Pareto chart and cost of quality report for a service company The administrator of Liberty Hospital has been asked to perform an activity analysis of the emergency room (ER). The ER activities include cost of quality and other patient care activities. The lab tests and transportation are hospital services external to the ER for determining external failure costs. The result of the activity analysis is summarized as follows: Activities Activity Cost Patient registration $ 6,500 Verifying patient information 9,700 Assigning patients 13,000 Searching/waiting for doctor 9,200 Doctor exam 4,900 Waiting for transport 17,500 Transporting patients 16,200 Verifying lab orders 14,500 Searching for equipment 8,200 Incorrect labs 11,300 Lab tests 17,000 Counting supplies 19,000 Looking for supplies 8,200 Staff training 4.800 Total $160,000 Required: 1. Select the following Pareto chart of the ER activities. Pareto Chart of Quality Activities 500.000 516000 $15.000 514000 512.000 $10.000 S8600 56.000 54000 52.000 Lab tests Counting supplies Waiting for transport Verifying lab orders Assigning patients Transporting patients Incorrect labs Doctor cam Staff training Searching for equipment Verifying patient information Looking for supplies Searching waiting for doctor Patient registration b. Pareto Chart-Quality Activities 25,000 20.000 15,000 Dollars 10.000 5.000 Doctor exam Stall training Lab tests Incorrect labs Looking for supplies Patient registration Assigning patients Counting supplies Verifying tab orders Transporting patients Searching for equipment Waiting for transports Verifying patient Information Searching waiting for doctor Pareto Chart-Quality Activities 25.000 20,000 15.000 Dollars 10,000 5.000 Labtests 7 Incorrect labs Dochota Staring Counting supplies Transporting patients Waiting for transports Assigning patients Verifying lab orders Looking for copies Patienten Searching for some Verlying patient formation Searching waiting for doctor d. Pareto Chart-Quality Activities 25,000 20.000 15.000 Dollars 10.000 5,000 Lablets Counting supplies incorrect labs Waiting for ansports Vandying lab orders Transporting patients Doctor exam Assigning patients Staff training Looking for supplies Patient registration Verlying patient information Searching waiting for doctor Searching for equipment 2. Classify the activities into prevention, appraisal, internal failure, external failure, and other patient care activities. Classify the activities into value-added and non-value-added activities. Cost of Quality Classification Value-Added/ Non-Value Added Classification Activity Activity Cost Patient registration $6,500 Prevention X Value-added Verifying patient information 9,700 Appraisal Value-added x Assigning patients 13,000 Internal failure X Value-added Searching/waiting for doctor 200 Other patient care X Non-value-added Doctor exam 4,900 Appraisal X Value-added Waiting for transport 17,500 Other patient care X Non-value-added Transporting patients 16,200 Internal failure X Value-added Verifying lab orders 14,500 Appraisal Value-added X Searching for equipment 8,200 Internal failure Non-value-added Incorrect labs 11,300 Internal failure X Non-value-added Lab tests 17,000 Appraisal x Value-added Counting supplies 19,000 Prevention X Value-added X Looking for supplies 8,200 Internal failure Non-value-added Staff training 4,800 Prevention Value-added Total $160,000 3. Use the activity cost information to determine the percentages of total ER costs that are prevention, appraisal, internal failure, external failure, and other patient care activities. Quality Cost Classification Percent of otal Departme ost Activity Cost Prevention $ X % Appraisal X X % Internal failure X % External failure X % Other patient care X % 4. Determine the percentages of the total ER costs that are value added and non-value-added. Percent of Total Department Cost Activity Cost Value-added $ X % Non-value-added X % Total $ 160,000 100.0 % 5. The ER has X % of its total costs as non-value-added. Internal failure and external failure costs represent X % of the total costs