External failure costs are costs incurred as a result of defects or failures that are discovered by the customer after the product has been delivered or used. In this case, the handheld GPS purchased by Al from the local electronics store failed to function properly when he tried to use it, indicating a defect in the product. The manufacturer would likely incur costs associated with handling customer complaints, returns, repairs, replacements, and potentially brand damage or loss of customer trust. Internal failure costs, on the other hand, are costs incurred as a result of defects or failures discovered before the product is delivered to the customer. These costs include rework, scrap, retesting, and any other costs associated with correcting defects during the production process. Since the defect was discovered after the product was delivered to the customer, it falls under the category of external failure cost.