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The cost of quality can be divided into the visible costs of quality and hidden or unmeasured costs of quality. The COPQ can be estimated by multiplying the number of defects per period of time by the average unit cost to fix a defect (labour and materials). For many companies, the costs for quality defects amounts up to 40% of total sales turnover.

The hidden costs of quality defects are often hidden as an overhead cost which is smoothed over or thrown together with other costs, which means that the cost of the quality defect is difficult to identify. Such a benign calculation however omits costs such as loss of goodwill and loss of competitiveness, and other matters such as warranty costs and legal damages. In 1977, the quality guru Armand Feigenbaum estimated the cost within the hidden factory can be 10% to 40% of total company effort.

Systematically focusing on identifying and eliminating visible as well as hidden costs for quality defects can give big results for relatively little effort.

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