Which of the following is an external failure that should be considered in a quality/cost study of Honey Nuggets cereal?
A) The cost of overfilling boxes
B) Expenses incurred during production before bad products leave the plant
C) The cost of sorting out bad boxes
D) Expenses incurred after bad products reach the consumer
E) All of these

Question

Quizplus · Accepted Answer

An external failure in a quality/cost study refers to expenses incurred after bad products reach the consumer. Therefore, the cost of external failure for Honey Nuggets cereal would include expenses related to consumer complaints, returns, and lost sales due to the bad product reaching the market. Options A, B and C refer to internal failures which occur before the product is shipped to the consumer, such as overfilling boxes, production expenses, and sorting out bad boxes.

Which of the Following Is an External Failure That Should