Cost of Quality MCQ Quiz in मल्याळम - Objective Question with Answer for Cost of Quality - സൗജന്യ PDF ഡൗൺലോഡ് ചെയ്യുക

Cost-Benefit Analysis

A cost-benefit analysis is a process of comparing the projected or estimated costs and benefits associated with a project decision to determine whether it makes sense from a business perspective.

Key Points

•  Cost-benefit analysis provides a measure of the profitability of education as an investment for society, or for the individual student or his/her family.
• It will act as a general guide for resource allocation and enable the comparison of the economic profitability of different types of education.
• The broad process for cost-benefit analysis is to set the analysis plan, determine your costs, determine your benefits, perform an analysis of both costs and benefits, and make a final recommendation.
• The desirability or feasibility of projects, whether in the private or public sector are adjusted on the basis of criteria that are rooted in the concept of profits.
• The two sectors, public and private, however, may differ on the explicit recognition of the prices at which the value of output and the cost of inputs are to be evaluated.
• In this analysis economic profitability is useful for decision-making in education.
• Profitability is contingent upon the likely costs that the project entails, and the likely returns that it generates.
• While the analysis of projects in the private sector generally incorporates the direct and financial costs and benefits only, the analysis of public sector projects attempts to encompass the indirect and non-financial costs also.
• Cost-benefit analysis steps are given below:-

1. Specifying the programme/project clearly
2. Describing quantitatively the inputs and outputs of the project.
3. Estimating the social benefits of the inputs and outputs of the project.
4. Comparing the benefits and costs.

Thus, option 1 is correct.

Hence, it can be concluded that economic profitability is related to cost-benefit analysis.

The correct answer is Both Statements (I) and (II) are not correct.

Quality Costs:

• Cost of quality (COQ) is defined as a methodology that allows an organization to determine the extent to which its resources are used for activities that prevent poor quality, that appraise the quality of the organization’s products or services, and that result from internal and external failures.
• Having such information allows an organization to determine the potential savings to be gained by implementing process improvements.

Key Points Internal failure costs: 

Internal failure costs are incurred to remedy defects discovered before the product or service is delivered to the customer. These costs occur when the results of work fail to reach design quality standards and are detected before they are transferred to the customer. They could include:

• Waste: Performance of unnecessary work or holding of stock as a result of errors, poor organization, or communication
• Scrap: Defective product or material that cannot be repaired, used, or sold
• Rework or rectification: Correction of defective material or errors
• Failure analysis: Activity required to establish the causes of internal product or service failure

External failure costs:

External failure costs are incurred to remedy defects discovered by customers. These costs occur when products or services that fail to reach design quality standards are not detected until after transfer to the customer. They could include:

• Repairs and servicing: Of both returned products and those in the field
• Warranty claims: Failed products that are replaced or services that are re-performed under a guarantee
• Complaints: All work and costs associated with handling and servicing customers’ complaints
• Returns: Handling and investigation of rejected or recalled products, including transport costs

Important Points

•  Internal failure costs are incurred before the delivery of products while external failure costs are generated after the dispatch of products to customers. 

Hence, the correct answer is Both Statements (I) and (II) are not correct.

Explanation:

(i) Cost of quality (COQ) is defined as a methodology that allows an organization to determine the extent to which its resources are used for activities that prevent poor quality, that appraise the quality of the organization's products or services, and that result from internal and external failures.

(ii) In process improvement efforts, quality costs or cost of quality is a means to quantify the total cost of quality-related efforts and deficiencies. It was first described by Armand V. Feigenbaum in a 1956 Harvard Business Review article