The concept of this Master's thesis was to research methods to determine and define the cost of quality. The thesis heavily relies on the existing studies, papers and literature from the field of quality.

The consumers are often using the term, quality, when making judgement between products or services in different organisations. Quality is complicated subject to specify. The consumers experience of quality is not homogenous; individuals have hugely varying opinions on the field of quality and those often are based on their feelings and habits rather than scientific studies. Framework of this study is chemical industry where one main product is manufactured. The product is mass produced and does not require continual R&D. This thesis specifies what quality means in such industry. The thesis also specifies what is the concept of "cost of quality" and by what kind of methods those costs are determined.

The Cost of Quality is one important part of the Total Quality Management. Quality related costs may represent dozens of percentages in organisations annual turn overs. Despite this overwhelming amount, chemical industry is rarely aware of the origins of such costs. The goal of this thesis was to research methods to estimate quality costs and the basic understanding and the philosophy of the Total Quality Management.

Study indicates that calculating the industries Cost of Quality is extremely difficult, but doing so is very beneficial. To gain valid numbers to these calculations, the researcher must have inside knowledge about target industries supply chain, value chain and the culture of management. In-creasing the quality will also in a long run increase the industries profitability. Downsizing the amount of impractical costs is simultaneously improving quality. Impractical costs are often same as Cost of Quality.