Siebe Automotive

Cost of Quality - General Information

WARRANTY/RECALL

COST OF OTHER CREDITS NOT BILLED

SCRAP - Cost of defective product that cannot economically be repaired

REOPERATION - Cost of correcting defectives to make them fit for use

FAILURE - Cost of analyzing nonconforming product to determine root causes

 Siebe Automotive
Cost of Quality - General Information

APPRAISAL - Cost incurred to determine the degree of conformance to quality requirements

PREVENTION - Cost incurred to keep failure and appraisal costs to a minimum

 Siebe Automotive
Cost of Quality - General Information

WARRANTY/RECALL
Actual monthly charges for replacing or making repairs to products warranted by Siebe Automotive that are still in the warranty period plus
actual monthly charges for recall and campaign costs incurred directly

Actual monthly charges for replacing or making repairs to products warranted by customers that are still in the warranty period and billed to
Siebe Automotive plus actual monthly charges for recall and campaign costs incurred by Siebe Automotive customers
and billed to Siebe Automotive.

Cost of time spent by Siebe Automotive personnel for investigation of warranty concerns, preparation of problem reports, presentation of reports
to customers, etc.

Travel and business expenses directly related to warranty concerns.

COST OF OTHER CREDITS NOT BILLED

Monthly charges to this account covering credits to customers for costs incurred by customers for correction of quality concerns attributable to
Siebe Automotive.

SCRAP - Cost of defective product that cannot economically be repaired

Monthly accumulation of scrap including material, direct labor and overhead at the scrap point.

Cost of time spent by all personnel for investigation of scrap concerns, preparation of problem reports, etc.

Cost of time of the Material Review Board.

Travel and business expenses directly related to scrap.

REOPERATION - Cost of correcting defectives to make them fit for use

Monthly accumulation of internal reoperation costs including material, direct labor and overhead.

Monthly charges to this account covering costs of sorting and reoperation performed by Siebe Automotive customers.

Cost of time spent by all personnel to set up reoperation processes and re-inspection instructions.

Cost of prototype operations for reoperation of prototypes due to prototype build deficiencies and/or design deficiencies attributable to Siebe
Engineering.

Cost of time spent by engineering personnel on product and process redesign due to deficiencies attributable to Siebe Engineering.

Cost of special fixtures, tooling, gages, material, etc.

Cost of time spent on continuing surveillance of overall subcontractor performance including quality, engineering, delivery and price.

Travel and business expenses directly related to reoperations,

FAILURE - Cost of analyzing nonconforming product to determine root causes

Cost of time spent for inspection and testing performed to improve unsatisfactory quality level.

Cost of time spent for inspection and testing performed to improve FMEA RPNs.

Cost of time spent for investigation, review, disposition and corrective action efforts for nonconformities, both internal and external customer
related.

Unplanned purchases. These costs may include purchase of additional material or services, excess overtime to meet customer timing, premium
freight to assure timely delivery to the customers, etc.

Cost of time for machine, tooling repair due to equipment failure. Include other incremental costs attributable to the equipment failure; such as
added overtime to make up lost production.

Cost of time for evaluation of subcontractors to improve unsatisfactory performance.

Travel and business expenses directly related to process, equipment, and tooling failures.
 Siebe Automotive
Cost of Quality - General Information

APPRAISAL - Cost incurred to determine the degree of conformance to quality requirements

Cost of time spent for receiving, in-process and final inspection and testing required by the customer.

Cost of time spent for receiving, in-process and final inspection and testing required by the Control Plan.

Cost of time spent for inspection of the first piece produced after process start-up.

Cost of time spent on design evaluation, qualification and validation testing, including DVP&R.

Cost of time spent on stock room audits of finished goods.

Cost of time spent for calibration and maintenance of measuring and test equipment including record maintenance, packing and shipping to
outside calibration sources, follow-up, etc.

PREVENTION - Cost incurred to keep failure and appraisal costs to a minimum

Cost of time spent on all 23 APQP items including time for preparation, meeting attendance, presentation, etc.

Cost of time spent on recurring Statistical Process Control application including measurement, chart preparation, data analyses, CP and Cpk
calculation, etc.

Cost of time spent on conducting, analyzing, reporting, etc. machine and process capability studies.

Cost of time spent on writing, distributing, controlling quality policies and procedures including ISO 9000 and QS 9000

Cost of time spent on quality system audits including scheduling, preparation, audit, follow-up, report presentation and presentation to
management.

Cost of time for capability evaluation of new subcontractors and revaluation of current subcontractors.

Cost of time spent by Siebe personnel for quality related training provided by internal Siebe Automotive or external sources.

Cost of time spent by Siebe Automotive personnel in conducting quality related training of other Siebe Automotive personnel

Cost of quality related training provided by outside sources including fees, travel & business expenses, etc.

Cost of time spent on maintenance of equipment and machinery performed to a planned schedule.

Cost of time spent on non-problem related visits to customers.

 21st Century Containers Ltd.

Hourly Rate

Number of work days in the month

WARRANTY/RECALL

1 Evaluation time-Hours

2 Travel time-Hours

3 Travel expenses

4 Total Warranty/Recall costs

SCRAP

1 Monthly accumulation of scrap, including material, labor and

overhead at the scrap point.

Cost of review and investigation.

2 Number of scrap tickets

3 Time per ticket in minutes

4 MRB time-Hours

5 Travel time-Hours

6 Travel expenses

7 Total Scrap costs

REOPERATION

1 Monthly accumulation of reoperation costs, including material, labor

and overhead
2 Outside services required for reoperation, (ex. plating)

Cost of review, investigation, set-up and inspection.

