The document discusses concepts related to total quality management including quality costing, measurement, and productivity. It defines categories of quality costs such as prevention costs, appraisal costs, internal failure costs, and external failure costs. Methods for measuring and reporting quality costs using index numbers are presented, with an example showing quality index numbers over four years. The relationship between quality, yield, and productivity is explored through examples calculating product yield for single and multi-stage processes. The quality-productivity ratio is introduced as a metric that increases with improvements in processing costs, rework costs, and product quality.
Taguchi loss function is a modern tool used to determine all the prices associated with manufacturing a product so the loss function along with its types and their basic details are explained in this presentation along with the Signal-Noise Functions in a basic manner
Cost of Quality is a widely spread and widely misunderstood concept.Here is a presentation that will evaporate all your doubts regarding this topic.A very well explained case study of H&S motors.It is a very well structured presentation.
Taguchi loss function is a modern tool used to determine all the prices associated with manufacturing a product so the loss function along with its types and their basic details are explained in this presentation along with the Signal-Noise Functions in a basic manner
Cost of Quality is a widely spread and widely misunderstood concept.Here is a presentation that will evaporate all your doubts regarding this topic.A very well explained case study of H&S motors.It is a very well structured presentation.
Bechmarking- Total Quality Management (TQM)Rehan Ehsan
This presentation covers basics of Benchmarking in the eye of Total Quality Management and customer satisfaction with examples. After Reading this, one should be uble to understand and deliver the best knowledge about benchmarking.
Bechmarking- Total Quality Management (TQM)Rehan Ehsan
This presentation covers basics of Benchmarking in the eye of Total Quality Management and customer satisfaction with examples. After Reading this, one should be uble to understand and deliver the best knowledge about benchmarking.
Unit I (8 Hrs)
Introduction to Linear Programming – Various definitions, Statements of basic
theorems and properties, Advantages Limitations and Application areas of Linear
Programming, Linear Programming -Graphical method, - graphical solution
methods of Linear Programming problems, The Simplex Method: -the Simplex
Algorithm, Phase II in simplex method, Primal and Dual Simplex Method, Big-M
Method
Unit II (8 Hrs)
Transportation Model and its variants: Definition of the Transportation Model
-Nontraditional Transportation Models-the Transportation Algorithm-the Assignment
Model– The Transshipment Model
Unit III (8 Hrs)
Network Models: Basic differences between CPM and PERT, Arrow Networks,
Time estimates, earliest completion time, Latest allowable occurrences time,
Forward Press Computation, Backward Press Computation, Representation in
tabular form, Critical Path, Probability of meeting the scheduled date of completion,
Various floats for activities, Critical Path updating projects, Operation time cost trade
off Curve project,
Selection of schedule based on :- Cost analysis, Crashing the network
Sequential model & related problems, processing n jobs through – 1 machine & 2
machines
Unit IV (8 Hrs)
Network Models: Scope of Network Applications – Network definitions, Goal
Programming Algorithms, Minimum Spanning Tree Algorithm, Shortest Route
Problem, Maximal flow model, Minimum cost capacitated flow problem
Unit V (8 Hrs)
Decision Analysis: Decision - Making under certainty - Decision - Making under
Risk, Decision
under uncertainty.
Unit VI (8 Hrs)
Simulation Modeling: Monte Carlo Simulation, Generation of Random Numbers,
Method for
Gathering Statistical observations
this is book which prescribed for mechanical engineering students its one of there paper in engineering subjects dat to for final years. it is easy to understand nd best for scoring
Target Costing and PricingExercise 8 Lovebug Company has de.docxjosies1
Target Costing and Pricing
Exercise 8:
Lovebug Company has determined that its new automotive hood screen would gain widespread customer acceptance if the company could price it at or under $30.
Anticipated labor hours and costs for each unit of the new product follow.
Direct Materials Cost
$5
Direct labor cost
Manufacturing labor:
Hours
0.2
Hourly labor rate
$10
Assembly labor:
Hours
0.5
Hourly labor rate
$15
Machine hours
1
The company currently uses the following three activity-based cost rates:
Machine handling
$0.30 per dollar of direct materials
Production
$5.00 per machine hour
Product delivery
$0.50 per unit
The company’s minimum desired profit is 40 percent over total production and delivery cost.
