Pearson eText Business in Action -- Instant Access (Pearson+)
Pearson eText Business in Action -- Instant Access (Pearson+)
9th Edition
ISBN: 9780135636459
Author: Courtland Bovee, John Thill
Publisher: PEARSON+
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Chapter 8.1, Problem 2CT
Summary Introduction

To discuss: Ways that flat structure of organization changes the responsibilites of individual managers.

Flat organizational structure is an organizational structure which eliminates a few or no levels of management between the management and staff (lower) level employees.

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It is January 1 of year 0, and Merck is trying to determine whether to continue development of a newdrug. The following information is relevant. You can assume that all cash flows occur at the ends of therespective years.■ Clinical trials (the trials where the drug is tested on humans) are equally likely to be completed in year1 or 2.■ There is an 80% chance that clinical trials will succeed. If these trials fail, the FDA will not allow thedrug to be marketed.■ The cost of clinical trials is assumed to follow a triangular distribution with best case $100 million,most likely case $150 million, and worst case $250 million. Clinical trial costs are incurred at the end ofthe year clinical trials are completed.■ If clinical trials succeed, the drug will be sold for five years, earning a profit of $6 per unit sold.■ If clinical trials succeed, a plant will be built during the same year trials are completed. The cost of theplant is assumed to follow a triangular distribution with best case $1…
1) Under “Costs of Quality”, costs associated with quality can be classified into four categories: appraisal, prevention, internal failures, and external failures. The costs of quality for Corley Motors Logistics is given in the table.   Cost Elements Amount Checking outbound boxes for errors $31,000 Quality planning    $10,625 Downtime due to conveyor/computer problems $342,125 Incoming product inspection $21,000 Customer complaint rework $33,000  Correcting erroneous orders before shipping $36,550 Quality training of associates $25,925 Correction of typographical errors--pick tickets $11,475   a) Classify the quality cost elements given in the table into the different quality cost categories (prevention, appraisal, internal failure, external failure). b) Total the quality costs in each of the different quality cost categories (prevention, appraisal, internal failure, external failure). c) Using a) and b), suggest which areas…
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