Tot Traveler 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, Tot Traveler's only problem with its car seats was stitching in the straps. Tot Traveler has discovered a more serious problem with the plastic core of its car seats. An accident can cause the plastic in some of the seats to crack and break, resulting in serious injuries to the occupant. It is estimated that this problem will affect about 200 car seats in the next year. This problem could be corrected by using a higher quality of plastic that would increase the cost of every car seat produced by $35. If this problem is not corrected, Tot Traveler estimates that out of the 200 accidents, customers will realize that the problem is due to a defect in the seats in only ten cases. Tot Traveler's legal team has estimated that each of these ten accidents would result in a lawsuit that could be settled for about $750,000. All lawsuits settled would include a confidentiality clause, so Tot Traveler's reputation would not be affected. Read the requirements. - Requirements 1. Assuming that Tot Traveler expects to sell 225,000 car seats next year, what would be the cost of increasing the quality of all 225,000 car seats? 2. What will be the total cost of the lawsuits next year if the problem is not corrected? 3. Suppose Tot Traveler has decided not to increase the quality of the plastic because the cost of increasing the quality exceeds the benefits (saving the cost of lawsuits). What do you think of this decision? (Note: Because of the confidentiality clause, the decision will have no effect on Tot Traveler's reputation.) 4. Are there any other costs or benefits that Tot Traveler should consider? Print Done