Define cost of quality (COQ), list the four categories, and provide an example of each.

The cost of quality (COQ) are costs incurred to prevent or rectify the production of a low-quality product. These costs focus on conformance quality and are incurred in all areas of the value chain. They are broken into four categories:
1.   Prevention costs: costs incurred in precluding the production of products that do not conform to specifications.
2.   Appraisal costs: costs incurred in detecting which of the individual units of products do not conform to specifications.
3.   Internal failure costs: costs incurred when a nonconforming product is detected before it is shipped to customers.
4.   External failure costs: costs incurred when a nonconforming product is detected after it is shipped to customers.