Pharasalia skincare Inc. has developed a new lotion that will help to improve skin ageing. Total sales of the lotion for the last year were $60,000,000. The following data have just been gathered on last year's quality- related costs. COST CATEGORY AMOUNT ($) Product recalls $625,000 Downtime due to defects 600,000 Warranty claims 420,000 Inspection of and testing of incoming materials 300,000 Product liability lawsuits 500,000 Process quality audits 350,000 Rework costs 480,000 Quality training 150,000 Process control monitoring 350,000 Transportation costs to fix customers' problems 375,000 Statistical process control 200,000 Waste 300,000 Net cost of scrap 650,000 Supplier certification 250,000 Reliability engineering 200,000 Returned products 380,000 Manufacturing inspection 150,000 1.Prepare a cost-of-quality report classifying costs into prevention, appraisal, internal failure, and external failure. Also, show costs as a percentage of total costs and total sales. 2.Write a report to the management explaining the report you prepared and recommending the way forward for future actions.
Pharasalia skincare Inc. has developed a new lotion that will help to improve skin ageing. Total sales of the
lotion for the last year were $60,000,000. The following data have just been gathered on last year's quality-
related costs.
COST CATEGORY AMOUNT ($)
Product recalls $625,000
Downtime due to defects 600,000
Warranty claims 420,000
Inspection of and testing of incoming materials 300,000
Product liability lawsuits 500,000
Process quality audits 350,000
Rework costs 480,000
Quality training 150,000
Process control monitoring 350,000
Transportation costs to fix customers' problems 375,000
Statistical process control 200,000
Waste 300,000
Net cost of scrap 650,000
Supplier certification 250,000
Reliability engineering 200,000
Returned products 380,000
Manufacturing inspection 150,000
1.Prepare a cost-of-quality report classifying costs into prevention, appraisal, internal failure, and external failure. Also, show costs as a percentage of total costs and total sales.
2.Write a report to the management explaining the report you prepared and recommending the way forward
for future actions.
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