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The XYZ Company is a semiconductor company that manufactures electronic chips for computers. The company was established in 1 9 9 8 and located at

The XYZ Company is a semiconductor company that manufactures electronic chips for computers. The company was established in 1998 and located at New South Wales, Australia. The designs of chips are normally supplied by the customers. Operations are relatively complex and geared to high volume production to meet customer demands if required. The company is analysing its cost of quality in order to design most appropriate corrective actions. Now as a manager in quality control department, the following information has been provided to you: Costs of Quality Amount (AUD) Repair of customer returns/ warranty3,000 Material review and corrective action costs (including disposition costs)7,000 Rework due to design changes 2,500 Vendor systems audit10,000 Incoming and final inspection10,000 Operator SPC process control 7,000 Employee training 38,000 Product development research 50,000 Reinspection and retest6,600 Retrofit cost 3,000 Scrap 1,500 Marketing Research 12,000 You are requested to discuss your approach to the solution and input thepercentageof Internal Failure Costs, External Failure Costs, Prevention Costs and Appraisal Costs on Total Quality Costs.

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