Quality Initiative Decision
Wharedale manufactures high-quality speakers. Suppose Wharfedale is considering spending for the following amounts on a new quality program.
Additional 20 minutes of testing for each speaker $600,000
Negotiating with and training suppliers to obtain higher-quality materials 
And on time delivery $300,000
Redesigning the speakers to make them easier to manufacture $1,400,000
Wharfedale expects this uality program to save costs as follows:
Reduced warranty repair costs $200,000
Avoid inspection of raw materials $400,000
Rework avoided because of fewer defective units $650,000
It also expects this program to avoid lost profits from the following:
Lost sales due to disappointed customers $850,000
Lost production time due to rework $300,000
Classify each of these costs into one of the four categories of quality costs (prevention, appraisal, internal failure, external failure).
Should Wharfedale implement the quality program? Give your reasons.

    • 12 years ago
    ACC - Wharedale manufactures Solution
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