Backwoods American, Inc., produces expensive water-repellent, down-lined parkas. Currently, the cost of producing each parka is estimated to be $55. This company is planning to produce approximately 1650 parkas in the next year. The quality manager of the company has estimated that, with the current situation, 10 percent of the parkas produced will be defective and only 50 percent of the defective parkas can be reworked. The rework cost is estimated to be $10.The quality management department has suggested to upgrade the sewing machine to reduce the percentage of defective items. With this upgrade, the cost of producing each parka will be 85$ and the percentage of defective items will be 5 percent. The rework cost and the percentage of defective items that can be reworked do not change with this upgrade.Calculate:Number of units reworked during the next year, with the current situation:
Product yield during the next year, with the current situation
Effective per unit production cost, with the current situation:
If the company wants the yield to be 2000, how many parkas they should plan to produce during the next year, with the current situation? 1650Number of units reworked annually with the upgraded sewing machine:
The Yield during the next year with the upgraded sewing machine:
Effective per unit production cost per with the upgraded sewing machine:
Should the company upgrade their sewing machine? (Yes/No)
2) 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 woodworked; 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 percent ages of good-quality units are as follows.
StageAverage percentage of good
83 percent 1)
88 percent 2)
85 percent 3)
90 percent 4)
92 percent 5)
87 percent 6)
The cabinets are produced in weekly production runs with a product input for 400 units.The Colonial House Furniture Company has investigated the manufacturing process to identify potential improvements that would improve quality. The company has identified four alternatives, each costing $15,000, as follows.Alternative 1: Only Stage 1 quality improves to 87 percent.Alternative 2: Stage 2 quality improves to 92 percent and Stage 4 quality improves to 91 percent. All the other quality percentages remain the same as the current situation.Alternative 3: Stage 5 quality improves to 89 percent and Stage 4 quality improves to 94 percent. All the other quality percentages remain the same as the current situation.Alternative 4: Only Stage 2 quality improves to 96 percent.What is the yield for each alternatives, if the company chooses to go with Alternative 1, 2, 3, 4,5,6
3) Backwoods American, Inc., produces expensive water-repellent, down-filled parkas. The company implemented a total quality-management program in 2016. Following are quality-related accounting data that have been accumulated for the three-year period after the program’s start. Numbers in each category are for 2017 until 2019, from left to right. For example, the prevention cost in 2017 is 28.3 and prevention cost in 2019 is 50.0.
Compute the company’s total failure costs as a percentage of total quality costs for each of the five years. Does there appear to be a trend to this result? If so, speculate on what might have caused the trend.Also 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?You are just reporting the total failure costs as a percentage of total quality costs for each of the three years and quality indices as requested below.Always keep two decimal places. Report 81.36 percent as 81.36 and not 0.8136.Use two decimal places in your calculations.