Downgrading Notes: Definitions & Explanations PDF | Download eBooks
Study Downgrading lecture notes PDF with total quality management definitions and explanation to study What is Downgrading?. Study downgrading explanation with TQM terms to review total quality management course for online MBA programs.
Downgrading Definition:
Downgrading is the price differential between the normal selling price and any selling price that might be obtained for a product that does not meet the customer?s requirements.
Introduction to Statistical Quality Control by Douglas C. Montgomery
Downgrading Notes:
A number of costs are associated with quality. These costs are collectively called quality costs. There are different types of quality costs. One of them is internal failure cost. Internal failure cost is the cost associated with poor quality of products before they are shipped to the customers. Internal failure costs are further categorized into sub classes. One of these sub classes is downgrading. Downgrading is also called off-specing. Sometimes, a product has a certain defect, still it can be used. However, organizations tend to charge a price lower than the normal selling price for these types of defective products. The different between the normal selling price and the price that is charged when the product is not according to the specifications is called downgrading. The disadvantage of downgrading is that the products may not recover the actual costs that were incurred thus reducing profit margin.
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