that generated in correcting the defects. Furthermore, labor cost, rework cost, disposition costs, and material costs that added to the fulfilling the product rejection are included in COPQ.

Here is the figure shows the main components of COPQ

Cost of inefficient processes
Cost of nonconformities
Cost of poor quality

Cost of lost opportunities for sales

Figure 2.1 components of COPQ

2.2 Why COPQ

The reasons to estimate the cost of poor quality are multifold, including quantifying the cost of money generated by quality problems, identifying major opportunities for cost reduction, and verifying probabilities of reducing customer dissatisfaction and product salability threats. Additionally, measuring COPQ provides a means of evaluating the progress of quality improvement activities and knowing the cost of poor quality leads to the development of strategic quality plan that is consistent with overall organization of goals.

2.3 Categories of Quality Costs
There are four general categories of costs concerning products’ quality.

The Internal failure costs are the cost due to the deficiencies discovered before delivery, which are associated with the failure to meet explicit requirements or implicit needs of customers.

External failure costs are because of afterwards deficiencies discovered. In the case of FDA, this cost might be associated with food and drug safety problems, and re-inspection of problematic products that have already been publicized.

Appraisal costs are the cost generated by ensuring the degree of…...

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