Eye Spy (ES) produces home security cameras that can be connected to personal devices through Wi-Fi and 5G. The company is worried because one of its competitors has recently come under public scrutiny owing to data breaches. ESs only problem with its security camera is the electronic switch which, when faulty, allows for remote access by unauthorised users. The problem can usually be detected and repaired during an internal inspection. The cost of the inspection is $4.50 per device and the repair cost is $2.50. All 500 000 security cameras produced during the previous year were inspected of which 7% were found to have problems with the electronic switch. Another 2.5% of the 500 000 cameras had problems with the electronic switch but were not detected during internal inspection. When ES has sold and shipped defective cameras to customers, customers return them, and ES pays $5.50 for shipping costs and repairs the units at a cost of $2.50 per camera. However, the shipping and repair costs are not the only costs resulting from the defects that remained undetected by the internal inspection. Management estimates that negative publicity and social media commentary will result in a loss of $250 for each defect discovered by customers. Data privacy issues are of increasing concern to governments worldwide.

Required

1. Evaluate and calculate each cost-of-quality category, and the total costs of the system quality assurance for ES.

[6 marks]

2. ES is concerned about the high up-front cost of inspecting all 500 000 units. It is considering an alternative internal inspection plan that will cost only $3.50 per camera. During the internal inspection, this alternative technique will detect only 5.5% of the 500 000 cameras that have electronic switch problems. The other 2.5% will be detected after the cameras are sold and shipped. Critique this technique by calculating the total costs of quality of following this process.

[6 marks]

3. Which inspection techniques should ES adopt? Assess social responsibility and sustainability factors, evaluate against the context above, and offer a critique of how this may impact of managements decision.