Suppose you need to buy 1,000 units of a certain product. If one defect unit is used, the product will fail to work later on and it will cost you $150 to repair/ replace/service.

Use the excel sheet attached to answer the following questions:

 Calculating the Cost of Quality

Units needed		1,000
Repair/Replace/Service Cost		$        150.00
Supplier	Price/Unit	Defect Rate	Cost based on price only	Repair for each supplier	Total cost considering repair
A	$                          10.00	1.00%
B	$                             4.00	2%
C	$                             2.00	6%
D	$                             1.00	10%

Copy and paste or attach the excel sheet with your calculations supporting your answers.

1. Calculate the cost based on price only
2. Calculate the repair cost for each supplier
3. Calculate final price of product considering repair cost
4. Before considering quality costs, what is the cheapest supplier?
5. After considering quality costs, what is the cheapest supplier?
6. Quantify your losses, should you have chosen supplier based on cost only, and have not considered quality costs.

Answer rating: 100% (QA)

Supplier PriceUnlt A B D 10 4 2 1 Defect Cost based on pri... View the full answer