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CMA Intermediate · Operations Management and Strategic Management · Productivity Management and Quality Management

A Pune firm reports the following annual quality costs (in ₹ lakh): quality training 4, process inspection 6, rework of defects found before dispatch 9, customer warranty claims 11, supplier evaluation 3, final product testing 5. What is the total of prevention plus appraisal costs, and the total failure cost?

Prevention plus appraisal costs total ₹18 lakh, being training 4, supplier evaluation 3, process inspection 6 and final testing 5. Failure costs total ₹20 lakh, being internal rework 9 and external warranty claims 11.

  1. APrevention plus appraisal ₹18 lakh; failure ₹20 lakhCorrect
  2. BPrevention plus appraisal ₹13 lakh; failure ₹25 lakh
  3. CPrevention plus appraisal ₹18 lakh; failure ₹11 lakh
  4. DPrevention plus appraisal ₹27 lakh; failure ₹11 lakh

Explanation

Prevention: training 4 and supplier evaluation 3 = 7. Appraisal: process inspection 6 and final testing 5 = 11. Together 18. Failure: rework 9 (internal) and warranty 11 (external) = 20. Option C ignores internal failure rework; option B wrongly places supplier evaluation and testing elsewhere.

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