COPQ consists of those costs which are generated as a result of
producing defective material.
This cost includes the cost involved in fulfilling the gap between
the desired and actual product/service quality. It also includes the cost of
lost opportunity due to the loss of resources used in rectifying the defect.
This cost includes all the labor cost, rework cost, disposition costs, and
material costs that have been added to the unit up to the point of rejection.
COPQ does not include detection and prevention cost.
Our COPQ will generally cover the followings:
1) Cost of labor to fix the problem.
2) Cost of extra material used.
3) Cost of extra utilities .
4) Cost of lost opportunity
a) Loss of sales/revenue (profit margin)
b) Potential loss of market share
c) Lower service level to customers/consumers