For supply item abc- andrews company has been ordering 125 units

Problem 1 – The Door Company manufactures doors. Classify each of the following quality costs as prevention costs, appraisal costs, internal failure costs, or external failure costs.Retesting of reworked productsDowntime due to quality problemsAnalysis of the cause of defects in productionDepreciation of test equipmentWarranty repairsLost sales arising from a reputation for poor qualityQuality circlesRework direct manufacturing labor and overheadNet cost of spoilageTechnical support provided to suppliersAudits of the effectiveness of the quality systemPlant utilities in the inspection areaReentering data because of keypunch errorsProblem 2 – For supply item ABC, Andrews Company has been ordering 125 units based on the recommendation of the salesperson who calls on the company monthly. A new purchasing agent has been hired by the company who wants to start using the economic-order-quantity method and its supporting decision elements. She has gathered the following information: Annual demand in units 250 Days used per year 250 Lead time, in days 10 Ordering costs $100 Annual unit carrying costs $20 Determine the EOQ, average inventory, orders per year, average daily demand, reorder point, annual ordering costs, and annual carrying costs.

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