Macrosoft Data Entertainment (MacDatEE) develops software systems for the sports and entertainment market. The company implemented a quality system in late 2014 and has been tracking its quality related costs since 2015. The following is the accumulated data from the past 5 years.

			Year
	2015	2016	2017	2018	2019
All figures in $ 000s
Prevention	30	80	250	300	400
Appraisal	340	300	240	200	120
Internal Failure	350	420	320	210	140
External Failure	1,400	1,100	920	870	680
Sales	27,000	26,000	30,000	33,000	39,000
Total Costs*	25,000	25,200	27,000	29,000	30,200
Lines of Code Produced (in millions)	1.01	1.00	1.11	1.21	1.30
Code lines with first pass error++	0.11	0.18	0.15	0.12	0.09

* Total Costs: All costs related to the business

++ Lines of code that are not error free on first verification (in millions)

Question 3 (30 marks, note high value = lots of work)

You are a competitor with 3 sigma first pass quality i.e. 99.73% first pass quality, is it a good idea for you to enter the market? Why or why not? Note: to answer the question fully, assume you can reference all of the data given and all of the data you have generated. Use this data to justify your answer.

If you chose to enter the market, how would you position your firm (i.e. How would you gain competitive advantage? Differentiation, Low cost?) Fully explain your answer (this means using data and clearly explaining any assumptions).

Format Guidelines

• Show all your calculations and equations used. This is true if you use excel.
• Your solutions must be clearly labeled.
• Late assignments are accepted with a 10% reduction in the marks per day.