Question 1

Since an employee's responsibility is to move production along, it is ethical to knowingly pass defective services or products to internal or external customers when capacity is tight.

Accepted Answer

It is not ethical to knowingly pass defective services or products to internal or external customers, even when there is a tight capacity. Doing so violates the principles of quality, honesty, and integrity, and can harm the reputation and trust of the organization. Instead, employees should strive to ensure that products and services meet the required standards and seek assistance or communicate with management if there are any challenges in meeting customer needs.

Question 2

Which one of the following is considered to be an appraisal cost?

Accepted Answer

The cost of quality audits is considered to be an appraisal cost, as it involves evaluating the conformance of products or processes to quality standards.

Question 3

A cost that is incurred if some aspect of a service must be performed again is called a(n):

Accepted Answer

Rework cost is the cost incurred if some aspect of a service has to be performed again. Yield loss is the reduction in output or unusable output that results from a failure to meet specifications. Prevention cost is the cost incurred to prevent defects from occurring, while appraisal cost is the cost incurred to detect defects before they reach the customer. Therefore, the best choice is D - rework cost.

Question 4

Appraisal costs are associated with preventing defects before they happen.

Accepted Answer

Appraisal costs are associated with evaluating or inspecting materials, parts, and products to ensure they meet quality standards, not with preventing defects before they happen. Prevention costs are associated with preventing defects.

Question 5

The investment a company makes in training employees to perform their duties and redesigning products and processes to improve them would be categorized as prevention costs.

Accepted Answer

Prevention costs are costs incurred to prevent defects from occurring in the first place. This includes investments in training employees, redesigning products and processes, and any other activities that aim to avoid problems and errors.

Question 6

A professor, dissatisfied with a product he's purchased, bad mouths the product to his class, resulting in decreased market share (since the students believe everything he tells them). The manufacturer suffers:

Accepted Answer

This scenario represents an external failure cost, as the negative word-of-mouth from the professor led to decreased market share and ultimately lost sales for the manufacturer.

Question 7

Which of the following would be considered an appraisal cost of quality?

Accepted Answer

Running a functional test on each item before it is boxed for shipment is considered an appraisal cost of quality. This is because it involves inspection, testing, and verifying that the product meets certain predetermined standards to ensure quality. The other options (A, B, and C) are more related to prevention costs or failure costs of quality.

Question 8

From an ethical standpoint, it is not a requirement to consider the greater societal effects of decisions that reduce the costs of quality.

Accepted Answer

It is important to consider the greater societal effects of decisions that reduce the costs of quality from an ethical standpoint. These decisions can have impacts on various stakeholders such as employees, customers, and the environment, and it is important to weigh the potential benefits and harms for these stakeholders when making decisions. Ignoring the societal effects of such decisions can lead to negative consequences and harm the reputation of the business.

Question 9

Which of the following would be considered a prevention cost of quality?

Accepted Answer

Training workers to perform their jobs is considered a prevention cost of quality as it aims to prevent defects and errors from occurring in the production process. Inspecting incoming raw materials, issuing a recall of defective product, and performing a 24-hour burn-in are all examples of appraisal costs and failure costs, which are incurred after defects have already occurred.

Question 10

At which of the following steps will the cost of detecting product defects be the highest?

Accepted Answer

Detecting defects at the customer level is the most expensive due to the added costs of returns, repairs, shipping, and the potential loss of customer trust and future sales. Early detection (e.g., during raw material inspection or process stages) is generally less costly.

Question 11

An example of an internal failure cost would be warranty cost.

Accepted Answer

Internal failure costs are costs associated with defects found before the product reaches the customer, such as scrap and rework, not costs incurred after the product has been delivered like warranty costs.

Question 12

When errors have been made while producing a product such that the item must be discarded, the resultant cost is called a(n):

Accepted Answer

Scrap cost refers to the cost incurred when a product has to be discarded due to errors during production. The other options - warranty, rework cost, and external failure cost - refer to costs incurred due to errors that are discovered after the product has been sold, and do not apply to the situation described in the question.

Question 13

Which one of the following statements is True?

Accepted Answer

Appraisal costs, which are the costs associated with inspecting and testing to ensure products meet quality standards, tend to increase as the variation of output increases. This is because more inspection and testing are needed to identify and correct defects when there is greater variability in the products being produced.

Question 14

Increasing the quality level by better products and processes may:

Accepted Answer

If a company improves the quality of its products and processes, it can justify charging a higher price for its products. This is because consumers are willing to pay more for higher quality products.

Answer: C 
 Prevention costs are the costs associated with preventing defects or errors from occurring in the first place. By improving products and processes, a company can reduce its prevention costs.

Answer: D 
 When a company invests in improving the quality of its products and processes, it needs to ensure that the costs of doing so are worthwhile. This means that the benefits of reducing defects and errors need to outweigh the costs of prevention. When quality is increased, the trade-off between prevention costs and other costs of poor quality becomes more favorable.

Therefore, the best choices are A, C, and D.

Question 15

Improving quality seems to be a strategic weapon in gaining market share. However, improving quality entails allocation of resources and effort. As greater effort is expended to stop defects before they occur, which one of the following costs increases?

Accepted Answer

Prevention costs are the costs incurred to prevent defects from occurring in the first place. As more effort is expended on preventing defects, the prevention costs increase. Appraisal costs are the costs incurred to detect defects, internal failure costs are incurred when defects are found within the organization, and external failure costs are incurred when defects are found by customers or in the market. Therefore, the correct answer is A) prevention costs.

Question 16

Which one of the following is a consequence of internal failures?

Accepted Answer

Internal failures often result in defects or errors in products or processes, which can lead to increased inventory costs as companies need to hold extra inventory to compensate for the higher probability of defective products being produced or an increased likelihood of delays in the production process. Increased customer service, productivity, or decreased lead time are not likely consequences of internal failures.

Question 17

A prime example of an internal failure cost is the:

Accepted Answer

Internal failure costs are costs associated with defects found before the product is delivered to the customer. The material cost of a piece of stock metal that has had too large a hole drilled in it represents a defect that was identified internally, hence it is an internal failure cost.

Question 18

Which one of the following is a potential consequence of external failures?

Accepted Answer

External failures refer to defects that are found by the customers after the product has been delivered. This can result in higher litigation costs due to customer complaints, lawsuits, and recalls. A, B, and D are not potential consequences of external failures.

Question 19

Which one of the following is part of prevention costs?

Accepted Answer

Prevention costs are costs incurred to prevent defects from occurring in the first place. The costs of improving process design and product design are part of prevention costs. The costs of quality audits and the costs resulting from scrap are part of appraisal costs and internal failure costs respectively. The costs of lawsuits from injury from use of the product are part of external failure costs.

Question 20

When a process fails to satisfy a customer:

Accepted Answer

When a process fails to satisfy a customer, it is considered a defect. It indicates that the process did not meet the customer's expectations or needs, and therefore needs to be improved or corrected. Blaming the customer or assuming that half the fault belongs to the customer does not solve the problem or improve the process. Instead, the focus should be on identifying the root cause of the defect, and taking corrective action to prevent it from happening again in the future. Reengineering the process may be necessary in some cases, but it should not be the first or only option considered.

Quiz 3: Quality and Performance