Question

The following cost of quality data were collected at the installment loan department of the Kenney Bank.
Total prevention costs: 1,500
Total appraisal cost : 9,100
Total internal failure costs= 2,055
Total external failure costs= 3,345
Prepare a Pareto Chart and copy
Give two suggestions to improve quality for Kennedy Bank

Answer 1

Particular	Cost	Percentage of total cost
Total prevention costs	1500	(1500/16000)*100 =9.4
Total appraisal cost	9100	(9100/16000)*100 = 56.88
Total internal failure costs	2055	(2055/16000)*100 =12.84
Total external failure costs	3345	(3345/16000)*100 =20.9
Total Cost	16000

The chart is as below:-

Two suggestions are as below:-

Prevention costs are relatively low thus company should invest more in the defect and waste prevention

The company is incurring a lot of cost in appraisal, in fact, the focus should be more on finding effective ways of productivity improvement a