94. Which of the following is not true regarding the determination of relevant costs and
relevant revenues associated with quality–related initiatives (such as the move to JIT
production)?
95. Which of the following items is not a tool that can be used by management to detect poor
quality in an operation?
96. Which of the following items is not a tool that can be used by management to take
corrective action in a process deemed out of control?
97. The tool that consists of a histogram of factors contributing to a specified quality
problem, ordered from the most to the least frequently occurring factor, is a:
98. The tool that can be used to depict main causes for an identified quality problem,
subdivided into categories represented as machines, materials, methods, and manpower, is
called a:
99. All of the following would generally be included in a Cost of Quality (COQ) report except:
100. Listed below are selected line items from the Cost of Quality (COQ) report for Watson
Products for last month:
Category Amount
Rework $725
Equipment maintenance 1,154
Product testing 786
Product repair 695
What was Watson’s total prevention and appraisal cost for last month?
101. Statistical quality control often involves the use of control charts, whose basic purpose is
to:
102. Product-quality-related costs are part of a total quality control program. A product–
quality-related cost incurred in detecting individual products that do not conform to
specifications is an example of a(n):
103. Wolk Corporation is a highly automated manufacturing firm. The vice president of finance
has decided that traditional standards are inappropriate for performance measures in an
automated environment. Labor is insignificant in terms of the total cost of production and tends
to be fixed, material quality is considered more important than minimizing material cost, and
customer satisfaction is the number one priority. As a result, delivery performance measures
have been chosen to evaluate performance. The following information is considered typical of the
time involved to complete customer orders.
Wait time:
From time order is placed to time order received by manufacturing 10.0 days
From time order is received by manufacturing to time production begins 5.0 days
Inspection time 1.5 days
Process (manufacturing) time 3.0 days
Move time 2.5 days
What is the
processing cycle efficiency
(PCE) for this order (rounded to one decimal point)?
104. Wolk Corporation is a highly automated manufacturing firm. The vice president of finance
has decided that traditional standards are inappropriate for performance measures in an
automated environment. Labor is insignificant in terms of the total cost of production and tends
to be fixed, material quality is considered more important than minimizing material cost, and
customer satisfaction is the number one priority. As a result, delivery performance measures
have been chosen to evaluate performance. The following information is considered typical of the
time involved to complete customer orders.
Wait time:
From time order is placed to time order received by manufacturing 10.0 days
From time order is received by manufacturing to time production begins 5.0 days
Inspection time 1.5 days
Process (manufacturing) time 3.0 days
Move time 2.5 days
What is the
production
(
manufacturing) lead time
for this order?
105. The cost of scrap, rework, and tooling changes in a Cost of Quality (COQ) Report are
properly categorized as a(n):
106. The cost of using a statistical quality control system is properly characterized in a Cost of
Quality (COQ) report as a(n):
107. An example of an internal failure cost in a Cost-of-Quality (COQ) reporting system is:
108. In 2016 a manufacturing company instituted a Total Quality Management (TQM) program
and one year later produced the report shown below:
Summary of Cost of Quality (COQ) Report
(in thousands)
2016 2017 % Change
Prevention costs $200 $300 +50
Appraisal costs 210 315 +50
Internal failure costs 190 114 –40
External failure costs 1,200 621 –48
Total COQ $1,800 $1,350 –25
On the basis of the above report, which one of the following statements is most likely correct?
109. Which of the following items is not considered an external quality (performance) metric?
110. 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?
111. Chapter 17 presents (as Exhibit 17.3) a framework that can be used as the basis for
creating a comprehensive system for managing and controlling quality.
Required:
Provide an overview of the key elements of the framework presented in the chapter.
112. List three examples of quality improvement initiatives in a manufacturing facility that
would lead to increased sales productivity.
113. What is the reasoning behind the misconception that quality improvements
decrease
productivity?
114. 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 in recommending
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 (QLF) operates within the absolute quality
conformance plan.
3. Do you think worker reaction to the two plans in Part (1) above might be different? Why or why
not?
115. The four accepted categories of a Cost of Quality (COQ) Report are prevention, appraisal,
internal failure, and external failure. Assume your cost management instructor has given you an
assignment related to COQ. You are to relate each of the cost categories above to the
preparation of a class project, which is a study of an actual firm’s cost management system. The
typical student spends 16 hours researching an identified firm, five hours writing the report, and
three hours in revising and presenting the report to the class.
Required:
1. Give an example of prevention, appraisal, internal failure, and external failure costs you might
encounter in writing and presenting your report. (Example: “Draw up a time budget with
necessary deadlines before starting the report” is an example of a
prevention cost
.)
2. Which of the four category examples you gave for Requirement (1) above has the greatest
cost? What has the least cost? What has the greatest benefit? What has the least benefit?
(Example: “Not saving word processing on a hard drive or jump drive” is an example of
greatest
cost in terms of time
.)
116. Jordan Company manufactures doors and maintains a Cost–of-Quality (COQ) reporting
system. Classify each of the following quality-related costs as a
prevention cost
, an
appraisal
cost
, an
internal failure cost
, an
external failure cost
, or none of the above.
(a) Retesting of reworked products
(b) Downtime due to quality problems
(c) Analysis of the cause of defects in production
(d) Depreciation of test equipment
(e) Warranty repairs
(f) Lost sales arising from a reputation for poor quality
(g) Quality circles
(h) Rework direct manufacturing labor and overhead
(i) Net cost of spoilage
(j) Technical support provided to suppliers
(k) Audits of the effectiveness of the quality system
(l) Plant utilities in the inspection area