Situation: Tamara's Monogrammed Baked Goods sells muffins, cakes, and pastries that have their customers' initials sewed onto them with celery strings. But, the delivery team sometimes gets orders mixed up and delivers monogrammed baked goods to the wrong customers. For health reasons, food items cannot be returned, so Tamara has to monogram a new set of baked goods and have them delivered to the affected customers. According to The Cost of Poor Quality, what category does this cost belong to?

Internal failure

External failure

Appraisal

Prevention


Choose an option to see if it’s correct. Check the explanation below.

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Explanation: Situation: Tamara’s Monogrammed Baked Goods sells muffins, cakes, and pastries that have their customers’ initials sewed onto them with celery strings. But, the delivery team sometimes gets orders mixed up and delivers monogrammed baked goods to the wrong customers. For health reasons, food items cannot be returned, so Tamara has to monogram a new set of baked goods and have them delivered to the affected customers. According to The Cost of Poor Quality, what category does this cost belong to?


Explanation: The correct answer is **External failure**. External failure costs are incurred when defective products or services reach customers and cause dissatisfaction or problems. In the given scenario, Tamara's Monogrammed Baked Goods experiences external failure costs due to delivering monogrammed baked goods to the wrong customers. This results in customer dissatisfaction and necessitates remaking and redelivering the baked goods, which incurs additional expenses for the company. External failure costs not only include the direct costs of replacing or fixing the defective products but also encompass intangible costs such as damage to reputation, loss of customer trust, and potential legal ramifications. By misdelivering the monogrammed baked goods, Tamara's company faces increased expenses, decreased customer satisfaction, and potential damage to its brand image, all of which contribute to the category of external failure costs. Therefore, the correct categorization of this cost aligns with the principles outlined in The Cost of Poor Quality, making "External failure" the appropriate choice in this situation.
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