Distinguish between customer-response time and manufacturing cycle time.
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The Crimson Corporation uses multicolored molding to make plastic lamps. The molding operation has a capacity of 200,000 units per year. The demand for lamps is very strong. Crimson will be able to sell whatever output quantities it can produce at 40 dollar per lamp. Crimson can start only 200,000 units into production in the molding department because of capacity constraints on the molding machines. If a defective unit is produced at the molding operation, it must be scrapped at a net disposal value of zero. 0 f the 200,000 units started at the molding operation, 20,000 defective units 10 % are produced. The cost of a defective unit, based on total (fixed and variable) manufacturing costs incurred up to the molding operation, equals 20 dollar per unit, as follows: Crimson's designers have determined that adding a different type of material to the existing direct materials would result in no defective units being produced, but it would increase the variable costs by \(\$ 3\) per lamp in the molding department. 1\. Should Crimson use the new material? Show your calculations. 2\. What nonfinancial and qualitative factors should Crimson consider in making the decision?
Give two examples of nonfinancial measures of internal-business-process quality.
Six Sigma is a continuous quality improvement methodology that is designed to promote: 1\. Improvements for existing products and business processes. 2\. Development of new products or business processes. 3\. Both existing product/process improvement and new product process development. 4\. Statistical evaluation of critical success factors.
'Companies should always make and sell all products whose selling prices exceed variable costs." Assuming fixed costs are irrelevant, do you agree? Explain.
TidyCar washes vehicles using a nohands approach. Business is good but Jonathan, the manager, has noticed that customers complain because there are streaks on their vehicles at pickup. TidyCar warrants that each vehicle will sparkle at delivery and charges 25 dollar for each vehicle. TidyCar washes 100 vehicles each day and last month, 40%of them required a hand finish. Each hand wash costs 15 dollar Jonathan believes the problem can be eliminated by a prewash (costing 2 dollar per vehicle) and an equipment calibration at the start of each day, which will reduce the number of vehicles washed each day by 10 , but will decrease the vehicles requiring a hand finish from 40% to 10% 1\. Should TidyCar implement Jonathan's idea? Show your calculations. 2\. What nonfinancial and qualitative factors should TidyCar consider in deciding whether to implement the new design?
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