General Motors Corp., in a move to improve relations with unhappy customers, said it will fix leaky head gaskets on as many as halfa million Quad 4 engines. In addition to payingforfuture repairs, GMsaid it will reimburse customers who already have had the gasket—which sits between the engine block and the cylinder head—replaced at their own expense. “GM is doing this in the interest of customer satisfaction, ” the company said.

GM estimates that about 8% of the half million Quad 4 engines soldfrom 1981 to 1991 will develop leaky head gaskets. At $550 per car, that would put the cost of the repair campaign at $22 million.

Beginning with the 1992 models, GM switched to a new head gasket in the Quad. 4. GM also switched to a new manufacturing procedure to improve head bolt tightening. “We’re finding these changes are doubling the life of the head gasket, ” said a GM spokeswoman.

[SOURCE: Neal Templin, “GM Will Repair Head Gasket on Engines,” Wall Street Journal (February 16, 1993), p. A4. Reprinted by permission of The Wall Street Journal, © 1993 Dow Jones & Company, Inc. All Rights Reserved Worldwide.]

a. Discuss items associated with the leaky gasket that would fall under each of the types of quality costs (prevention, appraisal, and failure).

b. GM quotes a cost of $550 per car to fix the gasket or a total of $22 million. Do you think this estimate reflects the true cost of the repairs? Be sure to consider all of the items you mentioned above.

LO1