Compute the target cost for the new hood screen, and determine if the company should market it (Round to two decimal places).
Problem 5
Developing Transfer Prices
Sand Company has two divisions, Glass Division and Instrument Division.
For several years, Glass Division has manufactured a special glass container, which it sells to Instrument Division at the prevailing market price of $20.
Glass Division produces the glass containers only for Instrument Division and does not sell the product to outside customers.
Annual production and sales volume is 20,000 containers.
A unit cost analysis for Glass Division follows.
Cost Categories
Costs per Container
Direct Materials
$3.50
Direct labor, 1/4 hour
2.3
Variable overhead
7.5
Avoidable fixed costs: $30,000/20,000 units
1.5
Corporate overhead: $3.60 per direct labor hour
4.5
Variable shipping costs
1.2
Unit Cost
$20.50
Corporate overhead represents the allocated joint fixed costs of production- building depreciation, property taxes, insurance, and executives’ salaries.
A profit markup of 20 percent is used to determine transfer prices.
REQUIRED:
What would the appropriate transfer price for Glass Division to use in billing its transactions with Instrument Division?
If Glass Division decided to sell some containers to outside customers, would your answer to requirement 1 change?
Defend your response.
What factors concerning transfer price should management consider when transferring products between divisions?
Exercise 4:
Measures of Quality in a Service Business
Rehab Health Care, LLC, incurred the service-related activity costs for the month that follow.
Total sales
$40,000
Customer complaint processing
1,000
Employee training
400
Reinspection and retesting
500
Design review of service procedures
300
Technical support
200
Investigation of service defects
800
Sample testing of vendors
100
Inspection of supplies
150
Quality audits
250
Quality-related downtime
300
Prepare an analysis of the costs of quality for Rehab Health Care.
Categorize the costs as (a) costs of conformance, with subsets of prevention costs and appraisal costs, or (b) costs.
This is a presentation based on Product life Cycle Costing. This presentation is prepared with the help of books and internet resources. There are some example, mathematical calculation and also some case which is too much relevant to practice of Life Cycle Costing in the real world.
This complete presentation has a set of sixty six slides to show your mastery of the subject. Use this ready-made PowerPoint presentation to present before your internal teams or the audience. All presentation designs in this Expense Management PowerPoint Presentation Slides have been crafted by our team of expert PowerPoint designers using the best of PPT templates, images, data-driven graphs and vector icons. The content has been well-researched by our team of business researchers. The biggest advantage of downloading this deck is that it is fully editable in PowerPoint. You can change the colors, font and text without any hassle to suit your business needs. http://bit.ly/39vrTIB
Introduction to AI for Nonprofits with Tapp NetworkTechSoup
Dive into the world of AI! Experts Jon Hill and Tareq Monaur will guide you through AI's role in enhancing nonprofit websites and basic marketing strategies, making it easy to understand and apply.
Synthetic Fiber Construction in lab .pptxPavel ( NSTU)
Synthetic fiber production is a fascinating and complex field that blends chemistry, engineering, and environmental science. By understanding these aspects, students can gain a comprehensive view of synthetic fiber production, its impact on society and the environment, and the potential for future innovations. Synthetic fibers play a crucial role in modern society, impacting various aspects of daily life, industry, and the environment. ynthetic fibers are integral to modern life, offering a range of benefits from cost-effectiveness and versatility to innovative applications and performance characteristics. While they pose environmental challenges, ongoing research and development aim to create more sustainable and eco-friendly alternatives. Understanding the importance of synthetic fibers helps in appreciating their role in the economy, industry, and daily life, while also emphasizing the need for sustainable practices and innovation.
The Roman Empire A Historical Colossus.pdfkaushalkr1407
The Roman Empire, a vast and enduring power, stands as one of history's most remarkable civilizations, leaving an indelible imprint on the world. It emerged from the Roman Republic, transitioning into an imperial powerhouse under the leadership of Augustus Caesar in 27 BCE. This transformation marked the beginning of an era defined by unprecedented territorial expansion, architectural marvels, and profound cultural influence.
