Below are the quality costs data for a company for 2014 & 2015 2014 2015 Prevent
ID: 326255 • Letter: B
Question
Below are the quality costs data for a company for 2014 & 2015 2014 2015 Prevention $90,000 $110,000 Appraisal $50,000 $62,000 Internal Faliure $40,000 $34,000 External Faliure $62,000 $60,000 Sales: $5,100,000 $5,350,000 A) whats the precentage change in the total quality index between 2014 & 2015 B) What is the percentage change in the precention quality index between 2014 & 2015 C) What is the percentage change in the internal faliure quality index between 2014 & 2015 ? D) Do you think this company is on the right track investing more in quality improvements? Please explain using the above data.
Explanation / Answer
A.) Total Quality Index is defined by Total quality cost / Total sales
Here, Total quality cost (2014) = Internal failure + External Failure = 40000+62000 = 102000
Total sales (2014)= 5100000
Total quality index (2014)= 102000/5100000 = 0.0200
Total quality cost (2015) = Internal failure + External Failure = 34000 + 60000 = 94000
Total sales (2015)= 5350000
Total quality index (2015) = 94000/5350000 = 0.0176
Percentage change = (0.0176 - 0.0200) / 0.0200 = -12.15%
B.) Prevention quality index is defined as Prevention cost / Total sales
Prevention cost (2014) = 90000
Total sales (2014)= 5100000
Prevention quality index = 90000 / 5100000 = 0.0176
Prevention cost (2015) = 110000
Total sales (2014)= 5350000
Prevention quality index = 110000 / 5350000 = 0.0206
Percentage change = (0.0206 - 0.0176) / 0.0176 = +16.51%
C.) Internal failure quality index is defined as Internal failure cost / Total sales
Internal failure cost (2014) = 40000
Total sales (2014)= 5100000
Internal failure quality index = 40000/ 5100000 = 0.0078
Internal failure cost (2015) = 34000
Total sales (2014)= 5350000
Internal failure quality index = 34000/ 5350000 = 0.0064
Percentage change = (0.0064 - 0.0078) / 0.0078 = -18.97%
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