What does Cost of Quality refer to?

Cost of Quality refers to the total costs associated with ensuring that a product or service meets quality standards. This includes not only the costs associated with preventing defects (such as training, process control, and quality planning) but also the costs incurred to assess performance (such as inspections and testing). Additionally, it covers the costs resulting from defects when they occur, which may encompass correction costs and external failures.

The concept of Cost of Quality emphasizes that investing in quality improvement can positively impact a company's bottom line by reducing waste, rework, and failures. By understanding this broader view of quality costs, organizations can make better decisions on resource allocation and quality initiatives.

The other provided options are limited in scope; for instance, referring solely to marketing costs or labor costs does not capture the comprehensive nature of quality expenses. The emphasis on defect correction costs alone overlooks the proactive measures meant to prevent those defects, which is a key principle behind effective quality management.