External Failure Costs Notes: Definitions & Explanations PDF | Download eBooks

Study External Failure Costs lecture notes PDF with project management definitions and explanation to study What are External Failure Costs?. Study external failure costs explanation with project management terms to review project management course for online MBA programs.

External Failure Costs Notes:

Organizations, nowadays, are adopting quality management. When the products of an organization are monitored to make them according to the desired specifications, the organization is faced with some specific costs. These costs are called cost of quality. One of the type of quality cost is called external failure cost. External failure costs, as the name indicates, are related to a defected or failed product. The word 'external' with the failure costs refer to the fact that the defective product has been shipped to the customer. When a customer determines that his/her requirements have not been met, the organization must take some action on that complaint which incurs cost. This cost is called external failure cost. Some examples of external failure costs are cost of visiting customer for inspection, cost of complaint resolution, compensations if damage has occurred to the customer etc.

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