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Genelec manufactures high-quality speakers. Suppose Genelec is considering spending the following amounts on a new quality program Prevention costs 2. Negotiating & training suppliers to

Genelec manufactures high-quality speakers. Suppose Genelec is considering spending the following amounts on a new quality program

Prevention costs
2. Negotiating & training suppliers to obtain higher quality material & on time delivery 550,000
3. Redesigning the speakers to make them easier to manufacture 1,405,000
Appraisal costs
1. Additional 20 minutes of testing for each speaker 604,000
5. Avoid inspection of raw materials 404,000
Internal failure costs
6. Rework avoided because of fewer defective units 656,000
8. Lost production time due to rework 309,000
External failruse costs
4. Reduced warranty repair costs 208,000

7. Lost sales due to disappointed customers

Should Genelec adopt or refuse this quality program? Give your reason/calculations.

858,000

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