The Backwoods American company in Problem 2-1 produces approximately 20,000 parkas annually. The quality management program the company implemented was able to improve the average percentage of good parkas produced by 2% each year, beginning with 83% good-quality parkas in 2003. Only about 20% of poor-quality parkas can be reworked. a. Compute the product yield for each of the five years.
The Backwoods American company in Problem 2-1 produces approximately 20,000 parkas annually. The quality management program the company implemented was able to improve the average percentage of good parkas produced by 2% each year, beginning with 83% good-quality parkas in 2003. Only about 20% of poor-quality parkas can be reworked. a. Compute the product yield for each of the five years.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Backwoods American company in Problem 2-1 produces approximately 20,000
parkas annually. The quality management program the company implemented was
able to improve the average percentage of good parkas produced by 2% each year,
beginning with 83% good-quality parkas in 2003. Only about 20% of poor-quality
parkas can be reworked.
a. Compute the product yield for each of the five years.
b. Using a rework cost of $12 per parka, determine the
parka for each of the five years. What do these results imply about the company’s
quality management program?
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