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Should Company A go ahead with the quality program

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Reference no: EM133088422

Question - Company A has been experiencing lost sales and high returns recently, so they have decided to undertake a comprehensive quality program. The program would require additional inspection of products prior to shipment at an estimated cost of $45,000, and the upgrading of production equipment at an estimated cost of $400,000. Company A knows that if it undertakes this program, it will be able to reduce warranty repair costs by $25,000. They also know they will be able to avoid lost profits by retaining customers, but they cannot quantify that benefit with any degree of precision. Should Company A go ahead with the quality program?

Reference no: EM133088422

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