i am not sure that number 2 is correct, and i dont know how to do number 3? here is all the information.
Kathy Shorts, president of Oliver Company, was concerned with the trend in sales and profitability. The company had been losing customers at an alarming rate. Furthermore, the company was barely breaking even. Investigation revealed that poor quality was at the root of the problem. At the end of 20x5, Kathy decided to begin a quality improvement program. As a first step, she identified the following costs in the accounting records as quality related: 20x5 Sales (557,000 units @ $100) $55,700,000 Retesting 1,782,400 Rework 2,283,700 Vendor certification 835,500 Consumer complaints 1,114,000 Warranty 2,228,000 Test labor 1,615,300 Inspection labor 1,169,700 Design reviews 222,800 Required: 1. Prepare a quality cost report by quality cost category. Round percentages to one decimal place if rounding is required. For example, 5.78% would be entered as "5.8". Oliver Company Quality Cost Report For the Year Ended December 31, 20x5 Quality Costs Total Quality Cost Percentage of Sales Prevention costs: Vendor certification 835,500 Design reviews 222,800 1,058,300 1.9 Appraisal costs: Test labor $ 1,615,300 Inspection labor 1,169,700 2,785,000 5 % Internal failure costs: Retesting $ 1,782,400 Rework 2,283,700 4,066,100 7.3 % External failure costs: Consumer complaints $ 1,114,000 Warranty 2,228,000 3,342,000 6 % Total quality costs $11,251,400 20.2 % 2. Calculate the relative distribution percentages for each quality cost category. Round percentages to one decimal place if rounding is required. For example, 5.789% would be entered as "5.8". Prevention 1.9 % Appraisal 5 % Internal failure 7.3 % External failure 6 % Comment on the distribution. More resources need to be invested in control activities with the objective of driving down failure costs. X 3. Using the Taguchi loss function, an average loss per unit is computed to be $16 per unit. What are the hidden costs of external failure? How does this affect the relative distribution? A serious imbalance between control and failure costs has now been revealed, and failure costs should be decreased. 4. Shorts's quality manager decided not to bother with the hidden costs since any efforts to reduce measured external failure costs will also reduce the hidden costs. Do you agree or disagree? Agree, though ignoring the hidden costs may result in underestimating the need to reduce failure costs. X Kathy Shorts, president of Oliver Company, was concerned with the trend in sales and profitability. The company had been losing customers at an alarming rate. Furthermore, the company was barely breaking even. Investigation revealed that poor quality was at the root of the problem. At the end of 20x5, Kathy decided to begin a quality improvement program. As a first step, she identified the following costs in the accounting records as quality related: 20x5 Sales (557,000 units @ $100) $55,700,000 Retesting 1,782,400 Rework 2,283,700 Vendor certification 835,500 Consumer complaints 1,114,000 Warranty 2,228,000 Test labor 1,615,300 Inspection labor 1,169,700 Design reviews 222,800 Required: 1. Prepare a quality cost report by quality cost category. Round percentages to one decimal place if rounding is required. For example, 5.78% would be entered as "5.8". Oliver Company Quality Cost Report For the Year Ended December 31, 20x5 Quality Costs Total Quality Cost Percentage of Sales Prevention costs: Vendor certification 835,500 Design reviews 222,800 1,058,300 1.9 Appraisal costs: Test labor $ 1,615,300 Inspection labor 1,169,700 2,785,000 5 % Internal failure costs: Retesting $ 1,782,400 Rework 2,283,700 4,066,100 7.3 % External failure costs: Consumer complaints $ 1,114,000 Warranty 2,228,000 3,342,000 6 % Total quality costs $11,251,400 20.2 % 2. Calculate the relative distribution percentages for each quality cost category. Round percentages to one decimal place if rounding is required. For example, 5.789% would be entered as "5.8". Prevention 1.9 % Appraisal 5 % Internal failure 7.3 % External failure 6 % Comment on the distribution. More resources need to be invested in control activities with the objective of driving down failure costs. X 3. Using the Taguchi loss function, an average loss per unit is computed to be $16 per unit. What are the hidden costs of external failure? How does this affect the relative distribution? A serious imbalance between control and failure costs has now been revealed, and failure costs should be decreased. 4. Shorts's quality manager decided not to bother with the hidden costs since any efforts to reduce measured external failure costs will also reduce the hidden costs. Do you agree or disagree? Agree, though ignoring the hidden costs may result in underestimating the need to reduce failure costs. X
