Target Costing; Quality Function Deployment (QFD) Hilton Yacht manufactures a line of fami...

Target Costing; Quality Function Deployment (QFD) Hilton Yacht manufactures a line of family cruiser/racing sailboats. The boats are well known for their quality, safety, and performance. Hilton hired Matthew Perry, a well-known sailboat designer and racer, to design a new sailboat, the M33. The M33 will have advanced materials in the hull and rigging to enhance the safety and performance of the boat and also to improve its overnight comfort. Safety and comfort are the two most important boat-buying criteria of Hilton’s customers, rated at 34% and 33% respectively, on a 100-point scale. The other two criteria are performance (20%) and styling (13%). The overall length of the boat is about 33 feet; its two sleeping areas have room for five or six people. Hilton projects a sale price of approximately $200,000 and estimates the costs of manufacturing the M33 as shown in Table 1.

Table 1

A team of engineers and sales managers studied the projected cost and identified how each component of the planned boat contributed to satisfying customers’ criteria. The results of this study, based on careful estimates, are shown in Table 2. For example, the estimates show that 30% of customers’ desire for safety is satisfied by the construction of the hull and keel, another 30% by the standing rig, and so on.

Table 2

Required

1. Using the information in Table 2 developed by the team of engineers and sales managers, together with the customer criteria, determine which components of the boat are most important to customers, and why.

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2. Take your findings in requirement 1 and compare them against the target cost figures in Table 1. What conclusions can you draw from this comparison?