Exam 17: The Management and Control of Quality

List three examples of quality improvement in a manufacturing facility that would lead to increased sales productivity.

Cycle time efficiency is:

A graphical representation of frequency of occurrence of the factors contributing to an indicated quality problem,ordered from the most to the least frequent is a(n):

Slumberger Manufacturing Co. ,Inc.is considering a change in its manufacturing layout (e.g. ,to a flexible manufacturing system [FMS] or cellular manufacturing),but it is unsure of the net benefits it should expect in conjunction with such a move.Company management has asked you to estimate both financial and nonfinancial effects of the proposed move.In this regard,you have collected the following information:

Listed below are 6 items concerned with quality. Required: Classify each of these items into its appropriate Cost-of-Quality (COQ)category. (1)Establish a 24-hour hot line for customers to report quality failures. (2)Establish a quality-inspection program. (3)Re-design parts and components to simplify manufacturing of the product. (4)Hire additional field service people to provide better services. (5)Extend the warranty period for products from 90 days to one year. (6)Train employees on the importance of zero defects.

Typically,as prevention and appraisal costs increase,other costs of quality:

Design Products is committed to its quality program.It works with all areas of the company to establish sound quality programs within reasonable budget guidelines.For 2010,it has budgeted $1,000,000 for prevention costs and $800,000 for appraisal costs.Internal failure has a budget of $100 per failed item,while external failure has a total budget of $600,000.Product Testing has proposed to a change in the 2010 budget for a new method of testing products.If management decides to implement the new method,$2 per unit of appraisal costs will be saved,up to a level of 200,000 tests.No additional savings are above past the 200,000 level.The new method involves $110,000 in training costs and $60,000 in yearly testing supplies.Traditionally,3 percent of all completed items have to be reworked.External failure costs average $120 per failed unit.The company's average external failures are 1 percent of units sold.The company carries no ending inventories. Required: (1)What is the adjusted budget for appraisal costs,assuming the new method is implemented and 800,000 units are tested during the manufacturing process in 2010? (2)How much do internal failure costs change,assuming 600,000 units are tested under the new method and it reduces the amount of unacceptable units in the manufacturing process by 40 percent? (3)What would be the change in the external failure budget,assuming external failures are reduced by 60 percent,assuming the same facts as in part (b)?

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

The Old Army Jean Company has been very proud of the quality of its products.The company has won industry awards for high quality and trend-setting styles in the last five years.For the last two years,however,both sales volume and market share have been declining.At the latest executive managers' meeting,everyone was blaming everyone else for the decline.Both production and design managers suggested that sales relationships were the cause of most of the problems. Required: As the CEO,how would you determine that quality of sales relationships,not product design or product quality,is the cause of the financial decline the company is experiencing?

Which of the following is not a characteristic of lean manufacturing?

Verizon Manufacturing Company spent $400,000 in 2009 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 2009,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 $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 2010 for the project.Verizon expects no changes in its operating level in the foreseeable future.The $100,000 payment to the consulting firm for COQ reporting purposes is best classified as a(n):

The set of international quality-related standards,adopted in 1987 and revised in both 1994 and in 2000,is referred to as:

ISO certification is a key component of a firm's efforts to improve quality and compete successfully. Required: What must an organization demonstrate,in terms of its operating processes,in order to become ISO-9000 certified?

Ladder Manufacturing specifies the quality characteristic of one of its popular products to be 0.400" $\pm$ 0.010.An analysis of company records for the last two years suggests that the average cost for warranty repair or replacement is $100 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 0.400,by the tolerance of 0.010.What is the cost coefficient,k,for the Taguchi loss function associated with this situation?

Kray Co.manufactures high quality knives for use in the meat processing industry,and operates in an industry which values and rewards consistent production quality.Technical innovation over the past decade has given the industry a good supply of high quality steel in raw material form.Kray Co.recognizes the need to establish and maintain strong quality controls for labor activities.A company quality team has asked you to assist the company with a recommendation to the firm,choosing either a goalpost conformance quality plan or an absolute quality conformance plan to monitor its manufacturing activities. Required: (1)Briefly distinguish between the two approaches to ensuring conformance with production standards. (2)Explain how the Taguchi Quality Loss Function operates within the absolute quality conformance plan.(3)Do you think worker reaction to the two plans in Part (a)above might be different? Why or why not?

Which of the following is not a characteristic of a lean accounting system?

Studies have shown that improvements in quality can lead to:

Six Sigma is one approach for setting quality expectations for a given process or output.As pointed out in your text,the term "Six Sigma" comes from statistics: in a normal distribution,the area (probability)outside of +/- six standard deviations from the mean value is exceedingly small.You are provided the following values from a standardized normal distribution .