Concept explainers
Stella, Inc. is using a costs-of-quality approach to evaluate design engineering efforts for a new skateboard. Stella’s senior managers expect the engineering work to reduce appraisal, internal failure, and external failure activities. The predicted reductions in activities over the two-year life of the skateboards follow. Also shown are the predetermined
Requirements
- 1. Calculate the predicted quality cost savings from the design engineering work.
- 2. Stella spent $103,000 on design engineering for the new skateboard. What is the net benefit of this “preventive” quality activity?
- 3. What major difficulty would Stella’s managers have in implementing this costs-of-quality approach? What alternative approach could they use to measure quality improvement?
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