Shung skincare Inc. has developed a cream that will diminish the effects of aging. Total sales of the cream for the last year were $75,000,000. The following data have just been gathered on last year's quality-related costs.

COST CATEGORY AMOUNT ($)

Product recalls $325,000

Downtime due to defects 600,000

Warranty claims 420,000

Inspection of and testing of incoming materials 300,000

Product liability lawsuits 500,000

Process quality audits 350,000

Rework costs 2,000,000

Quality training 150,000

Process control monitoring 350,000

Repair costs in the field 375,000

Statistical process control 300,000

Waste 900,000

Net cost of scrap 1,500,000

Supplier certification 350,000

Quality engineering 200,000

Returned products 380,000

Question 1:

Prepare a cost-of-quality report grouping costs into prevention, appraisal, internal failure, and external failure. Also show costs as a percentage of sales.

Question 2

Interpret the data and make recommendations to the Shung Skincare management.