Describe the four quality-related costs and tell how they are related.

Answer: The four quality-related costs are internal failure costs, external failure costs, appraisal costs, and prevention costs. Internal failure costs are caused by defects that occur prior to delivery to the customer, including money spent on repairing or reworking defective products, as well as time wasted on these activities. External failure costs are costs incurred by defects that are not detected until a product or service reaches the customer. Appraisal costs occur when a company assesses its quality levels. Prevention costs are those costs incurred by an organization to actually prevent defects from occurring to begin with. Classically, we expect that as prevention and appraisal efforts (and costs) rise, that internal and external failure costs should drop.