Steve Gauthier, the president of Southern Plastic Company, is a famous cost cutter in the plastics industry. Two years ago, he accepted an offer from Southern's board of directors to help the company cut costs quickly. In fact, Mr. Gauthier's compensation package included a year-end bonus tied to the percentage of cost decrease over the preceding year. On February 12, 2018, Mr. Gauthier received comparative financial information for the two preceding years. He was especially interested in the results of his cost-cutting measures on quality control. The quality report shown below was extracted from the company's financial information.
Required
a. Explain the strategy that Mr. Gauthier initiated to control Southern's costs.
b. Indicate whether the strategy was successful or unsuccessful in reducing quality costs.
c. Explain how the strategy will likely affect the company's business in the long term.

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2017 2016 Amount Percentage Amount Percentage Engineering and design Depreciation on prevention equipment Product and materials inspection Testing equipment (depreciation) Total internal failure Warranty repairs and replacement Restocking and packaging Total external failure