Operations and Supply Chain Management, 9th Edition WileyPLUS Registration Card + Loose-leaf Print Companion
9th Edition
ISBN: 9781119371618
Author: Roberta S. Russell
Publisher: Wiley (WileyPLUS Products)
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Chapter 2, Problem 5P
Summary Introduction
To draw: The the
Introduction
Manufacturing cost can be defined as the cost incurred by the firm in consuming various resources in order to make different products. The manufacturing cost increases with the increase in level of production.
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The Omega Shoe Company manufactures a number of dif-ferent styles of athletic shoes. Its biggest seller is the X-Pacer running shoe. In 2008 Omega implemented a
quality-management program. The company’s shoe pro-duction for the past three years and manufacturing costs
are as follows.
Only one-quarter of the defective shoes can be reworked, at acost of $2 apiece. Compute the manufacturing cost per goodproduct for each of the three years and indicate the annual
percentage increase or decrease resulting from the quality-management program.
Year
2008 2009 2010Units produced/input 32,000 34,600 35,500Manufacturing cost $278,000 291,000 305,000Percent good quality 78% 83% 90%
The following table lists all costs of quality incurred by Kate's shop last year.
Annual inspection costs
247000
Annual cost of scrap materials
456000
Annual rework cost
204679
Annual cost of quality training
626000
Annual warranty cost
1886000
Annual testing cost
664000
What was Kate's appraisal cost for quality last year?
Pharasalia skincare Inc. has developed a new lotion that will help to improve skin ageing. Total sales of the
lotion for the last year were $60,000,000. The following data have just been gathered on last year's quality-
related costs.
COST CATEGORY AMOUNT ($)
Product recalls $625,000
Downtime due to defects 600,000
Warranty claims 420,000
Inspection of and testing of incoming materials 300,000
Product liability lawsuits 500,000
Process quality audits 350,000
Rework costs 480,000
Quality training 150,000
Process control monitoring 350,000
Transportation costs to fix customers' problems 375,000
Statistical process control 200,000
Waste 300,000
Net cost of scrap 650,000
Supplier certification 250,000
Reliability engineering 200,000
Returned products 380,000
Manufacturing inspection 150,000
1.Prepare a cost-of-quality report classifying costs into prevention, appraisal, internal failure, and external failure. Also, show costs as a percentage of total costs and total sales.
2.Write a…
Chapter 2 Solutions
Operations and Supply Chain Management, 9th Edition WileyPLUS Registration Card + Loose-leaf Print Companion
Ch. 2 - Prob. 2.1ASCCh. 2 - Prob. 3.1ASCCh. 2 - Prob. 4.1ASCCh. 2 - Prob. 5.1ASCCh. 2 - Prob. 6.1ASCCh. 2 - Prob. 7.1ASCCh. 2 - Prob. 8.1ASCCh. 2 - Prob. 9.1ASCCh. 2 - Prob. 10.1ASCCh. 2 - Prob. 11.1ASC
Ch. 2 - Prob. 13.1ASCCh. 2 - Prob. 1QCh. 2 - Prob. 2QCh. 2 - Prob. 3QCh. 2 - Prob. 4QCh. 2 - Prob. 5QCh. 2 - Prob. 6QCh. 2 - Prob. 8QCh. 2 - Prob. 9QCh. 2 - Prob. 10QCh. 2 - Prob. 12QCh. 2 - Prob. 13QCh. 2 - Prob. 14QCh. 2 - Prob. 15QCh. 2 - Prob. 17QCh. 2 - Prob. 21QCh. 2 - Prob. 22QCh. 2 - Prob. 23QCh. 2 - Prob. 24QCh. 2 - Prob. 25QCh. 2 - Prob. 26QCh. 2 - Prob. 27QCh. 2 - Prob. 28QCh. 2 - Prob. 29QCh. 2 - Prob. 30QCh. 2 - Most students live in a dormitory or apartment...Ch. 2 - Prob. 32QCh. 2 - Describe, in general, how the J.D. Power Circle...Ch. 2 - Select a product that you own (like a cell phone,...Ch. 2 - Prob. 35QCh. 2 - Prob. 36QCh. 2 - Prob. 37QCh. 2 - Prob. 38QCh. 2 - Prob. 39QCh. 2 - Prob. 40QCh. 2 - Prob. 41QCh. 2 - Prob. 42QCh. 2 - Prob. 43QCh. 2 - Prob. 44QCh. 2 - Prob. 45QCh. 2 - Prob. 47QCh. 2 - Prob. 48QCh. 2 - Prob. 49QCh. 2 - Prob. 50QCh. 2 - Prob. 51QCh. 2 - Prob. 55QCh. 2 - Prob. 56QCh. 2 - Prob. 57QCh. 2 - Prob. 60QCh. 2 - Prob. 61QCh. 2 - Prob. 67QCh. 2 - Prob. 68QCh. 2 - Prob. 1PCh. 2 - The Backwoods American company in Problem 2-1...Ch. 2 - Prob. 3PCh. 2 - In Problem 2-3, if the direct manufacturing cost...Ch. 2 - Prob. 5PCh. 2 - The Colonial House Furniture Company manufactures...Ch. 2 - Prob. 8PCh. 2 - Prob. 9PCh. 2 - Prob. 10PCh. 2 - Prob. 11PCh. 2 - Prob. 12PCh. 2 - Prob. 14PCh. 2 - Prob. 1.1CPCh. 2 - Prob. 2.1CPCh. 2 - Prob. 3.1CPCh. 2 - Prob. 3.3CPCh. 2 - Prob. 3.4CPCh. 2 - Prob. 3.5CPCh. 2 - Prob. 3.6CPCh. 2 - Prob. 3.7CPCh. 2 - Prob. 3.8CPCh. 2 - Prob. 4.1CP
