Chapter 10, Problem 54E

Cost of Quality: Environmental Issues

Many companies have adapted the cost of quality framework to environmental issues. They assign costs to one of four categories: prevention (P), appraisal (A), internal failure (IF), and external failure (EF), where the categories refer to environmental activities and consequences of environmental failures. Classify the following costs incurred for environmental activities into the four categories.

1. a.            Criminal penalties for illegal dumping.
2. b.            Cleanup of leaks and spills on the plant floor.
3. c.             Employee training: environmental policies.
4. d.            Lost sales from bad publicity after toxic spill.
5. e.             Fines for being out of compliance with environmental regulations.
6. f.              Maintenance of machinery that handles hazardous material.
7. g.            Monitoring costs of chemical processes.
8. h.            Design of processes to minimize leakage and waste.