Exam 17: The Management and Control of Quality

All the following approaches can be used to set quality-related performance expectations except:

Euromold specializes in manufacturing molded a plastic panel to be fitted on car doors. The blueprint specification for the thickness of a high-demand model calls for 0.20625 ± 0.00275 inch. It costs an estimated $180 to scrap a part that is outside of specification. The thickness measure for the unit just completed is 0.20823. Required: 1. Calculate the value of k, the cost coefficient in the Taguchi Quality Loss Function (QLF) for the above situation (rounded to nearest whole number). 2. Calculate the estimated amount of quality cost (or loss) for the unit in question, L(x) (where x = 0.20823 inches); round final answer to two (2) decimal places.

For Cost of Quality (COQ) reporting purposes, materials inspection costs would normally be classified as:

This question deals with the general topic of nonfinancial performance indicators. Required: Chapter 17 of the text discusses both financial and nonfinancial performance indicators that can be used to manage and control quality. 1. Provide a description of each of the following two nonfinancial quality indicators: a. Customer response time (CRT) b. Cycle time efficiency 2. Into what three components can CRT be broken down?

List three examples of quality improvement initiatives in a manufacturing facility that would lead to increased sales productivity. Answer: Three examples (among other possible answers) of quality improvement initiatives leading to increased productivity are:

One of the concerns with moving to lean manufacturing is the fact that conventional accounting approaches may discourage such a move. These deficiencies relate to the lag in recognizing financial benefits from the move to lean. Required: According to critics, what are the three primary reasons why improvements in financial results, after adopting lean manufacturing, typically appear later in conventional accounting statements than the operating improvements from implementing lean manufacturing?

Provide a definition of the term "quality," as used in Chapter 17 of the text. Into what two categories (or dimensions) can total quality be divided? Define each of these two dimensions. How, conceptually, can cost management contribute to the management of each of these two dimensions of quality?

The term Six Sigma refers to:

Verizon Manufacturing Company spent $400,000 in 2019 to inspect incoming components. Of the $400,000, $240,000 is fixed appraisal costs. The variable inspection cost is $0.20 per component. It takes two components for each finished product. Internal failure costs average $80 per failed unit of finished goods. In 2019, five percent of all completed items had to be reworked. External failure costs average $200 per failed unit. The company's average external failures are one percent of units sold. The company manufactures all units as ordered and carries no materials inventories. Seeking to decrease its total cost of quality (COQ), Verizon contracted Quality-is-Free Consultants, Inc. (QIFC) to study ways to improve product quality and to reduce costs. Upon completion of the study, QIFC recommended automatic inspection equipment that requires a $60,000 annual cost for training and $150,000 for equipment rental and maintenance. The new equipment will eliminate $40,000 of the fixed appraisal costs, reduce the amount of unacceptable product units in the manufacturing process by 10 percent, and cut product failures by half. The company paid the consulting firm $100,000 in early January 2020 for the project. Verizon expects no changes in its operating level in the foreseeable future. What is the current (i.e., 2019) total Cost of Quality (COQ)?

Pandra Manufacturing specifies the quality characteristic of one of its popular products to be 0.500" ±0.020. An analysis of company records for the last two years suggests that the average cost for warranty repair or replacement is $125.00 per unit. The customer service manager believes that the product is likely to fail during the warranty period when the quality characteristic exceeds on either side of the target of 0.500 the tolerance of 0.020. What is the cost coefficient, k, in the Taguchi loss function (QLF) for this company, rounded to the nearest dollar?

A proper role for accounting in terms of managing and controlling quality includes all the following except:

In a Cost-of-Quality (COQ) reporting framework, costs incurred in conjunction with the measurement and analysis of data to ascertain conformity of products and services to specification are properly classified as:

In a typical Cost of Quality (COQ) report, instructor fees for quality training would be classified as:

Which of the following is not a likely consequence of improved product quality?

The desired target quality characteristic of a product of Hanson Component Manufacturing is 0.5. The customer-service manager knows that customers are likely to complain when the specification is off the desired quality characteristic by more than 0.025. On average, it costs the firm $2,000 to handle and resolve each complaint. The production manager of the Hanson Manufacturing suggests that the company test the product more thoroughly before shipping. The cost of additional testing and adjustments is estimated at $30.00 per unit. Given the company's cost coefficient, k, what should the tolerance be (to five decimal places) before conducting additional testing and adjusting at the factory?

Within the context of managing and controlling quality, the term "tolerance" refers to all of the following except:

The desired target quality characteristic of a product of Hanson Component Manufacturing is 0.5. The customer-service manager knows that customers are likely to complain when the specification is off the desired quality characteristic by more than 0.025. On average, it costs the firm $2,000 to handle and resolve each complaint. The production manager of the Hanson Manufacturing suggests that the company test the product more thoroughly before shipping. The cost of additional testing and adjustments is estimated at $30.00 per unit. For Hanson, what is the value of k, the cost coefficient in the Taguchi Quality Loss Function (QLF), rounded to the nearest dollar?

Jordan Company manufactures doors and maintains a Cost-of-Quality (COQ) reporting system. Classify each of the following quality-related costs as a prevention cost, an appraisal cost, an internal failure cost, an external failure cost, or none of the above. (a) Retesting of reworked products (b) Downtime due to quality problems (c) Analysis of the cause of defects in production (d) Depreciation of test equipment (e) Warranty repairs (f) Lost sales arising from a reputation for poor quality (g) Quality circles (h) Rework direct manufacturing labor and overhead (i) Net cost of spoilage (j) Technical support provided to suppliers (k) Audits of the effectiveness of the quality system (l) Plant utilities in the inspection area

Which of the following is a tool that indicates how frequently each type of quality defect occurs?

The set of international quality-management standards, which provide guidance and tools for organizations that want to ensure quality outputs of goods and services, is referred to as: