Quality worked example

Cost of Poor Quality with scrap cost of 21,000 $: a worked example

Push scrap cost up to 21,000 $ and the picture changes. This example computes every intermediate figure at that operating point. Use when quality issues need financial priority for corrective action or improvement work.

The inputs for this scenario

  • Scrap cost: 21,000 $ (raised for this scenario; the documented default is 8,400)
  • Rework cost: 5,200 $ (unchanged)
  • Warranty cost: 3,100 $ (unchanged)
  • Inspection / containment cost: 2,600 $ (unchanged)
  • Customer penalties: 1,500 $ (unchanged)
  • Shipped units: 18,000 units (unchanged)

Working through the calculation

  • Applying the documented formula (COPQ = scrap + rework + warranty + inspection + penalties) to the inputs above produces each figure below.
  • At this operating point the engine returns 33,400 $ for cost of poor quality, the number this scenario is built around.
  • At this operating point the engine returns 1.86 $ / unit for copq per shipped unit.
  • At this operating point the engine returns 26,200 $ for internal failure cost.
  • At this operating point the engine returns 4,600 $ for external failure cost.

How this compares with the baseline

  • Against the tool's baseline example, where scrap cost sits at 8,400 $ and the headline result is 20,800 $, this scenario comes in 60.58% above the baseline at 33,400 $.
  • It adds the five failure-cost buckets into a single COPQ figure, splits it into internal (scrap + rework) and external (warranty + penalties) failure, and divides by shipped units. The value of this scenario is the size of the gap it exposes: that gap, priced out over a year, is the budget you can justify spending to close it.

Results at a glance

  • Cost of poor quality: 33,400 $ (headline result)
  • COPQ per shipped unit: 1.86 $ / unit
  • Internal failure cost: 26,200 $
  • External failure cost: 4,600 $

Run it with your numbers

  • Every input above is editable in the live Cost of Poor Quality calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.