The minimum amount of total quality costs is achieved when the:
A) marginal voluntary expenditures exceed marginal failure costs.
B) marginal voluntary expenditures equal the marginal savings on failure costs.
C) marginal voluntary expenditures are less than the marginal savings on failure costs.
D) none of the other answers are correct.

Question

Quizplus · Accepted Answer

The minimum amount of total quality costs is achieved when the marginal voluntary expenditures equal the marginal savings on failure costs. This means that the cost of preventing a failure through voluntary expenditures is equal to the cost of correcting the failure. Any additional spending on voluntary expenditures would increase the total cost of quality, while any reduction in voluntary expenditures would increase the cost of failure. Therefore, the optimal level of spending on quality is at the point where the marginal costs of voluntary expenditures and failure costs are equal.

The Minimum Amount of Total Quality Costs Is Achieved When