Liability Costs Notes: Definitions & Explanations PDF | Download eBooks

Study Liability Costs lecture notes PDF with total quality management definitions and explanation to study What are Liability Costs?. Study liability costs explanation with TQM terms to review total quality management course for online MBA programs.

Liability Costs Notes:

The activities performed to carry out quality control and monitoring incur costs that are termed as costs of quality. Costs of quality are further divided into prevention, appraisal and failure costs. Failure costs have two types. One type is external failure cost that is linked to shipping poor quality products to the customers. Sometimes the product has serious defects that can harm the user or customer. In this case, there is a liability on the buyer or organization to compensate the customer. This is a legal obligation on the organization. The costs that are associated to fulfill this legal obligation are called liability costs. Liability costs include paying for a law suit or to cover the complete cost of damage or harm.

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