Internal failure costs

Internal failure costs are those costs of quality associated with product failures that are discovered before a product leaves the factory. These failures are discovered through the firm's internal inspection processes. Examples of internal failure costs are:

  • Failure analysis activities
  • Product rework costs
  • Product scrapped, net of scrap sales
  • Throughput lost

Internal failure costs are one of the four costs of quality. The other three costs are prevention costs, appraisal costs, and external failure costs.