Cost of poor output

The PAF model splits prevention, appraisal, internal failure, and external failure. Cost of poor output is internal plus external failure. It does not include prevention or appraisal, and it does not include lost sales you chose to keep off the books.

The example is a month in which failure is 82,500. Check the addition before you quote a percent of sales.

Type each cost into the bucket it belongs in. A prevention spend stays in prevention even when it is large. The percent of sales uses the sales figure you type for that period, so a partial month needs a partial sales number.

Keep one period on the sheet. Mixing a week of scrap with a month of sales makes the percent look better or worse than the period you meant. The four buckets stay separate so prevention is not counted as failure.