Question: This problem is based on one of the topics, Costs of Quality, in chapter four of your class textbook - Managing Quality: Integrating the Supply
This problem is based on one of the topics, Costs of Quality, in chapter four of your class textbook - Managing Quality: Integrating the Supply Chain, 6th Edition by S. Thomas Foster. An example is solved for you in the text. Study the chapter and solve the following problems.
Statement of the problem
| The Colorado Manufacturing Company of Boulder, CO has gathered the following quality-related costs. You are hired as a consultant to evaluate these costs and to make recommendations to management.
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| Annual Quality Costs |
| Failure Costs Defective Products $ 4,234 Engineered Scrap $ 21,265 Non-engineered Scrap $ 224,123 Consumer Adjustments $ 125,654 Downgrading Products $ 2,125,328 Lost Goodwill Not evaluated Customer Policy Changes Not evaluated Total |
| Appraisal Costs Receiving Inspection $ 24,138 Line 1 Inspection $ 7,256 Line 2 Inspection $ 8,543 Spot Checking $ 2,766 Total
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| Prevention Costs Quality Training $ 25,500 Process Engineering Corporate $ 132,678 Plant $ 44,124 Product Redesign $ 10,422 Total
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