Sinclair Corp. manufactures radiation-shielding glass panels. Suppose Sinclair is considering spending the following amounts on a new TQM program:

Strength-testing one item from each batch of panels ………………….. $63,000

Training employees in TQM ……………………………………………………. $27,000

Training suppliers in TQM ………………………………………………………. $39,000

Identifying preferred suppliers that commit to on-time delivery of

Perfect quality materials ………………………………………………………….. $52,000

Sinclair expects the new program to save costs through the following:

Avoid lost profits from lost sales due to disappointed customers ….. $93,000

Avoid rework and spoilage ………………………………………………………. $64,000

Avoid inspection of raw materials …………………………………………….. $52,000

Avoid warranty costs ………………………………………………………………. $19,000

Requirements

1. Classify each item as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost.

2. Should Sinclair implement the new quality program? Give your reason.



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