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week 7 homework




Question;Problem 1 -;The Door Company manufactures doors. Classify each of the following;quality costs as prevention costs, appraisal costs, internal failure costs, or;external failure costs. (13 points);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;m.;Reentering data because of keypunch errors;Problem;2 - For supply;item ABC, Andrews Company has been ordering 125 units based on the;recommendation of the salesperson who calls on the company monthly. A new;purchasing agent has been hired by the company who wants to start using the;economic-order-quantity method and its supporting decision elements. She;has gathered the following information;Annual demand in units;250;Days used per year;250;Lead time, in days;10;Ordering costs;$100;Annual unit carrying costs;$20;Determine the EOQ, average inventory, orders per year;average daily demand, reorder point, annual ordering costs, and annual carrying;costs (17 points).;Quiz;1.(TCO 11)The;four cost categories in a cost of quality program are (Points: 3);product design, process design, internalsuccess, and external success.;prevention;appraisal, internal failure, andexternal;failure.;design;conformance, control, andprocess.;design;process specification, on-timedelivery;and customer satisfaction.;2.(TCO 11) ________ is a formal means ofdistinguishing between random and nonrandom variation;in an operatingprocess. (Points;3);Statisticalprocess;control (SPC);A;Paretodiagram;A;cause-and-effectdiagram;A;fishbonediagram;3.(TCO 11) Which of the following is NOT one of the;three mainmeasurements in the theory of constraints? (Points: 3);Investmentsor;inventory;Otheroperating costs;Manufacturinglead time;Throughputcontribution;4.(TCO 11) Designengineering;is an example of (Points: 3);externalfailure;costs.;internalfailure costs.;preventioncosts.;appraisalcosts.;5.(TCO 11) Regal Products has a budget of $900,000 in;20X3 for prevention costs. If it decides to automate a portion of;its prevention activities, it will save $60,000 in variable costs.;The new method will require $18,000 in training costs and $120,000 in;annual equipment costs. Management is willing to adjust the budget;for an amount up to the cost of the newequipment.;The budgeted production level is 150,000 units. Appraisal costs for the;year are budgeted at $600,000. The new prevention procedures will;save appraisal costs of $30,000. Internal failure costs average $15;perfailed unit of finished goods. The internal;failure rate is expected to be 3% of all completed items. The;proposed changes will cut the internal failurerate by one-third. Internal failure units are;destroyed. External failure costs average $54 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. How much will internal failure costs change if;the internal product failuresare;reduced by 50% with the new procedures?(Points;3);$500,000decrease;$750,000decrease;$33,750decrease;$67,500decrease;6.(TCO 12) Which of the following categories of costs;are important whenmanaging inventories of goods for sale, according to;the authors of the text? (Points;3);Purchasing, ordering, supply, spoilage,and opportunity;Purchasing;stockout carrying, ordering,and;quality;Buying;holding, invoicing, opportunity,and;investment;Supply;obsolescence, holding, stockout,and;transportation-in;7.(TCO 12)Quality;costs include (Points: 3);preventioncosts.;stockoutcosts.;purchasingcosts.;orderingcosts.;8.(TCO 12)The;economic order quantity ignores (Points;3);purchasingcosts.;relevantordering costs.;stockoutcosts.;Both;1 and 3 arecorrect;9.(TCO 12) The ________ describes the flow of;goods, services, andinformation;from the initial sources of materials and services to the delivery of;products to consumers. (Points;3);supplychain;materialrequirements plan (MRP);customerlist;enterpriserequirements plan (ERP);10.(TCO 12) Liberty Celebrations, Inc., manufactures a;line of flags. The annual demand for its flag display is estimated;to be 100,000 units. The annual cost of carrying one unit in;inventory is $1.60, and the cost to initiate a production run is;$40. There are no flag displays on hand butLiberty had scheduled 60 equal production runs of the;display sets for the coming year, the first of which is to be run;immediately. Liberty Celebrations has 250 business days per;year. Assume that sales occur uniformly throughout the year and;that production is instantaneous.;If Liberty Celebrations does not maintain a safety stock, the estimated;total carrying cost for the flag displays for the coming year is (Points: 3);$2,000.;$2,200.;$2,400.;$3,000.


Paper#55811 | Written in 18-Jul-2015

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