Give two examples of nonfinancial measures of customer satisfaction relating to quality.

Examples of nonfinancial measures of customer satisfaction relating to quality include the

following:
1. the number of defective units shipped to customers as a percentage of total units of product
shipped;
2. the number of customer complaints;
3. delivery delays (the difference between the scheduled delivery date and date requested by
customer);
4. on-time delivery rate (percentage of shipments made on or before the promised delivery date);
5. customer satisfaction with specific product features (to measure design quality);
6.      market share; and
7.      percentage of units of product that fail soon after delivery.

19-9 Give two examples of nonfinancial measures of internal-business-process quality.

Examples of nonfinancial measures of internal-business-process quality include the following:

1. the percentage of defective products;
2. percentage of reworked products;
3. manufacturing cycle time (the amount of time from when an order is received by production to
when it becomes a finished good); and
4. number of product and process design changes

19-10 “When evaluating alternative ways to improve quality, managers need to consider the
fully allocated costs of quality.” Do you agree? Explain.

When evaluating alternative ways to improve quality, managers need to identify the relevant
costs and benefits of quality improvement efforts by focusing on how total costs and total
revenues will change. Fully allocated costs of quality often include the allocation of fixed costs
that will not change with quality-improvement activities. These fixed costs are irrelevant when
calculating the benefits of quality improvement and so should not be considered.

19-11 Distinguish between customer-response time and manufacturing cycle time.

Customer-response time is how long it takes from the time a customer places an order for a
product or a service to the time the product or service is delivered to the customer.
Manufacturing cycle time is how long it takes from the time an order is received by
manufacturing to the time a finished good is produced. Manufacturing cycle time is only one part
of customer-response time. Delays in delivering an order for a product or service can also occur
because of delays in receiving customer orders and delays in delivering a completed order to a
customer.