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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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