Nebulas Software Vendors sells programs that reside exclusively “on the cloud.” They use contract programmers around the world to develop modules for the programs, assemble the subassemblies, and integrate the subassemblies into a final program to sell to users. Testing must take place at each stage of the process, and errors at each succeeding stage are more costly. Naturally, if a program does not function properly, or has a lot of “bugs,” customers will be upset and demand refunds. Use Pareto analysis to investigate the quality losses at Nebulas Software Vendors using data in the worksheet Prob03-06 in the Excel workbook Ch03Data.xlsx on the Student Companion website. What conclusions do you reach?

 

Nebulas Software Venders
	QUALITY COSTS AND PERCENTAGES					ORIGINAL DATA
Category	Percent	Cumulative %	Cost			Category	$Annual Loss
Customer dissatisfaction	38.67%	38.67%	290000			Rework costs	25000
Rejected subprograms	19.73%	58.40%	148000			Rejected modules	80000
System downtime	14.93%	73.33%	112000			Rejected subprograms	148000
Rejected modules	10.67%	84.00%	80000			Inspection costs (extra)—incoming	16000
Trng. & syst. Improve.	7.33%	91.33%	55000			Inspection costs (extra)—outgoing	24000
Rework costs	3.33%	94.67%	25000			Customer dissatisfaction	290000
Insp. (extra)—out	3.20%	97.87%	24000			Training and system improvement costs	55000
Insp.(extra)—in	2.13%	100.00%	16000			System downtime	112000
Total Costs			750000			Total	750000