Question

Click the Requiremec 1. Classify 2. Should Le Data Table malt Requireme external fail hal far Larter is considering spending the following amounts on the new program Additional 20 minutes testing for each speaker $ 620.000 Negotiating and training suppliers to obtain higher quality materials and on time delivery 350.000 Redesigning the speakers to make them easier to manufacture 1.450.000 Additional 2 Larter expects this quality program to save costs as follows Reduce warranty repair costs 250,000 Avoid inspection of raw materials 490,000 Avoid rework because of fewer defective units 810.000 It also expects this program to avoid lost profits from the following Lost sales due to disappointed customers $ 890,000 Lost production time due to rework 276,000 Done Choose from 8 Penang Clear All Check Answer в о вi орд е е о

Answer 1

Part 1

Cost	Type of quality cost
Additional 20 minutes of testing for each speaker	Appraisal
Negotiating with and training suppliers to obtain higher quality materials and on-time delivery	Prevention
Redesigning the speakers to make them easier to manufacture	Prevention
Reduced warranty repair costs	External failure
Avoid inspection of raw materials	Appraisal
Avoid rework because of fewer defective units	Internal failure
Lost sales due to disappointed customers	External failure
Lost production time due to rework	Internal failure

Part 2

Costs of Implementing New Quality Program:
Prevention costs:
Negotiating with and training suppliers to obtain higher quality materials and on-time delivery	350000
Redesigning the speakers to make them easier to manufacture	1450000
Appraisal costs:
Additional 20 minutes of testing for each speaker	620000
Total costs of implementing the new quality program	$2420000

Costs of Not Implementing New Quality Program:
Appraisal costs:
Inspection of raw materials	490000
Internal failure costs:
Rework	810000
Lost profits from lost production time due to rework	276000
External failure costs:
Warranty repair costs	250000
Lost profits from lost sales due to disappointed customers	890000
Total costs of not implementing new quality program	$2716000

Larter should implement the new quality program. The cost of implementing the program ($2420000) is $296,000 less than the costs of failing to implement the program ($2716000)