Problem $2-3($Algo$)$

You are the operations manager for a small kayak and canoe manufacturer $($Valley Kayaks$)$ located on the Pacific Northwest $($Oregon$).$

Lately your company has experienced product quality problems. Simply put, the kayaks that you produce occasionally have defects

and require rework. Consequently, you have decided to assess the impact of introducing a total quality management $($TQM$)$ program.

After discussing the potential effects with representatives from marketing, finance, accounting, and quality, you arrive at a set of

estimates $($contained in the following table$).$ Top management has told you that it will accept any proposal that you come up with,

provided that it improves the return on assets measure by at least $20$ percent. Use Figure $2\mathrm{.}3.$

a$.$ Calculate ROA with changes and without changes.

b$.$ Would you go forward with this proposal to improve quality?