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Internal failure costs are incurred when removing defects from goods before transporting them to clients. Examples include rework that involves the cost of corrective defects in products, sorting inspection cost that includes separation of bad products from good ones, scrap costs that entail the labor and material used to make defective products and retest cost that includes testing if all defectiveness has been rectified in a defective product (Stevenson, 2016). On the other hand, external failure costs occur after the client has received the goods. Such costs include warranty charges that include repairing and replacing defective products that are under warranty period. Other external failure costs include complaint adjustment, returned materials, and penalties resulting from poor quality. Tradeoff refers to the technique of forgoing or reducing a desirable outcome at the expense of a more desirable outcome to maximize income in a given situation. For instance, the company would ra...

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Coursework (66 pages)
Business
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Young H
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