Murphy Ltd manufactures, sells and installs photocopying machines. Murphy Ltd has placed a heavy emphasis on reducing defects and failures in its production operations. It faced difficulties in managing its accounts receivables, which result from non-cash sales transactions with customers. It wonders how to apply total quality management principles to manage its accounts receivable.

Requirements

1. What would you classify as failures in accounts receivable?
2. Give examples of prevention and appraisal activities that could reduce failures in accounts receivable.
3. Assume that Murphy Ltd. has gathered information regarding the items you list in 1. and 2. Give examples of how Murphy Ltd. can use the information to make decisions regarding accounts receivable.