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39. A graph that depicts successive observations of an operation taken at constant intervals
is a(n):
40. A graphical representation of the variation in a given set of data is a(n):
41. 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):
42. A graphical method that organizes a chain of causes and effects to sort out root causes
and identify relationships between causes or variables is a(n):
43. Which of the following is a tool that indicates how frequently each type of quality defect
occurs?
44. A tool that can be used to identify potential causes of failures or defects is a:
45. A ______________ shows trends in a quality measure over time.
46. Which of the following statements about product quality is not true?
47. Within a Cost-of-Quality (COQ) system, product liability resulting from a legal action is
classified as a(n):
48. The four categories of cost associated with a Cost-of-Quality (COQ) reporting system
are:
49. In a Cost-of-Quality (COQ) reporting framework, the cost of scrap, rework, and tooling
changes are categorized as a(n):
50. All of the following costs are generally included in a Cost-of-Quality (COQ) report except:
51. Verizon Manufacturing Company spent $400,000 in 2016 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 2016, 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 2017 for the project.
Verizon expects no changes in its operating level in the foreseeable future.
The $100,000 payment to the consulting firm for Cost of Quality (COQ) reporting purposes is best
classified as a(n):
52. Verizon Manufacturing Company spent $400,000 in 2016 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 2016, 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 2017 for the project.
Verizon expects no changes in its operating level in the foreseeable future.
What is the current 2016 total Cost of Quality (COQ)?
53. Verizon Manufacturing Company spent $400,000 in 2016 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 2016, 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 2017 for the project.
Verizon expects no changes in its operating level in the foreseeable future.
What effect does the new equipment have on appraisal costs?
54. Verizon Manufacturing Company spent $400,000 in 2016 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 2016, 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 2017 for the project.
Verizon expects no changes in its operating level in the foreseeable future.
How much are internal failure costs projected to change?
55. Verizon Manufacturing Company spent $400,000 in 2016 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 2016, 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 2017 for the project.
Verizon expects no changes in its operating level in the foreseeable future.
How much do you expect total external failure costs to change?
56. Verizon Manufacturing Company spent $400,000 in 2016 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 2016, 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 2017 for the project.
Verizon expects no changes in its operating level in the foreseeable future.
What is the change in total quality cost projected for 2017?
57. 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 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?
58. 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 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.
Using a Taguchi quality loss function (QLF) for this company, what is the amount of the
estimated loss when the actual quality characteristic,
x
, is 0.505?
59. 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 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 amount of the estimated loss using a Taguchi quality loss function (QLF) if the
actual quality characteristic,
x
, is 0.510?
60. Oslo Company's target quality characteristic,
T
, for one of its key components is set at 82.
Using the Taguchi Quality Loss Function (QLF) the company has determined the cost coefficient,
k
, to be $6,000. What is the estimated loss,
L
(
x
), if the value of the quality characteristic,
x
, is 85?
61. Heidelberg Manufacturing specifies the quality characteristic for one of its key
components to be 154" ± 4. The cost of failure is estimated to be $8,000 per unit. Using the
Taguchi Quality Loss Function (QLF) the firm has estimated the loss,
L
(
x
), at the quality
characteristic that the firm has experienced,
x
, to be $4,500. What is the estimated loss if the
deviation from the value of the quality characteristic doubled?
62. Over the last few months, Ithaca Precision Instruments (IPI) obtained the following
measurements on a key quality characteristic of its product:
Observed Quality Characteristic Probability
0.46 0.05
0.47 0.10
0.48 0.12
0.49 0.15
0.50 0.30
0.51 0.12
0.52 0.10
0.53 0.05
0.54 0.01
The company's experience has been that a customer will reject a product that deviates from the
target quality characteristic of 0.50 by more than 0.004. Each rejection costs the firm $5.
Determine the expected loss of the observed quality characteristic for IPI. Round final steps of
calculation to 4 decimal places (e.g., $18.89568 becomes $18.8957).
