Relevant costs, qualitative factors, cost-of-quality framework, environmental issues Kwik Clean handles both commercial laundry and individual customer dry cleaning. Kwik Clean’s current dry cleaning process involves emitting a pollutant into the air. In addition, the commercial laundry and dry cleaning processes produce sediments and other elements that must receive special treatment before disposal. Pat Polley, Kwik Clean’s owner, is concerned about the cost of dealing with increasingly stringent laws and environmental regulations. Recent legislation requires Kwik Clean to reduce its amount of air pollution emissions. To reduce pollution emissions, Polley is considering the following two options:
In evaluating the two options and current operations, Polley has enumerated the following items:
1. The price and quantity of solvent used in current operations (and option 1).
2. The price and quantity of the new solvent that would be used in option 2.
3. The purchase price of new equipment for option 1 and for option 2.
4. The cost of removing old equipment and installing new equipment under option 2.
5. The purchase price of the filtration equipment in option 1 as well as the useful life of the equipment.
6. The purchase price of the current equipment and its remaining useful life.
7. The salvage value of the current equipment, which would be sold under option 2.
8. Polley’s salary and fringe benefits.
9. Labor costs for current operations (and option 1) and option 2; labor costs would be lower under option 2 than under option 1.
10. Training costs associated with the new equipment in option 2.
11. Legal fees paid to handle paperwork associated with hazardous waste liabilities connected with the sediments produced when cleaning commercial laundry by the current operations (the same sediments would be produced with the equipment in option 2).
12. Storage and disposal costs associated with the sediments produced when cleaning commercial laundry.
13. Insurance for the equipment and workers; under option 2, insurance fees would be reduced from the current level.
Polley was concerned about recent events that were publicized locally. A newspaper article reported that the Occupational Safety and Health Administration fined one of Polley’s competitors several thousand dollars for unsafe employee working conditions related to handling solvents. Another business incurred a very expensive cleanup for accidental hazardous waste leakage that contaminated the soil. The leakage received major attention in the local television and radio news broadcasts and was headlined in the local newspapers.
(a) Which costs are relevant to Polley’s decision to choose either option 1 or option 2?
(b) What qualitative factors is Polley likely to consider in choosing either option 1 or option 2?
(c) Explain how the cost-of-quality framework of prevention, appraisal, internal failure, and external failure might be applied to operations with environmental pollution, where failures are defined as accidental spillage or leakage of hazardous wastes or as illegal levels of pollutants. On which of the four cost-of-quality categories would you advise Polley to focus her attention?
instructi 2.00 peinls CD Express, Inc., provides CD duplicating services to software companies. Th provides a master CD from which CD Express makes copies. An order from...Mar 20 2020
Liquid water flows at a velocity of 1.5 m/s in a brass tube having 7.0 mm inside diameter. The tube wall is maintained at a temperature of 115 °C, and the average bulk te...Aug 18 2020
Use the Intermediate Theorem to show that the function has a root in the given intervalJul 19 2021
1. Suppose you have a random variable that is uniformly distributed between 7 and 26. What is the expected value for this random variable? Answer to one decimal place if ...Apr 16 2020
A company has made a profit for the year. Which of the following company actions will have NO EFFECT on its Leverage Ratio compared to the start of the year?A. It retains...Jul 30 2021
Respond to the following prompts in a post with a minimum of 150 words, commenting on other posts is recommended but optional. . Since the end of the Great Recession of 2...Apr 16 2021
If the world price for good A is above the domestic price for good A without trade, then producer surplus will ________ and total economic surplus will _______ with trade...Jul 06 2021
A thin-walled spherical tank in buried in the ground at a depth of 3 m. The tank has a diameter of 1.5 m, and it contains chemicals undergoing exothermic reaction that pr...Jul 21 2020
Sometimes it is convenient to think about the consumer’s problem in its ‘‘dual’’ form. This alternative approach asks how a person could achieve a given target level of...Mar 29 2020
The following table shows data on the average number of customers processed by several bank service units each day. The hourly wage rate is $25, the overhead rate is 1.0 ...Aug 28 2020