The empire's roots lie in the city of Rome, founded, according to legend, by Romulus in 753 BCE. Over centuries, Rome evolved from a small settlement to a formidable republic, characterized by a complex political system with elected officials and checks on power. However, internal strife, class conflicts, and military ambitions paved the way for the end of the Republic. Julius Caesar’s dictatorship and subsequent assassination in 44 BCE created a power vacuum, leading to a civil war. Octavian, later Augustus, emerged victorious, heralding the Roman Empire’s birth.
Under Augustus, the empire experienced the Pax Romana, a 200-year period of relative peace and stability. Augustus reformed the military, established efficient administrative systems, and initiated grand construction projects. The empire's borders expanded, encompassing territories from Britain to Egypt and from Spain to the Euphrates. Roman legions, renowned for their discipline and engineering prowess, secured and maintained these vast territories, building roads, fortifications, and cities that facilitated control and integration.
The Roman Empire’s society was hierarchical, with a rigid class system. At the top were the patricians, wealthy elites who held significant political power. Below them were the plebeians, free citizens with limited political influence, and the vast numbers of slaves who formed the backbone of the economy. The family unit was central, governed by the paterfamilias, the male head who held absolute authority.
Culturally, the Romans were eclectic, absorbing and adapting elements from the civilizations they encountered, particularly the Greeks. Roman art, literature, and philosophy reflected this synthesis, creating a rich cultural tapestry. Latin, the Roman language, became the lingua franca of the Western world, influencing numerous modern languages.
Roman architecture and engineering achievements were monumental. They perfected the arch, vault, and dome, constructing enduring structures like the Colosseum, Pantheon, and aqueducts. These engineering marvels not only showcased Roman ingenuity but also served practical purposes, from public entertainment to water supply.
A Strategic Approach: GenAI in EducationPeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
Instructions for Submissions thorugh G- Classroom.pptxJheel Barad
This presentation provides a briefing on how to upload submissions and documents in Google Classroom. It was prepared as part of an orientation for new Sainik School in-service teacher trainees. As a training officer, my goal is to ensure that you are comfortable and proficient with this essential tool for managing assignments and fostering student engagement.
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Embracing GenAI - A Strategic ImperativePeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
2. QUALITY COST
Feigenbaum defined quality costs as:
“Those costs associated with the definition,
creation, and control of quality as well as the
evaluation and feedback of conformance with
quality, reliability, and safety requirements, and
those costs associated with the consequences of
failure to meet the requirements both within the
factory and in the hands of customers.”
“QUALITY IS FREE” (Crosby)
3. COST OF QUALITY
CATEGORIES OF QUALITY COST:
– COST OF ACHIEVING GOOD QUALITY
– COST OF POOR QUALITY
COST OF ACHIEVING GOOD QUALITY
– PREVENTION COSTS
The cost of any action taken to investigate, prevent or reduce the
risk of a non-conformity
Include quality planning costs, designing products with quality
characteristics, Training Costs, etc.
– APPRAISAL COSTS
The costs associated with measuring, checking, or evaluating
products or services to assure conformance to quality
requirements
Include inspection & Testing Costs, Test Equipment Costs,
Operator Costs, etc.
4. COST OF QUALITY
CATEGORIES OF QUALITY COST:
– COST OF ACHIEVING GOOD QUALITY
– COST OF POOR QUALITY
COST OF POOR QUALITY
– INTERNAL FAILURE COSTS
The costs arising within the organization due to non-
conformities or defects
include scrap, rework, process failure, downtime, and
price reductions
– EXTERNAL FAILURE COSTS
The costs arising after delivery of product or service to
the customer due to non-conformities or defects
include complaints, returns, warranty claims, liability,
and lost sales
6. GOAL OF
COST OF QUALITY SYSTEM
TO FACILITATE
QUALITY EFFORTS
THAT WILL LEAD TO
OPERATING COST
REDUCTION
OPPORTUNITIES
STRATEGY
Direct attack on Failure Costs to minimize them
Investment in Prevention activities
Reduction in Appraisal Costs
8. MEASURING AND
REPORTING QUALITY COSTS
INDEX NUMBERS
– ratios that measure quality costs against a base
value
– LABOR INDEX
ratio of quality cost to labor hours
– COST INDEX
ratio of quality cost to manufacturing cost
– SALES INDEX
ratio of quality cost to sales
– PRODUCTION INDEX
ratio of quality cost to units of final product
9. AN EVALUATION OF QUALITY
COSTS & QUALITY INDEX NUMBERS
EXAMPLE: The H&S Motor Company small motors (e.g., 3 hp) for use
in lawnmowers and garden equipment. The company instituted a quality
management program in 2004 and has recorded the following quality cost
data and accounting measures for four years.
