Problem 1. The Olympic Shoe Company manufactures a number of different styles of athletic shoes. Its biggest seller is the X-Pacer running shoe. In 2008 Olympic implemented a quality-management program. The company's shoe production for the past three years and manufacturing costs are as follows.
|
|
Year
|
|
|
2008
|
2009
|
2010
|
|
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