Inc. manufactures door panels. Suppose

RaleighRaleigh$,$

Inc. is considering spending the following amounts on a new total quality management$($TQM$)$ program:

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RaleighRaleigh$,$

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

RaleighRaleigh$,$

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

$$

Training employees in TQM

$$

Training suppliers in TQM

$$

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

$$

Lost profits from lost sales due to disappointed customers

$$

Rework and spoilage

$$

Inspection of raw materials

$$

Warranty costs

$$

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Spending

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

$$59,000$

Training employees in TQM

$27,000$

Training suppliers in TQM

$40,000$

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

$55,000$

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Savings

Avoid lost profits from lost sales due to disappointed customers

$$86,000$

Avoid rework and spoilage

$61,000$

Avoid inspection of raw materials

$53,000$

Avoid warranty costs

$23,000$

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