YEAR
2004 2005 2006 2007
QUALITY COSTS
Prevention $27,000 41,500 74,600 112,300
Appraisal 155,000 122,500 113,400 107,000
Internal Failure 386,400 469,200 347,800 544,400
External Failure 242,000 196,000 103,500 106,000
TOTAL $810,400 829,200 639,300 869,700
ACCOUNTING MEASURES
Sales $4,360,000 4,450,000 5,050,000 5,190,000
Manufacturing Costs 1,760,000 1,810,000 1,880,000 1,890,000
The company wants to assess its quality–assurance program and develop
quality index numbers using sales and manufacturing cost bases for the
four–year period.
10. AN EVALUATION OF QUALITY COSTS & QUALITY
INDEX NUMBERS: “EXAMPLE (Cont…)”
Quality Index = [(Total Quality Costs) / Base] X 100
The Index Number for 2004 sales is:
– Quality Cost per sale = [(810,400/4,360,000)] X 100 = 18.58%
Year Quality Sales
Index
Quality Manufacturing
Index
2004 18.58 46.04
2005 18.63 45.18
2006 12.66 34.00
2007 10.49 28.80
“The H&S Company quality index numbers reflect dramatically improved quality
during he four – year period”
Quality Costs as a Proportion of both sales & manufacturing costs improved
significantly
Quality Index Numbers are useful in showing trends in product quality over time
and reflecting the impact of product quality relative to accounting measures with
which managers are usually familiar
11. QUALITY INDEX NUMBERS: “QUESTION”
Backwoods American, Inc., produces expensive water-repellent, down-lined
parkas. The company implemented a total quality management program in
2002. Following are quality related accounting data that have been
accumulated for the five year period after the program’s start.
YEARS
2003 2004 2005 2006 2007
QUALITY COSTS (000s)
Prevention $3.2 10.7 28.3 42.6 50.0
Appraisal 26.3 29.2 30.6 24.1 19.6
Internal Failure 39.1 51.3 48.4 35.9 32.1
External Failure 118.6 110.5 105.2 91.3 65.2
ACCOUNTING MEASURES (000s)
Sales $2,700.6 2,690.1 2,705.3 2,810.2 2,880.7
Manufacturing Cost 420.9 423.4 424.7 436.1 435.5
Compute quality–sales indices and quality–cost indices for each of the five
years. Is it possible to assess the effectiveness of the company’s quality
management program from these index values?
12. QUALITY INDEX NUMBERS: “QUESTION”
ANSWER:
These index values do not provide much information regarding
the effectiveness of the quality assurance program. They are,
however, useful in making comparisons from one period to the
next and in showing trends in product quality over time.
13. QUALITY MANAGEMENT
AND PRODUCTIVITY
Productivity
– ratio of output to input
Yield:
– is a measure of output used as an indicator of
productivity
– Improved quality increases product yield
Yield=(total input)(% good units) + (total input)(1-%good
units)(% reworked)
or
Y=(I)(% G)+(I)(1-% G)(% R)
14. COMPUTING PRODUCT YIELD
EXAMPLE:
– The H & S Motor company starts production for a particular type of motor with a
steel motor housing. The production process begins with 100 motors each day.
The percentage of good motors produced each day average 80% and the
percentage of poor–quality motors that can be reworked is 50%. The company
wants to know the daily product yield and the effect on productivity if the daily
percentage of good–quality motors is increased to 90%.
