Lusaka Engineering Company (LEC) had actual quality costs for the year ended December 31, 2022, as given below: Cost Element Amount ($) Prototype verification 300,000 Process acceptance 315,000 Product liability 618,750 Recalls 243,750 Retesting 187,500 Rework 375,000 Test labour 360,000 Vendor certification 600,000 At the zero-defect state, LEC expects to spend $375,000 on Prototype verification, $75,000 on Vendor certification, and $50,000 on Process acceptance. Assume sales to be $25,000,000. Required: (a) Prepare a Cost of Quality report for 2022 using the PAF Model. What does this report tell the management of LEC? (b) Prepare a Cost of Quality report for the Zero-Defect State using the PAF Model. Explain why quality costs still are present for the zero-defect state. (c) What if LEC achieves the zero-defect state reflected in the report in part (b), what are some of the implications of this achievement?
Lusaka Engineering Company (LEC) had actual quality costs for the year ended December 31, 2022, as given below: Cost Element Amount ($) Prototype verification 300,000 Process acceptance 315,000 Product liability 618,750 Recalls 243,750 Retesting 187,500 Rework 375,000 Test labour 360,000 Vendor certification 600,000 At the zero-defect state, LEC expects to spend $375,000 on Prototype verification, $75,000 on Vendor certification, and $50,000 on Process acceptance. Assume sales to be $25,000,000. Required: (a) Prepare a Cost of Quality report for 2022 using the PAF Model. What does this report tell the management of LEC? (b) Prepare a Cost of Quality report for the Zero-Defect State using the PAF Model. Explain why quality costs still are present for the zero-defect state. (c) What if LEC achieves the zero-defect state reflected in the report in part (b), what are some of the implications of this achievement?
Elements Of Electromagnetics
7th Edition
ISBN:9780190698614
Author:Sadiku, Matthew N. O.
Publisher:Sadiku, Matthew N. O.
ChapterMA: Math Assessment
Section: Chapter Questions
Problem 1.1MA
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Question
Lusaka Engineering Company (LEC) had actual quality costs for the year ended December
31, 2022, as given below:
Cost Element Amount ($)
Prototype verification 300,000
Process acceptance 315,000
Product liability 618,750
Recalls 243,750
Retesting 187,500
Rework 375,000
Test labour 360,000
Vendor certification 600,000
At the zero-defect state, LEC expects to spend $375,000 on Prototype verification, $75,000
on Vendor certification, and $50,000 on Process acceptance. Assume sales to be
$25,000,000.
Required:
(a) Prepare a Cost of Quality report for 2022 using the PAF Model. What does this
report tell the management of LEC?
(b) Prepare a Cost of Quality report for the Zero-Defect State using the PAF Model.
Explain why quality costs still are present for the zero-defect state.
(c) What if LEC achieves the zero-defect state reflected in the report in part (b), what
are some of the implications of this achievement?
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