Cari and Jeremy Just Bought a Bed and Breakfast Inn

Question

Examlex · Accepted Answer

The Answer is 1. Prevention costs are incurred to keep quality defects from occurring; Appraisal (detection) costs are costs devoted to the measurement and analysis of data to determine conformity of outputs to specification(s); Internal failure costs are all costs associated with defective processes or defective products detected before delivery to customers; External failure costs are all costs associated with defective/poor-quality outputs detected after being delivered to the customer.
2. Examples of each of the four COQ categories:
Prevention:
● Hiring employees with good references.
● Training of owners and employees.
● Good security.
● Good reservation system.
● Purchasing quality furniture.
Appraisal:
● Verifying accuracy of reservation and registration procedures.
● Inspecting rooms, facilities, building and grounds regularly.
● Observing activities of employees.
● Testing furniture and fixtures.
● Taste testing food.
Internal failure:
● Re-cleaning rooms and facilities.
● Restocking rooms with linens, glasses, etc.
● Out of stock supplies.
● Re-inspection.
● Failure to bill on a timely basis.
External failure:
● Responding to complaints about rooms and food.
● Responding to complaints about reservations.
● Emergency cleaning of rooms when not ready on time.
● Customer refunds because of unsatisfactory conditions.
● Opportunity cost of lost revenue resulting from unhappy customers.

Cari and Jeremy Just Bought a Bed and Breakfast Inn

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