This problem is based on one of the topics, Costs of Quality, in chapter four of your class textbook - Managing Quality: Integrating the Supply Chain, 6^th Edition by S. Thomas Foster. An example is solved for you in the text. Study the chapter and solve the following problems.

Statement of the problem

The Colorado Manufacturing Company of Boulder, CO has gathered the following quality-related costs. You are hired as a consultant to evaluate these costs and to make recommendations to management.

Annual Quality Costs

Failure Costs

Defective Products $ 4,234

Engineered Scrap $ 21,265

Non-engineered Scrap $ 224,123

Consumer Adjustments $ 125,654

Downgrading Products $ 2,125,328

Lost Goodwill Not evaluated

Customer Policy Changes Not evaluated

Total

Appraisal Costs

Receiving Inspection $ 24,138

Line 1 Inspection $ 7,256

Line 2 Inspection $ 8,543

Spot Checking $ 2,766

Total

Prevention Costs

Quality Training $ 25,500

Process Engineering

Corporate $ 132,678

Plant $ 44,124

Product Redesign $ 10,422

Total

1. Compute the ratio of prevention and appraisal costs to total quality cost (total quality coast = prevention cost + appraisal cost + failure cost) and express your answer in percentage.

2. Compute the ratio of appraisal cost to total quality cost where total quality cost is as defined inside the bracket in question 1. Express your answer in percentage.

3. From the results in (a) above, what is the ratio of failure cost to total quality cost?