Question

Safe Travel produces car seats for children from newborn to 2 years old.

Safe Travel only problem with its car seats was stitching in the straps. The problem can usually be detected and repaired during an internal inspection.

Inspection costs $ 6.00 per car​ seat, and the repairs cost $ 0.50 per car seat. All 220,000 car seats were inspected last​ year, and 6​% were found to have problems with the stitching. Another 4​% of the 220,000 car seats had problems with the​ stitching, but the internal inspection did not discover them. Defective units that were sold and shipped to customers are shipped back to Safe Travel and repaired. Shipping costs are $ 9.00 per car​ seat, and repair costs are $0.50 per car seat. Negative publicity will result in a loss of future contribution margin of $300 for each external failure.

Requirements:

1.

Identify total costs of quality by category​ (appraisal, internal​ failure, and external​ failure).

2.

Safe Travel is concerned with the high​ up-front cost of inspecting all 220,000 units. It is considering an alternative internal inspection plan that will cost onlysidering an alternative internal inspection plan that will cost only $ 3.50 per car seat inspected. During the internal​ inspection, the alternative technique will detect only 3.0% of the 220,000 car seats that have stitching problems. The other 7.0​% will be detected after the car seats are sold and shipped. What are the total costs of quality for the alternative​ technique?

3.

What factors other than cost should Safe Travel consider before changing inspection​ techniques?

Requirement 1. Identify total costs of quality by category​ (appraisal, internal​ failure, and external​ failure.)

	Costs of quality
Appraisal	1,332,000
Internal failure	6600
External failure
Total costs of quality

Answer 1