Cost of quality is the sum of all costs associated with conformance and non-conformance. Cost of conformance includes prevention costs (employee training, tooling maintenance, planned preventive maintenance, suggestion awards) and appraisal costs (inspection, testing, gages and instrumentation, audit expenses).
The cost of non-conformance includes internal costs (unscheduled maintenance, pre-shipment scrap and rework, workers’ compensation) and external costs (warranty, customer complaint investigation, rework of returned goods, and product liability insurance).