Yield=(total input)(% good units) + (total input)(1-%good
units)(% reworked)
Y=(I)(% G)+(I)(1-% G)(% R)
Y = (100)(0.80) + (100)(1 – 0.80)(0.50) = 90 Motors
If product quality is increased to 90% good motors, the yield will be:
Y = (100)(0.90) + (100)(1 – 0.90)(0.50) = 95 Motors
A 10% point increase in quality products results in a 5.5% ((95/ 90 )*100)
increase in productivity output.
15. COMPUTING PRODUCT YIELD “QUESTION”
The Colonial House furniture company manufactures two-draw oak file
cabinets that are sold unassembled through catalogues. The company
initiates production of 180 cabinets’ packages each week. The percentage of
good-quality cabinets averages 83% per week, and percentage of poor-
quality cabinets that can be reworked is 60%.
a) Determine the weekly product yield of file cabinets.
b) If the company desires a product yield of 174 units per week, what
increase in the percentage of good quality products must results?
16. PRODUCT COST PER UNIT
Y
RKIK rd ))(())(( +
=Product Cost
where:
Kd = direct manufacturing cost per unit
I = input
Kr = rework cost per unit
R = reworked units
Y = yield
17. COMPUTING PRODUCT COST PER UNIT
EXAMPLE:
– The H & S Motor company has a direct manufacturing cost per unit of $30, and
motors that are of inferior quality can be reworked for $12 per unit. From
previous Example, 100 motors are produced daily, 80% (on average) are of good
quality and 20% are defective. Of the defective motors, half can reworked to
yield good–quality products. Through its quality management program, the
company has discovered a problem in its production process that, when corrected
(at a minimum cost), will increase the good – quality products to 90%. The
company wants to assess the impact on the direct cost per unit of improvement
in product quality.
The Original manufacturing cost per motor is:
Product Cost
= [($30)(100) + ($12)(10)] / 90 motors
= $34.67 per motor
The manufacturing cost per motor with the quality improvement is:
Product Cost = [($30)(100) + ($12)(5)] / 95 motors = $32.21 per motor
“The improvement in the production process as a result of the quality management program will
result in a decrease of $2.46 per unit, or [(34.67–32.21)/34.67] X 100 = 7.1%, in direct
manufacturing cost per unit as well as a 5.5% increase in product yield (computed in previous
example), with a minimal investment in Labor, plant, or equipment.
Y
RKIK rd ))(())(( +
=
18. COMPUTING PRODUCT COST PER
UNIT: “QUESTION”
The Omega Shoe Company manufactures a number of different styles of
athletic shoes. Its biggest seller is the X–pacer running shoe. In 2005 Omega
implemented a quality–management program. The company’s shoe
production for the past three years and manufacturing costs are as fellows.
YEAR
2005 2006 2007
Units Produced (Input) 32,000 34,600 35,500
Manufacturing Cost $278,000 291,000 305,000
Percent good quality 78% 83% 90%
Only one–quarter of the defective shoes can be reworked, at a cost of $2
apiece.
Compute the manufacturing cost per good product for each of the three years
and indicate the annual percentage increase or decrease resulting from the
quality management program.
20. COMPUTING PRODUCT
YIELD FOR MULTISTAGE
PROCESSES
Y = (I)(%g1)(%g2) … (%gn)
where:
I = input of items to the production process that will result in finished
products
gi = good-quality, work-in-process products at stage i
21. COMPUTING PRODUCT YIELD FOR
MULTISTAGE PROCESS
EXAMPLE:
– At the H&S motor company, motors are produced in a four–
stage process. Motors are inspected following each stage,
with percentage yields (on average) of good–quality, work in
process units as follows:
STAGE AVERAGE PERCENTAGE GOOD QUALITY
1 0.93
2 0.95
3 0.97
4 0.92
1. The company wants to know the daily product yield for product input of
100 units per day.
2. Furthermore, it would like to know how many input units it would have to
start with each day to result in a final daily yield of 100 good – quality
units.
22. COMPUTING PRODUCT YIELD FOR
MULTISTAGE PROCESS
SOLUTION:
– Y = (I)(%g1)(%g2)(%g3)(%g4) = (100)(0.93)(0.95)(0.97)(0.92)
– Y = 78.8 motors
Thus, the production process has a daily good – quality product yield of
78.8 motors.
