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In: Operations Management

Below are the quality costs data for a company for 2014 & 2015 2014 2015 Prevention...

Below are the quality costs data for a company for 2014 & 2015 2014 2015 Prevention $90,000 $110,000 Appraisal $50,000 $62,000 Internal Faliure $40,000 $34,000 External Faliure $62,000 $60,000 Sales: $5,100,000 $5,350,000 A) whats the precentage change in the total quality index between 2014 & 2015 B) What is the percentage change in the precention quality index between 2014 & 2015 C) What is the percentage change in the internal faliure quality index between 2014 & 2015 ? D) Do you think this company is on the right track investing more in quality improvements? Please explain using the above data.

Solutions

Expert Solution

A.) Total Quality Index is defined by Total quality cost / Total sales

Here, Total quality cost (2014) = Internal failure + External Failure = 40000+62000 = 102000

Total sales (2014)= 5100000

Total quality index (2014)= 102000/5100000 = 0.0200

Total quality cost (2015) = Internal failure + External Failure = 34000 + 60000 = 94000

Total sales (2015)= 5350000

Total quality index (2015) = 94000/5350000 = 0.0176

Percentage change = (0.0176 - 0.0200) / 0.0200 = -12.15%

B.) Prevention quality index is defined as Prevention cost / Total sales

Prevention cost (2014) = 90000

Total sales (2014)= 5100000

Prevention quality index = 90000 / 5100000 = 0.0176

Prevention cost (2015) = 110000

Total sales (2014)= 5350000

Prevention quality index = 110000 / 5350000 = 0.0206

Percentage change = (0.0206 - 0.0176) / 0.0176 = +16.51%

C.) Internal failure quality index is defined as Internal failure cost / Total sales

Internal failure cost (2014) = 40000

Total sales (2014)= 5100000

Internal failure quality index = 40000/ 5100000 = 0.0078

Internal failure cost (2015) = 34000

Total sales (2014)= 5350000

Internal failure quality index = 34000/ 5350000 = 0.0064

Percentage change = (0.0064 - 0.0078) / 0.0078 = -18.97%

keosha answered 10 months ago
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