Speedy 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, Speedy 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 $6.00 per car seat, and the repair cost is $1.00 per car seat. All 180,000 car seats were inspected last year, and 4% were found to have problems with the stitching in the straps during the internal inspection. Another 2% of the 180,000 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 Speedy Travel and repaired. Shipping costs are $9.00 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 $120 for each external failure. Required Requirement 1. Calculate appraisal cost. The appraisal cost is 1080000 Requirement 2. Calculate internal failure cost. The internal failure cost is 7200 Requirement 3. Calculate out-of-pocket external failure cost. The out-of-pocket external failure cost is 36000. Requirement 4. Determine the opportunity cost associated with the external failures. The opportunity cost associated with the external failures is 432000 Requirement 5. What are the total costs of quality? The total cost of quality is 1555200 Requirement 6. What are the total costs of quality for the alternative technique? (Round The total costs of quality for the alternative technique is 736200 Required 1. Calculate appraisal cost. 2. Calculate internal failure cost. 3. Calculate out-of-pocket external failure cost. 4. Determine the opportunity cost associated with the external failures. 5. What are the total costs of quality? 6. Speedy Travel is concerned with the high up-front cost of inspecting all 180,000 units. It is considering an alternative internal inspection plan that will cost only $3.75 per car seat inspected. During the internal inspection, the alternative technique will detect only 4% of the 180,000 car seats that have stitching problems. The other 3% will be detected after the car seats are sold and shipped. What are the total costs of quality for the alternative technique? 7. What factors other than cost should Speedy Travel consider before changing inspection techniques? Print Done 1