What causes external failure costs?

Purchasing new equipment

Costs associated with defects found after the product reaches the customer

External failure costs are costs incurred due to defects found after the product reaches the customer. These costs include warranty claims, product returns, customer support, and potentially damaging the reputation of the company. Purchasing new equipment, costs of acquiring a new company, and costs associated with a new patent are not directly related to external failure costs.

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Costs of acquiring a new company

Costs associated with a new patent

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