Question

Negotiating with and training suppliers to obtain higher-quality materials and Redesigning the speakers to make them easier.to.manufacture. $1,409,000

1.

ADDTIONAL 20 MINUTES OF TESTING TO MAKE THEM EASIER TO MANUFACTURE

Negotiating with and training suppliers to obtain higher quality materials and on-time delivery

SAVINGS ON REWORK

SAVINGS ON WARRANTY REPAIR COST

REDISGNING THE SPEAKERS TO MAKE THEM EASIER TO MANUFACTURE

SAVINGS ON INSPECTION OF RAW MATERIALS

SAVINGS ON LOST PROFITS FROM LOST PRODUCTION DUE TO REWORK

SAVINGS ON LOST PRODUCTION FROM LOST SALES DUE TO DISSAPOINTED CUSTOMERS

2.

SHOULD IMPLEMENT OR SHOULD NOT IMPLEMENT

SHOULD SAVE OR WOULD LOSE

Answer 1

Cost (Benefit) Analysis	Costs (Savings)
Prevention costs:
Negotiating with and training suppliers to obtain higher-quality materials and on-time delivery	300,100
Redesigning the speakers to make them easier to manufacture	1,409,000
Appraisal costs:
Additional 20 minutes of testing for each speaker	600,000
Avoid inspection of raw materials	(403,000)
Internal failure costs:
Avoid rework because of fewer defective units	(657,000)
Lost production time due to rework	(301,000)
External failure costs:
Reduce warranty repair costs	(206,000)
Lost sales due to disappointed customers	(852,000)
Net cost (benefit) from implementing quality program	(109,900)
Awesome should implement the new quality program. The company should save $09,900 by implementing the new program.