Appraisal costs are costs that are incurred to make sure that a product or service has a desired level of quality. This could include the costs of inspection and regular quality control tests on the field.
It is believed that when a customer experiences a defective product it will not come to the company again as it has lost its trust in it. Although the appraisal costs are higher than the regular costs of warranties or claims it reduces the overall cost of losing a customer.
Product appraisal costs are in form of achieving certifications like ISO9000 certification, that will involve the product inspection and how the production process is lead in order to reach the final product.
A number of terms relating to the cost of quality and quality
Osborn, Inc., produces cell phone equipment. Amanda Westerly,
Mercury, Inc., produces cell phones at its plant in Texas
Home Appliance (HA) builds coffeemakers and battery-powered small
Johnson & Johnson (www.jnj.com), a major
“An ounce of prevention is worth a pound of cure.”
Cerritos Circuitry manufactures electrical instruments for a variety of purposes. The
Costen, Inc., produces cell phone equipment. Jessica Tolmy,
Suppose that the prevention cost function is as given in Exercise 1
Consider Exercise 1-22. Suppose that market share is strongly
