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Prob03-01

Problem 3-1
Costbusters Company
Total Sales [$USD]1,229,800 [$USD]746,880 [$USD]1,117,700
Costs as % of Sales 24 19 15
% of Quality Costs by Product
Product A Product B Product C
External failure 35% 22% 8%
Internal failure 52% 29% 24%
Appraisal 10% 38% 38%
Prevention 3% 11% 30%

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Prob03-02

Problem 3-2
Great Press Printing Company
Cost Element Amount
Customer complaint remakes [$USD]27,000
Printing plate revisions 28,000
Quality improvement projects 13,000
Gauging 100,000
Other waste 38,000
Correction of typographical errors 210,000
Proofreading 450,000
Quality planning 56,000
Press downtime 285,000
Bindery waste 51,000
Checking and inspection 42,000
Customer complaint remakes [$USD]27,000
Printing plate revisions 28,000

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Prob03-03

Problem 3-3
Quality Camping Goods, Inc.
Cost Element $ Amount
Checking outbound boxes for errors 603500
Quality planning 8500
Downtime due to conveyor/computer problems 344250
Packaging waste 63750
Incoming product inspection 51000
Customer complaint rework 34000
Correcting erroneous orders before shipping 34000
Quality training of associates 25500
Quality improvement projects 17000
Other waste 46750
Correction of typographical errors--pick tickets 8500

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Prob03-04

Problem 3-4
Puragua Corporation
Cost Element $ Amount
Scrap costs 200000
Quality audits 10000
Laboratory support 20000
Customer returned goods 63700
Reinspection-retesting for calibration 40000
Warranty claims 34000
Purchased materials reject costs 34000
Quality training of associates 27500
Customer user surveys 17000
Measurement equipment purchases 46800
Design corrective action 12000
Customer penalties-late shipments 55000
Rework costs 150000
Supplier rating 15000
Total 725000

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Prob03-05

Problem 3-5
Basawas Paper Converters
Category $Annual Loss
Downtime 23000
Testing costs 12000
Rejected paper 300000
Odd lot 56000
Excess inspection 16000
Customer complaints 84000
High material costs 32000
Quality improvement training 7000
Total 530000

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Prob03-06

Problem 3-6
Nebulas Software Venders
Category $Annual Loss
Rework costs 25000
Rejected modules 80000
Rejected subprograms 148000
Inspection costs (extra)—incoming 16000
Inspection costs (extra)—outgoing 24000
Customer dissatisfaction 290000
Training and system improvement costs 55000
System downtime 112000
Total 750000

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Prob03-07

Problem 3-7
Shazam Modular Manufacturers, Inc.
Category $Annual Loss
Customer returns 99750
Inspection costs – outgoing 29500
Inspection costs – incoming 12500
Workstation downtime 41250
Training/system improvement 25000
Rework costs 42000
Totals 250000

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Prob03-08

Problem 3-8
International Fabrica, Inc.
Quarterly Costs (($ Thousands)
1 2 3 4
External failure 252.72 187.38 128.52 115.74
Internal failure 421.38 335.16 255.96 149.76
Appraisal 174.78 204.93 246.96 239.58
Prevention 25.56 26.28 45.18 72.18
Total quality costs 874.4 753.8 676.6 577.3
Total sales 3708.0 3785.4 4008.6 3695.4

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Prob03-09

Problem 3-9
Loire Valley Wine Co.
Quarterly Cost $Thousands)
1 2 3 4
External failure 1,400 900 950 530
Internal failure 1,700 1,925 1,250 900
Appraisal 900 1,100 1,350 700
Prevention 400 600 900 1,100
Total Quality Cost 4,400 4,525 4,450 3,230
Total Labor Cost 18,000 17,500 20,500 17,200

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