Non-financial measures of quality and time. Worldwide Cell Phones (WCP) has developed a cell phone that can be used anywhere in the world (even countries like Japan that have a relatively unique cell phone system). WCP has been receiving complaints about the phone. For the past two years, WCP has been test marketing the phones and gathering non-financial information related to actual and perceived aspects of the phone’s quality. They expect that, given the lack of competition in this market, increasing the quality of the phone will result in higher sales and thereby higher profits.

Quality data for 2009 and 2010 include the following:

1. For each year, 2009 and 2010, calculate:

a. Percentage of defective units shipped.

b. Customer complaints as a percentage of units shipped.

c. Percentage of units reworked during production.

d. Manufacturing lead time as a percentage of total time from order to delivery.

2. Referring to the information computed in requirement 1, explain whether WCP’s quality and timeliness have improved.

3. Why would manufacturing lead time have increased while customer response time decreased? (It may be useful to first describe what is included in each time measurement—see Exhibit 19-7.

Transcribed Image Text:

2009 2010 2,000 10,000 Cell phones produced and shipped Number of defective units shipped 100 400 Number of customer complaints 150 250 Units reworked before shipping 120 700 15 days 16 days Manufacturing lead time 30 days 28 days Average customer response time