The Ajax Corporation is proud of its quality- control program. It employs two quality engineers at an average $ 35,000 salary for quality planning and engineering, test method development, and quality training. Every item is 100 percent inspected, using eight inspectors earning an average salary of $ 30,000 per year. Nevertheless, in a typical year about 100 items averaging $500 in value must be scrapped, and another 200 require rework costing an average of $ 75.00. Customer service costs estimated at $ 15000 annually are generated by still more defects that slip through. Analyze the firm’s quality cost situation, and make recommendations.
