The Omega Shoe Company manufactures a number of different styles of athletic shoes. Its biggest seller is the X Pacer running shoe. In 2008 Omega implemented a quality management program

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  • The Omega Shoe Company manufactures a number of different styles of athletic shoes. Its biggest seller is the X Pacer running shoe. In 2008 Omega implemented a quality management program
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Description

Problem 1. The Omega Shoe Company manufactures a number of different styles of athletic shoes. Its biggest seller is the X-Pacer running shoe. In 2008 Omega implemented a quality-management program. The company's shoe production for the past three years and manufacturing costs are as follows.

2008

2009

2010

Units produced/input

32,000

34,600

35,500

Manufacturing cost

278,000

291,000

305,000

Percent good quality

 78%

 83%

 90%

Only one-quarter of the defective shoes can be reworked, at a cost of 2 apiece.

Question: Compute the manufacturing cost per good product for each of the three years and indicate the annual percentage increase or decrease resulting from the quality-management program.

Solution

Manufacturing cost per good product

Year 2008

Rework...

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