All of the following are examples of benchmarking standards except
Answer (A) is correct.
Benchmarking involves setting standards high. Arbitrarily using the
unitís prior period performance runs counter to the goal of
A company implemented a benchmarking program to compare itself to others in the
industry. Through this program, the company management team discovered that a larger
competitor has a lower overhead per unit sold. Based on this information, management
concluded that steps must be taken to reduce overhead to remain competitive. Which one
of the following is the best critique of this conclusion?
Answer (A) is correct.
The ideal benchmarking partner should be similar in size and structure. A
larger competitor may be benefiting from economies of scale, which a
smaller company cannot match.
"A manufacturer of high-technology consumer goods incurred the following quality-related
expenses last year."
Finished product testing
What is the total cost related to prevention?
Answer (C) is correct.
Equipment maintenance and supplier evaluations are both prevention
costs, as both are proactive measures to ensure the ability of the
production facility to continue to operate.
A manufacturer that wants to improve its staging process compares its procedures against
the check-in process for a major airline. Which of the following tools is the manufacturer
Answer (D) is correct.
Benchmarking is a primary tool used in quality management. It is a
means of helping organizations with productivity management and
business process analysis. Benchmarking involves analysis and
measurement of key outputs against those of the best organizations. This
procedure also involves identifying the underlying key actions and
causes that contribute to the performance difference. The benchmark
need not be a competitor or even a similar entity. Process (function)
benchmarking studies operations of organizations with similar processes
regardless of industry. Thus, a comparison to procedures against the
check-in process for a major airline is an example of benchmarking
Which one of the following would be classified as an internal failure cost on a quality cost
Answer (C) is correct.
Internal failure costs occur when defective products are detected before
shipment. Examples are scrap, rework, tooling charges, downtime,
redesign of products or processes, lost output, and lost learning
opportunities. Thus, the net cost of scrap would be classified as an
internal failure cost on the quality report.
"Hill Stand Company is currently performing a cost of quality analysis of its Memphis
facilities. The following are costs compiled by the facility accountant."
Testing of new materials
Preventive equipment maintenance
Liability claims 1,870 Rework
Hill Standís total internal failure cost is
Answer (A) is correct. Internal failure costs occur when defective products are detected before shipment. The internal failure costs include the cost of abnormal spoilage, scrap, and rework. Thus, the total internal failure cost is $2,080 ($645 + $150 + $1,285).
Which of the following statements are true with respect to continuous improvement? I. Improvements should be made continuously until the goal is reached. II. The continuous improvement should involve management and workers. III. Standards should be evaluated regularly, and improvements should be ongoing. IV. Continuous improvement initiatives should involve primarily the workers.
Answer (C) is correct. Improvements should be ongoing, with involvement by management and workers
Which one of the following is a value-added activity for a company that manufactures bicycles?
Answer (B) is correct. A value-added activity contributes to customer satisfaction or meets a need of the entity. A nonvalue-added activity does not make such a contribution. It can be eliminated, reduced, or redesigned without impairing the quantity, quality, or responsiveness of the product or service desired by customers or the entity. It is necessary to place a brake on a bicycle, whether the brake is reworked or new. The addition of the brake is required before the bicycle can be sold, which contributes to the customerís satisfaction.
Which one of the following statements about benchmarking is not correct?
Answer (D) is correct. Comparing a unitís results against industry benchmarks is usually considered as useful as comparing results to the budget. The budget helps in comparing actual results to the expectations of the company. Industry benchmarks help in comparing actual results to industry performance. Comparison to industry is just as important as company expectations in evaluating a unitís results.
The four factors that derive from a company distinctive competencies and which create competitive advantage are
These are the four factors that create competitive advantage.
Efficiency is the relationship between inputs and outputs, and superior efficiency leads to lower costs which
leads to higher profitability and competitive advantage.
A product has superior quality when its customers consider that its attributes give them higher utility than do
the attributes of competing products.
Innovation in products and processes is perhaps the most important component of competitive advantage,
because competition is driven by innovation.
Superior responsiveness to customers means the company does a better job than its competition of
identifying customer needs and satisfying them.