What is Appraisal Costs?
522 reads · Last updated: December 5, 2024
Appraisal costs are a specific category of quality control costs. Companies pay appraisal costs as part of the quality control process to ensure that their products and services meet customer expectations and regulatory requirements. These costs could include expenses for field tests and inspections.
Definition
Appraisal costs are a specific category of quality control costs. Companies incur appraisal costs during the quality control process to ensure their products and services meet customer expectations and regulatory requirements. These costs may include on-site testing and inspection fees.
Origin
The concept of appraisal costs originated from the evolution of quality management, particularly in the mid-20th century, as manufacturing and service industries increasingly emphasized quality assurance, making appraisal costs a crucial part of corporate quality management.
Categories and Features
Appraisal costs can be divided into internal and external appraisal costs. Internal appraisal costs include tests and inspections conducted within the company, while external appraisal costs involve certifications and audits by external agencies. The main feature of appraisal costs is their preventive nature, aiming to avoid product defects through detection and evaluation.
Case Studies
A typical case is Toyota Motor Corporation, which invests significant resources in quality appraisal during its production process to ensure the safety and reliability of its vehicles. Another example is Apple Inc., which conducts rigorous quality testing before product launches to ensure its products meet high customer expectations.
Common Issues
Investors might worry that high appraisal costs could affect a company's profits. However, neglecting appraisal costs can lead to higher failure costs and customer loss. Additionally, appraisal costs are not equivalent to waste but are an investment in product quality.
