Exam 19: Balanced Scorecard: Quality and Time

What are ISO 9000 and ISO 14000?

The tool crib at a large manufacturing company is responsible for providing tools to the factory workers on demand. The tool crib has a variable demand. Historically, its demand has ranged from 220 to 500 small tools per day with an average of 360. Diane, the tool crib attendant, works eight hours a day, five days a week. Each order is for one small tool and each small tool takes Diane 1 minute to retrieve from the bins. Diane has been asked to consider plans to add the retrieval of larger tooling fixtures to her duties. She anticipates that there would be an average of 10 tooling fixtures per day requested. Each tooling fixture would take Diane 4 minutes to retrieve. What is the average waiting time, in minutes, if Diane continues to be the only worker that would retrieve the small tools as well as the larger tooling fixtures?

Cysco Corp has a budget of $1,200,000 in 2017 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $103,000 in variable costs. The new method will require $51,000 in training costs and $148,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 207,000 units. Appraisal costs for the year are budgeted at $508,000. The new prevention procedures will save appraisal costs of $50,000. Internal failure costs average $34 per failed unit of finished goods. The internal failure rate is expected to be 5% of all completed items. The proposed changes will cut the internal failure rate by one-half. Internal failure units are destroyed. External failure costs average $52 per failed unit. The company's average external failures average 4.5% of units sold. The new proposal will reduce this rate to 1%. Assume all units produced are sold and there are no ending inventories. Management has offered to allow the prevention changes if all changes take place as anticipated and the amounts netted are less than the cost of the equipment. What is the net impact of all the changes created by the preventive changes? Assume that internal product failures are reduced by 45% with the new procedures.

The implication of controlling a process at a Six Sigma level is that the process produces only 3.4 defects per million products produced.

Zenich Corp manufactures laptops. The waiting time is 72 minutes before the start of production and the manufacturing lead time is 164 minutes per laptop. What is its manufacturing cycle efficiency? (Round to the nearest whole percent.)

An important difference between financial measures of quality and nonfinancial measures of quality is that ________.

Which of the following is a storage cost?

Which of the following reduces manufacturing cycle times and delays?

Which of the following is true of ISO 9000?

The two basic aspects of quality are quality of design and conformance quality. Define and give an example of each.

Which of the following is the mathematical expression for calculating manufacturing cycle efficiency (MCE)?

An on-time delivery rate is considered a nonfinancial measure of customer satisfaction.

In the formula for calculating the average waiting time, the squared manufacturing time indicates ________.

Inventory carrying costs equal the ________.

LaCrosse Products has a budget of $910,000 in 2017 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $80,800 in variable costs. The new method will require $40,500 in training costs and $103,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 151,000 units. Appraisal costs for the year are budgeted at $606,000. The new prevention procedures will save appraisal costs of $50,400. Internal failure costs average $15 per failed unit of finished goods. The internal failure rate is expected to be 2% of all completed items. The proposed changes will cut the internal failure rate by one-third. Internal failure units are destroyed. External failure costs average $50 per failed unit. The company's average external failures average 2% of units sold. The new proposal will reduce this rate by 50%. Assume all units produced are sold and there are no ending inventories. How much do external failure costs change if all changes are as anticipated with the new prevention procedures? Assume all units produced are sold and there are no ending inventories.

The financial cost of quality measures serves as a common denominator for evaluating trade-offs among prevention costs and failure costs.

Cause-and-effect diagrams are used in quality management systems to ________.

The average waiting time is the average amount of time an order will wait at the company's shipping office before it is sent to the customer.

Which of the following is an example of a nonfinancial measure for customer satisfaction?

Monticello Corp manufactures expensive tables. Its varnishing department is fully automated and requires substantial inspection to keep the machines operating properly. An improperly varnished table is very expensive to correct. Inspection hours for the 5800 tables varnished in September totaled 2000 hours by 12 employees. Eight quarts of varnish were used, on average, for each table. The standard amount of varnish per table is nine quarts. The cost of inspection for September was equal to the budgeted amount of $40,300. What is the inspection cost per unit? (Round the final answer to the nearest cent.)