Requirement 2

Suppose Clason is considering spending the following amounts on a new TQM program: Strength-testing one item from each batch of panels ....... .............. $ 70,000 Training employees in TQM. ....... .................. 22,000 Training suppliers in TQM.......... ...................$ 30,000 Identifying preferred suppliers that commit to on-time delivery of perfect quality materials 56,000 .......$ Clason expects the new program to save costs through the following: Avoid lost profits from lost sales due to disappointed customers ...... $ Avoid rework and spoilage ..... A 89,000 65,000 54,000 21,000 Avoid inspection of raw materials ...... ......... A Avoid warranty costs. ........................... A ............ Requirement 1. Classify each item as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost. Cost Type of Quality Cost Appraisal Prevention Prevention Strength-testing one item from each batch of panels Training employees in TQM Training suppliers in TQM Identifying preferred suppliers who commit to on-time delivery of perfect quality materials Avoid lost profits from lost sales due to disappointed customers Prevention External failure Internal failure Avoid rework and spoilage Appraisal Avoid inspection of raw materials External failure Avoid warranty costs Requirement 2. Should Clason implement the new quality program? Give your reason. Clason Vimplement the new quality program. The program would the company $ D