Answer:
Options A and B both represent ideal cost of quality (CoQ) breakdowns.
Explanation:
In trying to determine the financial benefit of quality in an organization, certain models can be adopted. One such model is the PAF model.
The PAF model tracks the resources spent in ensuring quality by preventing the occurrence of bad quality, appraising the products and processes and the internal and external costs of failure. It accounts for all of the activities that any typical company would perform in the name of providing good products or services to customers.
Prevention refers to costs associated with preventing a quality problem from occurring in the first place. Typical costs that are included in this category are; training, procedure writing, ISO related costs, and process or equipment automation.
Appraisal refers to any activity aimed at inspecting the quality of the product or service including calibration, instrumentation, and inspection and test personnel.
Internal Failure are those costs associated with recognizing a poor quality characteristic exists BEFORE the product leaves the factory. The most common cost in this category is scrap, followed closely by rework costs.
External failure is failure of a product or service at the delivery point or usage point of the customer. At this point, the product is fully burdened with cost, including transportation and storage costs. Reputation is impacted here too.
[tex]CoQ = Prevention + Appraisal + Failure[/tex]
The point where the sum of Prevention and Appraisal cost is equal to the Failure cost is referred to as minimal or ideal Cost of Quality point.
[tex]Prevention + Appraisal = Failure[/tex]
Clearly, in option A, [tex]15%+ 35% = 50%[/tex]
and in option B, [tex]5% + 45% = 50%[/tex].
