Question 1

Identify the appropriate cost-of-quality (COQ) category for each of the following items:
1. Engineering time spent to simplify production processes.
2. Engineering time spent on engineering change orders to reduce the number of component used in a current product.
3. Scrap resulting from substandard materials undetected by the receiving personnel.
4. Rework to correct inconsistency caused by machine variability.
5. Preventive maintenance on machinery.
6. Product inspections.
7. Air freight to replace a defective part discovered by a customer.
8. Long-distance call to a customer who has experienced a quality failure.

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Question 2

Cari and Jeremy just bought a bed and breakfast inn at a very attractive price. The business had been doing poorly. Before they reopened the inn for business, they attended a seminar on operating a high-quality business. Now that they are ready to open the inn, they need some advice on quality costs and the management and control of quality.
Required:
1. Identify and define each of the four categories in a typical Cost-of-Quality (COQ) reporting system.
2. For the identified business (bed and breakfast) provide three examples of costs within each of the four COQ categories.

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Question 3

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):
A)Prevention cost.
B)Appraisal cost.
C)Internal failure cost.
D)External failure cost.
E)Opportunity cost.

Accepted Answer

Appraisal costs are those incurred in detecting individual products that do not conform to specifications. These costs are incurred to ensure that defective products are not shipped to customers. Prevention costs, on the other hand, are incurred to prevent defects from occurring in the first place. Internal failure costs are those incurred when defective products are detected before they are shipped to customers, while external failure costs are incurred when defective products are detected after they have been shipped to customers. Opportunity costs are the costs of forgoing the next best alternative.

Question 4

Which of the following items is not considered an external quality metric?
A)On-time delivery rates.
B)Customer response time (CRT).
C)Number of customer complaints.
D)Throughput efficiency (i.e., the ratio of throughput to resources used).
E)Percentage of products that experience early or excessive failure.

Accepted Answer

Throughput efficiency is an internal quality metric, as it measures how efficiently resources are being used within the system. External quality metrics, on the other hand, focus on aspects of the system's performance that are visible or important to customers or stakeholders outside of the organization. A, B, C, and E are all examples of external quality metrics.

Question 5

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.

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Question 6

What is the reasoning behind the misconception that quality improvements decrease productivity?

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Question 7

What is the production (manufacturing) lead time for this order?
A)7 days.
B)8 days.
C)15 days.
D)18 days.
E)19 days.

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Question 8

An example of an internal failure cost in a Cost-of-Quality (COQ) reporting system is:
A)Maintenance.
B)Inspection.
C)Rework.
D)Product recalls.
E)Contribution margin foregone in terms of lost sales.

Accepted Answer

Rework is an internal failure cost, as it involves correcting or repairing a product that did not meet quality standards before it can be shipped to the customer. Other examples of internal failure costs include scrap, downtime, and process inefficiencies.

Question 9

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 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?

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Question 10

List and explain three tools that can be used to identify or detect quality problems in a process or operation.

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Question 11

List three examples of quality improvement in a manufacturing facility that would lead to increased sales productivity.

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Question 12

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?

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Question 13

The cost of scrap, rework, and tooling changes in a product quality cost system are properly categorized as a(n):
A)Training cost.
B)External failure cost.
C)Internal failure cost.
D)Prevention cost.
E)Appraisal cost.

Accepted Answer

Scrap, rework, and tooling changes are all costs associated with fixing defects in products after they have been produced. These costs are considered internal failure costs because they occur after the product has been completed but before it is delivered to the customer. External failure costs would be costs incurred after the product has been delivered to the customer and a defect has been discovered, such as warranty repairs or product recalls. Training costs, prevention costs, and appraisal costs are all related to preventing defects from occurring in the first place.

Question 14

Statistical quality control often involves the use of control charts, whose basic purpose is to:
A)Determine when accounting control procedures are not working.
B)Control labor costs in production operations.
C)Detect performance trends away from normal operations.
D)Monitor internal administrative control applications in EDP (electronic data processing) operations.
E)Control internal audit confirmation responses.

Accepted Answer

Control charts are used to monitor a process over time and detect any unexpected shifts or trends in performance that may indicate a problem or an opportunity for improvement. This helps to ensure that the process remains stable and within acceptable limits of variability, leading to consistent and reliable output. The other choices are not related to the use of control charts for statistical quality control purposes.

Question 15

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

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Question 16

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.)

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Question 17

Listed below are 6 items concerned with quality.
Required: Classify each of these items into its appropriate Cost-of-Quality (COQ) category: Prevention Cost; Appraisal Cost; Internal Failure Cost; or External Failure Cost.
1. Establish a 24-hour hot line for customers to report quality failures.
2. Establish a quality-inspection program.
3. Re-design parts and components to simplify manufacturing of the product.
4. Hire additional field service people to provide better services.
5. Extend the warranty period for products from 90 days to one year.
6. Train employees on the importance of zero defects.

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Question 18

The cost of statistical quality control in a product quality cost system is properly characterized as a(n):
A)External failure cost.
B)Internal failure cost.
C)Training cost.
D)Opportunity cost.
E)Appraisal cost.

Accepted Answer

Statistical quality control is a form of quality appraisal, and therefore the cost is classified as an appraisal cost.

Question 19

In 2013 a manufacturing company instituted a Total Quality Management (TQM) program and one year later produced the report shown below:  On the basis of the above report, which one of the following statements is most likely correct?
A)An increase in conformance costs resulted in a higher-quality product, and therefore, resulted in a decrease in non-conformance costs.
B)An increase in inspection costs was solely responsible for the decrease in total quality costs.
C)Quality costs such as scrap and rework decreased by 48 percent.
D)Quality costs such as returns and repairs under warranty decreased by 40 percent.
E)Non-conformance costs increased by 50 percent and conformance costs decreased by approximately 47 percent.

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Question 20

What is the processing cycle efficiency (PCE) for this order (rounded)?
A)25.0%.
B)13.6%.
C)37.5%.
D)69.2%.
E)33.3%.

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Quiz 17: The Management and Control of Quality

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) :

Which of the following items is not considered an external quality metric?

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.

What is the reasoning behind the misconception that quality improvements decrease productivity?

What is the production (manufacturing) lead time for this order?

An example of an internal failure cost in a Cost-of-Quality (COQ) reporting system is:

List and explain three tools that can be used to identify or detect quality problems in a process or operation.

List three examples of quality improvement in a manufacturing facility that would lead to increased sales productivity.

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?

The cost of scrap, rework, and tooling changes in a product quality cost system are properly categorized as a(n) :

Statistical quality control often involves the use of control charts, whose basic purpose is to:

The cost of statistical quality control in a product quality cost system is properly characterized as a(n) :

In 2013 a manufacturing company instituted a Total Quality Management (TQM) program and one year later produced the report shown below: On the basis of the above report, which one of the following statements is most likely correct?

What is the processing cycle efficiency (PCE) for this order (rounded) ?