From Elsmar Cove Quality Assurance and Business Standards Wiki
(1) Often cited as "the cost of conformance (achieving quality) plus the cost of nonconformance (waste)". This measure of organizational "effectiveness" fails to take into account the unknown and unknowable costs (e.g., the cost of a dissatisfied customer, or the loss to the individual and to society of poor education) and narrowly defines quality as conformance to specifications.
(2) Costs associated with providing poor quality products or service. There are four categories of costs: internal failure costs – costs associated with defects found before the customer receives the product or service, external failure costs – costs associated with defects found after the customer receives the product or service, appraisal costs – costs incurred to determine the degree of conformance to quality requirements, and prevention costs – costs incurred to keep failure and appraisal costs to a minimum.
