Warranty service, processing of complaints and costs of litigation are examples of

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BlackTom AI · Accepted Answer

Question restatement: The prompt asks us to categorize warranty service, processing of complaints, and costs of litigation as one of the standard quality cost categories.

Option 1: external failure costs
This is the conventional and correct category for costs that arise due to defects discovered after the product has reached the customer. Warranty service, handling complaints, and litigation are all costs incurred due to failures experienced by customers post-purchase, which aligns with external failure costs.

Option 2: replacement costs
While some companies might incur replacement-related expenses, 'replacement costs' is not a universally defined primary category in the standard quality-cost framework. It’s ambiguous and could refer to various scenarios (pre-sale replacement, post-sale replacement, etc.), which makes it an unreliable labeling for the standard classification.

Option 3: prevention costs
Prevention costs are aimed at preventing defects before they occur (training, process improvement, quality planning). The items in question (warranty service, complaints, litigation) are outcomes of defects that have already manifested in the field, so this option does not describe the given costs.

Option 4: internal failure costs
Internal failure costs cover defects found before the product leaves the organization (rework, scrap, repair during production). Since warranty and post-sale complaints are discovered after delivery, labeling these as internal failure costs would be inaccurate.

Option 5: appraisal costs
Appraisal costs are associated with measuring, evaluating, or inspecting to assure quality (incoming inspections, testing, quality audits). The described items are about post-delivery consequences, not about detecting quality before release, so this option is not fitting.

Summary of reasoning: Among the listed categories, only external failure costs correctly captures expenses arising from defects after the product has reached customers (warranty service, handling complaints, litigation). The other options either describe pre-delivery activities (prevention, internal failure, appraisal) or are ambiguously defined (replacement costs) and do not align with the post-delivery nature of these expenses.

Warranty service, processing of complaints and costs of litigation are examples of

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