Concept explainers
The Omega Shoe Company manufactures a number of dif-
ferent styles of athletic shoes. Its biggest seller is the X-
Pacer running shoe. In 2008 Omega implemented a
quality-management program. The company’s shoe pro-
duction for the past three years and
are as follows.
Only one-quarter of the defective shoes can be reworked, at a
cost of $2 apiece. Compute the manufacturing cost per good
product for each of the three years and indicate the annual
percentage increase or decrease resulting from the quality-
management program.
Year
2008 2009 2010
Units produced/input 32,000 34,600 35,500
Manufacturing cost $278,000 291,000 305,000
Percent good quality 78% 83% 90%
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