Clason Corp. manufactures radiation-shielding glass panels. Suppose Clason is co

Question

Clason Corp. manufactures radiation-shielding glass panels. Suppose Clason is consider- ing spending the foll lowing amounts on a new TQM program: Strength-testing one item from each batch of panels Training employees in TOM Training suppliers in TOM Identifying preferred suppliers that commit to on-time delivery of perfect quality materials $62,000 $23,000 $34,000 $51,000 Clason expects the new program to save costs through the following: Avoid lost profits from lost sales due to disappointed customers Avoid rework and spoilage Avoid inspection of raw materials $85,000 $66,000 $49,000 .. $25,000 Requirements 1. Classify each item as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost. Should Clason implement the new quality program? Give your reason. 2.

Explanation / Answer

Question - 2

Total savings are 225,000 against total cost of 170000, thus there is a saving of 55,000 to the company.

Clason corp.  SHOULD implement the new quality program. The program would SAVE the company $ 55000

Type of quality cost COST Appraisal cost Strength - testing one item from each batch of panels Prevention cost Training employees in TQM Prevention cost Training suppliers in TQM Prevention cost Identifying preferred suppliers that commit to one time delivery of prefect quality materials External failure cost Avoid lost profits from lost sales due to disappointed customers Internal Failure costs Avoid rework and spoilage Appraisal cost Avoid inspection of raw materials External failure cost Avoid warranty costs

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