Sinclair Corp. manufactures radiation-shielding glass panels. Suppose Sinclair is considering spending the following amounts on a new
Question:
Sinclair Corp. manufactures radiation-shielding glass panels. Suppose Sinclair is considering spending the following amounts on a new TQM program:
Strength-testing one item from each batch of panels ....................... $63,000
Training employees in TQM ............................................................. $27,000
Training suppliers in TQM ................................................................ $39,000
Identifying preferred suppliers that commit to on-time delivery of
Perfect quality materials .................................................................... $52,000
Sinclair expects the new program to save costs through the following:
Avoid lost profits from lost sales due to disappointed customers ..... $93,000
Avoid rework and spoilage ................................................................ $64,000
Avoid inspection of raw materials ..................................................... $52,000
Avoid warranty costs ......................................................................... $19,000
Requirements
1. Classify each item as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost.
2. Should Sinclair implement the new quality program? Give your reason.
Step by Step Answer: