Which of the following statements is true?

1. The most effective way to minimize quality costs while maintaining high quality is to avoid having quality problems in the first place. This is the reason for incurring appraisal costs.
2. Quality of conformance refers to the extent to which a product offered by one company is similar to products offered by other companies.
3. The costs of lost sales arising from poor quality are always included in quality cost reports.

Multiple Choice

• Only statement I is true.

• Only statement III is true.

• Both statements II and III are true.

• None of the statements are true.