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Safeway Travel produces car seats for children from newborn to 2 years old. The company is worried because one of its competitors has recently come under public scrutiny because of product failure. Historically, Safeway Travel's only problem with its car seats was stitching in the straps. The problem can usually be detected and repaired during an internal inspection. The cost of the inspection is $3.00 per car seat, and the repair cost is $2.00 per car seat. All 215,000 car seats were inspected last year, and 3% were found to have problems with the stitching in the straps during the internal inspection Another 3% of the 215,000 car seats had problems with the stitching, but the internal inspection did not discover them Defective units that were sold and shipped to customers needed to be shipped back to Safeway Travel and repaired Shipping costs are $950 per car seat, and repair costs are $1.00 per car seat. However the out-of-pocket costs (shipping and repair) are not the only costs of defects not discovered in the internal inspection. Negative publicity will result in a loss of future contribution margin of $95 for each external failure Regulred ho Requirement 1. Calculate appraisal cost The appraisal cost is a Requirement 2. Calculate internal fallure cost The internal failure cost is Requirement 3. Calculate out-of-pocket external failure cost The out-of-pocket external failure cost is Safeway Travel produces car seats for children from newborn to 2 years old. The company is worried because one of its compet has recently come under public scrutiny because of product failure. Historically, Safeway Travels only problem with its car seats stitching in the straps. The problem can usually be detected and repaired during an internal inspection. The cost of the inspection $3.00 per car seat, and the repair cost is $2.00 per car seat. All 215,000 car seats were inspected last year, and 3% were found problems with the stitching in the straps during the internal inspection. Another 3% of the 215,000 car seats had problems with th stitching, but the internal inspection did not discover them. Defective units that were sold and shipped to customers needed to be shipped back to Safeway Travel and repaired. Shipping costs are $9.50 per car seat, and repair costs are $1.00 per car seat Ho the out-of-pocket costs (shipping and repair) are not the only costs of defects not discovered in the internal inspection. Negative publicity will result in a loss of future contribution margin of 595 for each external failure. Required Requirement 4. Determine the opportunity cost associated with the external failures. The opportunity cost associated with the external failures is Requirement 5. What are the total costs of quality? The total cost of quality is Requirement 6. What are the total costs of quality for the alternative technique? (Round your answer to the nearest whole dollar The total costs of quality for the alternative technique is Requirement 7. What factors other than cost should Safeway Travel consider before changing inspection techniques? Select all that apply A. There could easily be serious reputation effects if the percentage of external failures increases from 3% to 3 5% This rise in external failures may lead to costs greater than 595 per failure due to lost profits. B. Higher external failure rates may increase the probability of lawsuits C. Government intervention is a concern with the chances of government regulation increasing with the number of external failures D. Lower internal failure rates may increase product recalls Click to select your answers
