Six Sigma Green Belt Certification Practice Exam

When evaluating the cost of poor quality (COPQ), what is an example of an internal failure cost?

1. Equipment calibration

2. Procedure reviews

3. Restocking costs

4. Excess inventory

The correct answer is: Excess inventory

To understand internal failure costs within the context of the cost of poor quality (COPQ), it's important to recognize what internal failure costs encompass. Internal failure costs occur when defects are identified before they reach the customer. This includes expenses related to identifying and correcting problems internally, as well as costs incurred from wasted resources during the production process. In this case, excess inventory reflects a situation where products were produced that either did not meet quality standards or were overproduced due to demand miscalculations. Maintaining excess inventory incurs costs such as storage, handling, and risk of obsolescence. Thus, it is a direct result of internal failures in the quality process, making it an appropriate example of an internal failure cost. The other options, while related to quality control and operations, do not fit the category of internal failure costs as distinctly as excess inventory does. Equipment calibration, for instance, is more aligned with ensuring quality before defects occur rather than correcting defects, and procedure reviews relate to improving processes rather than handling direct failures. Restocking costs pertain to managing inventory processes but do not specifically connect to the internal failures of quality. Therefore, excess inventory serves as a clear representation of internal failure costs in the context of COPQ.