# Calculate the cost of poor quality at my plant

A cost of poor quality (COPQ) breakdown across scrap, rework, warranty, and appraisal, with the biggest money leaks ranked for action.

- Topic: Finance & Accounting
- Framework: RTF
- Level: Standard
- Tags: Finance, Analyze, Fill-in Template
- Source: https://www.thinkwithprompt.com/prompts/calculate-the-cost-of-poor-quality-at-my-plant

## Prompt

```text
Help me calculate the cost of poor quality (COPQ) for my plant or product line.

**Period and scope:** [e.g. "last 12 months, Plant 2"]
**Internal failure data:** [scrap quantities and values, rework hours and labor rate, re-inspection, downgraded product, line stoppages for quality]
**External failure data:** [warranty claims, returns, customer chargebacks, field service, premium freight to replace bad parts, recall costs]
**Appraisal costs:** [inspection and test labor, lab costs, calibration, audits]
**Prevention costs:** [quality planning, training, FMEA work, supplier development]
**Revenue or cost of goods sold for the period:** [AMOUNT]

Steps:
1. Sort every cost I give into the four buckets: prevention, appraisal, internal failure, external failure.
2. Calculate each bucket's total and COPQ as a percentage of revenue (or COGS).
3. Flag hidden costs I probably haven't counted: overtime to recover output, expedited freight, extra inventory held as a buffer, engineering time on firefighting, lost capacity on the bottleneck. List them as [ESTIMATE NEEDED] rather than guessing amounts.
4. Rank the top 5 failure costs by product, defect type, or line using a Pareto view.
5. For the top 3, suggest what prevention spend could reduce them, and a simple payback estimate based only on my numbers.

Return: a summary table by bucket, the Pareto ranking, the hidden cost list, and a 150-word summary for leadership.

Use only figures I provide. Show calculations. Where scrap is valued at material cost only, note that it understates the true cost (labor and overhead already spent).
```

## What to fill in

- e.g. "last 12 months, Plant 2"
- inspection and test labor, lab costs, calibration, audits
- quality planning, training, FMEA work, supplier development
- AMOUNT
- ESTIMATE NEEDED

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