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Unformatted text preview: CHAPTER 7 DISCUSSION QUESTIONS 7-1 Q7-1. Quality costs may be grouped into the follow-ing three classifications: 1. Prevention costs are the costs incurred to prevent product failure. They include the cost of designing high quality products and production systems, including the costs of implementing and maintaining such systems. 2. Appraisal costs are the costs incurred to detect product failure. They include the cost of inspecting and testing materials, inspecting products during production, and the cost of obtaining information from customers about product satisfaction. 3. Failure costs are the costs incurred when a product fails, and may occur internally or externally. Internal failure costs are those that occur during the manufacturing or pro-duction process (e.g., scrap, spoilage, and rework), and external failure costs are those that occur after the product has been sold (e.g., warranty repairs and replacements, sales refunds, handling customer complaints, and lost sales resulting from poor product quality). Q7-2. TQM stands for total quality management, which is a company-wide approach to quality improvement in all processes and activities. TQM is a pervasive philosophy of doing busi-ness that applies to all functional areas of the company and to all personnel. Q7-3. Five characteristics of TQM systems are: 1. The companys objective for all business activity is to serve its customers. The term product is extended to include services as well as goods, and customer includes internal users as well as those outside of the company who purchase the companys products. Each employees activity is ori-ented to providing service to the customer. 2. Top management provides an active leadership role in the quality improvement movement. 3. All employees are actively involved in quality improvement. Employees are not only asked to contribute ideas, but also to find better ways of doing things. Involvement can be successful only when there is encouragement and an open and honest environment of trust. 4. The company has a system of identifying quality problems, developing solutions, and setting quality improvement objec-tives. This typically involves organizing employees from all ranks and from differ-ent organizational units along with man-agers who have authority to take the necessary action to solve problems. 5. The company places a high value on its employees and provides continuous train-ing, as well as recognition for achieve-ment. Employees perform best when they are well trained, and they have the great-est capacity to contribute when they are highly educated. Q7-4. The concept of continuous quality improvement differs from the concept of quality optimization in that continuous quality improvement is a dynamic process of change under the assump-tion that the ideal is not an absolute known value; whereas quality optimization is a static approach to finding the best solution to a given set of fixed and known constraints....
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- Spring '11