Clegg$,$ Inc. manufactures door panels. Suppose Clegg$,$ Inc. is considering spending the following amounts on a new total quality management$($TQM$)$ program:

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Clegg$,$ Inc. expects the new program would save costs through the$$ following:

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Requirements

$1.$ Classify each cost as a prevention$$ cost$,$ an appraisal$$ cost$,$ an internal failure$$ cost$,$ or an external failure cost.

$2.$ Should Clegg$,$ Inc. implement the new quality$$ program? Give your reason.

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Part $1$

Requirement $1.$ Classify each cost as a prevention$$ cost$,$ an appraisal$$ cost$,$ an internal failure$$ cost$,$ or an external failure cost.

Type of Cost

Strength$-$testing one item from each batch of panels

Appraisal

Training employees in TQM

Prevention

Training suppliers in TQM

Prevention

Identifying suppliers who commit to on$-$time delivery of perfect$-$quality materials

Prevention

Lost profits from lost sales due to disappointed customers

External failure

Rework and spoilage

Internal failure

Inspection of raw materials

Appraisal

Warranty costs

External failure

Part $2$

Requirement $2.$ Should Clegg implement the new quality$$ program? Give your reason.

Start by identifying the net cost savings or increase in net costs from implementing the new quality program.$($Enter a net cost savings as a positive amount and enter an increase in net costs with a minus sign or$$ parentheses.$)$

Net cost savings $($increase in net costs$)$ from implementing the new quality program $=$