Problem:

1) The following table lists all costs of quality incurred by Sam's Surf Shop last year.

Question 1) What was Sam's appraisal cost for quality last year?

Annual inspection costs $ 155,000
Annual cost of scrap materials 286,000
Annual rework cost 34,679
Annual cost of quality training 456,000
Annual warranty cost 1,546,000
Annual testing cost 543,000

2) manufacturing company has been inspecting units of output from a process. Each product inspected is evaluated on fi ve criteria. If the unit does not meet standards for the criteria it counts as a defect for the unit. Each unit could have as few as zero defects, and as many as fi ve. After inspecting 2,000 units, they discovered 33 defects.

Question 1) What is the DPMO measure for this process?

Solve the given numerical problem and illustrate step by step calculation.