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- Quality Measurement Explanation: Identifies several quality measurements, including both direct and indirect measurementsarrow_forwardDIscuss how General Motors can use quality assurance to gain a competitive advantage for chevy boltarrow_forwardDiscuss how mistake proofing and the supply chain are integrated with quality management planning?arrow_forward
- The following table lists all costs of quality incurred by Sam's Surf Shop last year. Annual inspection costs Annual cost of scrap materials Annual rework cost Annual cost of quality training Annual warranty cost Annual testing cost $ 179,000 376,000 124,679 546,000 1,726,000 552,000 What was Sam's appraisal cost for quality last year? Appraisal costarrow_forwardA defense contractor manufactures rifles for the military. The military has exacting quality standards that the con-tractor must meet. The military is very pleased with the quality of the products provided by the contractor andrarely has to return products or has reason for complaint.However, the contractor is experiencing extremely high quality-related costs. Speculate on the reasons for the con-tractor’s high quality-related costs.arrow_forwardIn response to intensive foreign competition, the management of Florex Company has attempted over the past year to improve the quality of its products. A statistical process control system has been installed and other steps have been taken to decrease the amount of warranty and other field costs, which have been trending upward over the past several years. Costs relating to quality and quality control over the last two years are given below: Costs (in thousands) Last Year This Year Inspection $ 720 $ 909 Quality engineering $ 450 $ 765 Depreciation of test equipment $ 675 $ 270 Rework labor $ 1,080 $ 1,530 Statistical process control $ 0 $ 225 Cost of field servicing $ 1,350 $ 1,260 Supplies used in testing $ 45 $ 81 Systems development $ 720 $ 900 Warranty repairs $ 3,780 $ 1,620 Net cost of scrap $ 630 $ 1,170 Product testing $ 900 $ 1,800 Product recalls $ 3,150 $ 900 Disposal of defective products $ 810 $ 1,080 Sales have been flat over the…arrow_forward
- i) The concept of quality is considered to have evolved through stages. However, quality is used to describe a prestigious product. It is one that fits the intended customer’s requirements. Impliedly, the product should possess attributes that enables it meet the customer’s requirement or specification. Now, in identifiably distinctive manner, differentiate quality control from the others or quality assurance. ii) Briefly define hazard, when uncertainty is defined as being a situation in which the determination of risk factors is not possible. It is difficult therefore to calculate the effect of uncertainty upon the tender, and a discussion of uncertainty is out of place here. A builder will see risks in two distinct categories: (a). those that can be insured against and,( b). those that cannot be insured against.arrow_forwardExplain the two basic type of quality cost and how they differ from one another?arrow_forwardDescribe the four quality dimensions. Which is the most critical ?arrow_forward
- Look for product that has been existing in the market for more than 10 years . Research on how the product was able to sustain its market for the past 10 years . Present remarkable changes in the product with pictures and relate how the changes had affected the company in its operation . Determine the role of quality in the changes made throughout the yearsarrow_forwardThe typical cost-of-quality (COQ) report for a manufacturing company consists of four categories: (1) prevention costs, (2) appraisal costs, (3) internal failure costs, and (4) external failure costs. Discuss what should be included in a COQ report for a service organization/company. Your discussion should include at least three elements/factors within each category. Provide detailed justifications and reasons for the factors selected.arrow_forwardAlpesharrow_forward
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