Problem:
Nonfinancial measures of quality and time. Worldwide Cell Phones (WCP) has developed a cell phone that can be used anywhere in the world (even countries like Japan that have a relatively unique cell phone system). WCP has been receiving complaints about the phone. For the past two years, WCP has been test marketing the phones and gathering nonfinancial information related to actual and perceived aspects of the phone's quality. The company expects that, given the lack of competition in this market, increasing the quality of the phone will result in higher sales and thereby higher profits.
Quality data for 2010 and 2011 include the following:
Required
1. For each year, 2010 and 2011, calculate the following: Required
a. Percentage of defective units shipped
b. Customer complaints as a percentage of units shipped
c. Percentage of units reworked during production
d. Manufacturing cycle time as a percentage of total time from order to delivery
2. Referring to the information computed in requirement 1, explain whether WCP's quality and timeliness have improved.
3. Why would manufacturing cycle time have increased while customer response time decreased? (It may be useful to first describe what is included in each time measurement-see Exhibit19-7)