Investing in automated coffee machines to reduce human errors is an example of:

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BlackTom AI · Accepted Answer

Question restatement: The scenario describes investing in automated coffee machines to reduce human errors. What type of cost is this?

Option 1: Prevention cost
- This is the money spent to prevent defects from occurring in the first place, such as investing in automation to minimize human error. By purchasing automated machines, the organization aims to prevent errors, so this aligns with prevention costs.

Option 2: External failure cost
- External failure costs arise after a product or service reaches the customer, such as warranty repairs, returns, or reputation damage. The investment described is not a cost incurred after failure, but a proactive prevention measure, so this option does not fit.

Option 3: Internal failure cost
- Internal failure costs occur when defects are detected before delivery, such as scrap, rework, or debugging during production. The automation investment is intended to reduce the chance of failures, not to account for failures already inside the process, so this is not correct.

Option 4: Appraisal cost
- Appraisal costs are associated with measuring, evaluating, or testing to ensure quality, like inspection and testing activities. While automation can include monitoring, the core purpose described is prevention of human errors, not just appraisal/testing activities, so this option is not the best fit for the described scenario.

Summary: The investment in automation to prevent human errors is best categorized as a prevention cost, since its main purpose is to avoid defects before they occur rather than detecting or accounting for them later.

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Investing in automated coffee machines to reduce human errors is an example of:

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