QUESTION 1: PAKEL Tool Company is located in one of the Multi-Facility Economic Zone (MFEZ) in...

 

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QUESTION 1: PAKEL Tool Company is located in one of the Multi-Facility Economic Zone (MFEZ) in Zambia. The Company has been in existence for over five years and has a policy of building an excellent reputation for service and quality. Consequently, the Company requires all new employees to take its three-hour quality training program. The estimated annual cost of this program is $30,000. To ensure that only conforming products are shipped to customers, four inspectors are involved with final inspection (product acceptance), each earning a monthly salary of $5,000. Additionally, to ensure that it attends to its customers after sales, the Company employs three full-time employees in its complaints department, each earning $40,500 a year, and allows for after sales visits, with sales allowances totalling $45,000. The annual turnover of PAKEL Tool Company was slightly more than $15,000,000 in 2019. This was more or less the same as the turnover in the previous two years. However, the net income has been around $1,500,000. The General Manager of PAKEL Tool Company is convinced that the Company's profitability can increase significantly by improving quality - provided the potential for improvement exists. The General Manager has therefore tasked you, the Quality Manager, to provide details of the quality costs currently being incurred, and advise on whether the Company should invest in a quality improvement program. To enable you, the Quality Manager, perform a comprehensive analysis, you have collected relevant QUESTION 1: PAKEL Tool Company is located in one of the Multi-Facility Economic Zone (MFEZ) in Zambia. The Company has been in existence for over five years and has a policy of building an excellent reputation for service and quality. Consequently, the Company requires all new employees to take its three-hour quality training program. The estimated annual cost of this program is $30,000. To ensure that only conforming products are shipped to customers, four inspectors are involved with final inspection (product acceptance), each earning a monthly salary of $5,000. Additionally, to ensure that it attends to its customers after sales, the Company employs three full-time employees in its complaints department, each earning $40,500 a year, and allows for after sales visits, with sales allowances totalling $45,000. The annual turnover of PAKEL Tool Company was slightly more than $15,000,000 in 2019. This was more or less the same as the turnover in the previous two years. However, the net income has been around $1,500,000. The General Manager of PAKEL Tool Company is convinced that the Company's profitability can increase significantly by improving quality - provided the potential for improvement exists. The General Manager has therefore tasked you, the Quality Manager, to provide details of the quality costs currently being incurred, and advise on whether the Company should invest in a quality improvement program. To enable you, the Quality Manager, perform a comprehensive analysis, you have collected relevant

Answer rating: 100% (QA)

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