Chihooli, inc., manufactures radiation-shielding glass panels. Suppose chihooli is considering spending the following amounts on a new total quality management (TQM) program;
- Stength testing on item from each batch of panels 65000
- Training employees in TQM 30000
- training suppliers in TQM 40000
- Identifying preferred suppliers who commit to on time delivery of perfect quality materials 60000
Chihooli expects the nre program would save costs through the following:
- Aviod lost profits from the lost sales due to disappointed customers 90000
- aviod rework and spoilage 55000
- aviod inspection of raw materials 45000
- aviod warranty costs 15000
A.) classify each item as a prevention cost, an appriasal cost and internal failure cost or external failure cost.
B.) should chihooli implement the new quality program? give reason.