– To determine the product input that would be required to
achieve a product yield of 100 motors, “I” is treated as a
decision variable when Y equals 100:
– I = (Y) / (%g1)(%g2)(%g3)(%g4)
– I = (100) / (0.93)(0.95)(0.97)(0.92)
– I = 126.8 motors
To achieve output of 100 good – quality motors, the production process
must start with approximately 127 motors.
23. COMPUTING PRODUCT YIELD FOR
MULTISTAGE PROCESS: “QUESTION”
The Colonial House Furniture Company manufactures four–drawer oak filing cabinets in six
stages. In the first stage, the boards forming the walls of the cabinet are cut; in the second
stage, the front drawer panels are wood-worked; in the third stage, the boards are sanded and
finished; in the fourth stage, the boards are cleaned, stained, and painted with a clear finish; in
the fifth stage, the hardware for pulls, runners, and fittings is installed; and in the final stage,
the cabinets are assembled. Inspection occurs at each stage of the process, and the average
percentage of good quality units are as fellows.
Stage
Average
Percentage
Good Quality
1 87%
2 91%
3 94%
4 93%
5 93%
6 96%
The cabinets are produced in weekly production runs with a
product input for 300 units.
a. Determine the weekly product yield of good–quality
cabinets.
b. What would weekly product input have to be in order to
achieve a final weekly product yield of 300 cabinets?
24. QUALITY–PRODUCTIVITY RATIO
QPR:
– productivity index that includes productivity and
quality costs
– It increases if either processing cost or rework
costs or both decrease.
– It increases if more good-quality units are
produced relative to total product input(i.e.,
number of units that begin the production
process)
QPR =
(non-defective units)
(input) (processing cost) + (defective units) (reworked cost)
25. COMPUTING QUALITY & PRODUCTIVITY RATIO
EXAMPLE:
– The H&S Motors Company produces small motors at a process cost of
$30 per unit. Defective motors can be reworked at a cost of $12 each.
The company produces 100 motors per day on average 80% good-
quality motors., resulting in 20% defects, 50% of which can be reworked
prior to shipping to customers. The company wants to examine the
effects of:
1. Increase the production rate to 200 motors per day
2. Reducing the processing cost to $26 and the rework cost to $10
3. Increasing, through quality improvement, the product yield of good
quality products to 95%
4. The combination 2 & 3
SOLUTION:
– QPR for the base case:
QPR = [(80 + 10) / {(100)($30) + (10)($12)}] X 100
QPR = 2.89
QPR =
(non-defective units)
(input) (processing cost) + (defective units) (reworked cost)
26. COMPUTING QUALITY & PRODUCTIVITY RATIO
SOLUTION:
– Case#1: “Increase input to production capacity of 200 units”
QPR = [(160 + 20) / {(200)($30) + (20)($12)}] X 100
QPR = 2.89
“Increasing production capacity alone has no effect on the QPR”
– Case#2: “Reduce processing cost to $26 and rework cost to $10”
QPR = [(80 + 10) / {(100)($26) + (10)($10)}] X 100
QPR = 3.33
“Processing & Rework cost decreases caused the QPR to increase”
– Case#3: “Increasing, through quality improvement, the product yield of
good quality products to 95% ”
QPR = [(95 + 2.5) / {(100)($30) + (2.5)($12)}] X 100
QPR = 3.22
“Again, QPR increases as product quality improves”
– Case#4: “Decrease costs & increase initial good-quality units”
QPR = [(95 + 2.5) / {(100)($26) + (2.5)($10)}] X 100
QPR = 3.71
“The larger increase in the QPR results from decreasing costs &
increasing initial good quality products through improved quality”
27. COMPUTING QUALITY &
PRODUCTIVITY RATIO: “QUESTION”
Air–Phone, Inc., manufactures cellular telephones at a process cost of $47 per
unit. The company produces an average of 250 phones per week and has a
yield of 87% good-quality phones, resulting in 13% defective phones, all of
which can be reworked. The cost of reworking a defective telephone is $16.
a. Compute the Quality–Productivity Ratio (QPR).
b. Compute the QPR if the company increase the production rate to 320
phones per week while reducing the processing cost to $42, reducing the
rework cost to $12, and increasing the product yield of good–quality
telephones to 94%.