Exam 19: Balanced Scorecard: Quality and Time

Ventaz Corp manufactures small windows for back yard sheds.Historically,its demand has ranged from 30 to 50 windows per day with an average of 43.Alex is the one production worker and he works eight hours a day,five days a week.Each order is one window and each window takes 7 minutes.Alex plans to add doors to its product line and anticipates that they will average 2 doors per day.Each door takes V4 minutes to install. What is the average waiting time,in minutes,if Alex continues to be the only worker?

Discuss the means by which a company goes about evaluating and installing a new quality improvement program.

A time driver is any factor that causes a change in the speed of an activity when the factor changes.

The manufacturing cycle including related delays can be reduced by ________.

The amount of time from when an order is ready to start on the production line to when it becomes a finished good is referred to as ________.

Identifying and minimizing the sources of non-value-added manufacturing time increases a firm's responsiveness to its customers and reduces its costs.

A control chart identifies potential causes of failures or defects.

Costs of Quality (COQ)are classified into four categories: prevention costs,appraisal costs,opportunity costs,and sales costs.

An advantage of nonfinancial measures of quality include that they ________.

LaCrosse Products has a budget of $900,000 in 2017 for prevention costs.If it decides to automate a portion of its prevention activities,it will save $81,000 in variable costs.The new method will require $41,000 in training costs and $109,000 in annual equipment costs.Management is willing to adjust the budget for an amount up to the cost of the new equipment.The budgeted production level is 155,000 units. Appraisal costs for the year are budgeted at $600,000.The new prevention procedures will save appraisal costs of $50,200.Internal failure costs average $18 per failed unit of finished goods.The internal failure rate is expected to be 2% of all completed items.The proposed changes will cut the internal failure rate by one-third.Internal failure units are destroyed.External failure costs average $50 per failed unit.The company's average external failures average 2% of units sold.The new proposal will reduce this rate by 45%.Assume all units produced are sold and there are no ending inventories. What is the net change in the budget for prevention costs if the procedures are automated in 2017? Will management agree with the changes?

Northern Corp is concerned about its declining sales,especially the reduction in the number of customers.For the last two years,its shirts have won industry awards for high quality and trend-setting styles.At the latest executive managers' meeting,all were blaming each other for the decline.After much discussion and presenting some fact-finding information,it was determined that sales relationships were the cause of most of the problems. Required: What may be some of the causes and how can the causes be detected if product quality is not an issue?

Cause-and-effect diagrams are used in quality management systems to ________.

Examples of nonfinancial measures of quality include the ________.

Cysco Corp has a budget of $1,202,000 in 2017 for prevention costs.If it decides to automate a portion of its prevention activities,it will save $100,000 in variable costs.The new method will require $50,000 in training costs and $149,000 in annual equipment costs.Management is willing to adjust the budget for an amount up to the cost of the new equipment.The budgeted production level is 205,000 units. Appraisal costs for the year are budgeted at $505,000.The new prevention procedures will save appraisal costs of $50,600.Internal failure costs average $34 per failed unit of finished goods.The internal failure rate is expected to be 6% of all completed items.The proposed changes will cut the internal failure rate by one-half.Internal failure units are destroyed.External failure costs average $58 per failed unit.The company's average external failures average 2.7% of units sold.The new proposal will reduce this rate to 2%.Assume all units produced are sold and there are no ending inventories. What is the net change in the budget of prevention costs if the procedures are automated in 2017? Will management agree with the changes?

Cost of quality financial measures will usually deteriorate when nonfinancial measures of quality are emphasized and improved.

Product testing is an example of ________.

LaCrosse Products has a budget of $903,000 in 2017 for prevention costs.If it decides to automate a portion of its prevention activities,it will save $80,200 in variable costs.The new method will require $40,800 in training costs and $100,000 in annual equipment costs.Management is willing to adjust the budget for an amount up to the cost of the new equipment.The budgeted production level is 151,000 units. Appraisal costs for the year are budgeted at $609,000.The new prevention procedures will save appraisal costs of $50,400.Internal failure costs average $15 per failed unit of finished goods.The internal failure rate is expected to be 3% of all completed items.The proposed changes will cut the internal failure rate by one-third.Internal failure units are destroyed.External failure costs average $58 per failed unit.The company's average external failures average 3% of units sold.The new proposal will reduce this rate by 50%.Assume all units produced are sold and there are no ending inventories. Management has offered to allow the prevention changes if all changes take place as anticipated and the amounts netted are less than the cost of the equipment.What is the net impact of all the changes created by the preventive changes? (Note: numbers shown as (negatives )represent net savings and positive numbers represent net cost. )

When using a control chart,the observations outside the upper and lower control limits are ordinarily regarded as nonrandom and worth investigating.

The time from which a machine setup begins for an order until the product is delivered to the customer is the ________.

A machine has been identified as a bottleneck and the source of the constraint for a manufacturing company that has multiple products and multiple machines.Discuss ways the company can overcome the bottleneck.