3 Number of rework tickets
4 Evaluation time per ticket in minutes

5 Rework process development time in Hours

6 Product redesign time in Hours

7 Cost of special fixtures, tooling, gages

8 Travel time-Hours

9 Travel expenses

10 Total Reoperation costs

FAILURE

1 Added inspection and testing due to Unsatisfactory quality-Hours

2 Sorting time-Hours

3 8D Investigation, review, disposition, corrective action time-Hours

4 Machine repair time-Hours

5 Inspection/ testing time to improve unsatisfactory results and/or

RPNs-Hours

SPC time initiated to improve unsatisfactory results and/or RPNs

6 Statistical Process Control-Number of charts
7 Statistical Process Control-Minutes per sampling event
8 Number of sampling events for the day
9 Travel time-Hours

10 Travel expenses

11 Unplanned purchases

12 Total failure costs

 21st Century Containers Ltd.

APPRAISAL/INSPECTION

1 Design Evaluation, qualification, and validation testing - Hours

2 Incoming inspection-Hours

3 Internal gage calibration and maintenance-Hours

4 External gage calibration & maintenance

5 Travel time-Hours

6 Travel expenses

7 First piece inspection-Minutes per event

8 First piece inspection-Number of events per day
9 In-Process inspection-Minutes per event
10 In-Process inspection-Number of events per day
11 Product testing-Minutes per event
12 Product testing-Number of events per day
13 Final inspection-Minutes per event
14 Final inspection- Number of events per day
15 Stock room audits-Minutes per event
16 Stock room audits-Number of events per day
17 Total appraisal/inspection costs

PREVENTION

1 Advanced Product Quality Planning-Hours

2 Quality policies and procedures-Hours
3 Quality system audits-Hours
4 Evaluation of subcontractors-Hours
5 Quality related training-Hours
6 Preventive maintenance-Hours

7 Non-problem related visits-Hours

8 Statistical Process Control-Number of charts

9 Statistical Process Control-Minutes per event

10 Number of sampling events for the day

11 Number of Machine/process capability studies

12 Machine/process capability studies-Minutes per study

13 Travel time-Hours

14 Travel expenses

15 Total prevention costs

 21st Century Containers Ltd.

MAINTENANCE DEPARTMENT

Maintenance Technician Hourly Rate

Maintenance Technician hours spent on:

1 Preventive Maintenance
2 Corrective Maintenance
3 Total

PROTOTYPE OPERATIONS

Protype Technician Hourly Rate

Prototype Technician hours spent on:

1 Initial prototype build
2 Appraisal/inspection of initial build

3 Rework or rebuild of prototypes

4 Inspection of rework or rebuild of prototypes

5 Total

FINANCE DEPARTMENT

1 Warranty/Recall

2 Cost of other credits not rebilled

3 Scrap
4 Reoperation
5 Total

Production Sales ($ 000)

Warranty/Recall
Cost of other Credits not Rebilled
Scrap
Reoperation
Failure
Appraisal
Prevention
Total Cost of Quality

Prevention Cost (% of Sales)

Appraisal Cost (% of Sales)
Failure Cost (% of Sales)
Total Cost of Quality (% of Sales)
21st Century Containers Ltd.

Insert the average hourly rates, including fringes and overhead, for hourly and salaried personnel for each
department
Insert number of regular work days during the reporting period

Insert the total hours spent by hourly and salaried personnel (each department) for evaluation of warranty
concerns.

Insert the total hours spent by hourly and salaried personnel (each department) for associated travel time .
Insert the total travel expenses incurred by hourly and salaried personnel (each department) for associated
travel.
The total warranty/recall costs will be calculated and used for summary report

Insert the total value of scrap by each department

Insert the total number of scrap tickets processed by hourly and salaried personnel (each department)
Insert the estimated average time per scrap ticket for hourly and salaried personnel (each department). This
should include time for investigation, review and disposition of scrap.

Insert time spent by MRB (Material Review Board) for investigation, review and disposition of scrap.

Insert the total hours spent by hourly and salaried personnel (each department) for associated travel time .
Insert the total travel expenses incurred by hourly and salaried personnel (each department) for associated
travel.
The total scrap costs will be calculated and used for summary report

Insert the cost for reoperation by each department

Insert the total cost of outside services purchased by each department for reoperation.

Insert the total number of rework tickets.

Insert the estimated average time per rework ticket. This should include time for investigation, review,
rework process set-up, inspection instructions and re-inspection..
Insert the total hours spent by each department for development of rework process
Insert the total hours spent by each department for product/process redesign due to Engineering
deficiencies
Insert the total cost of special fixtures, tooling, gages, material, etc. required for reoperation

Insert the total hours spent by hourly and salaried personnel (each department) for associated travel time .
Insert the total travel expenses incurred by hourly and salaried personnel (each department) for associated
travel.
The total reoperation costs will be calculated and used for summary report.

Insert the hours spent by hourly and salaried personnel (each department) for inspection and testing that
was added because of nonconformities. This includes receiving, in-process, final inspection and audits.

Insert the hours spent by hourly and salaried personnel (each department) for sorting suspect stock.
Insert the hours spent by hourly and salaried personnel (each department) working on 8Ds.
Insert the hours spent by hourly and salaried personnel (each department) repairing machinery and
equipment.
Insert the hours spent by hourly and salaried personnel (each department) for inspection and testing
performed to improve unsatisfactory results and RPNs. These hours are additional to those reported under
line #1.

Insert the number of SPC charts maintained to improve unsatisfactory results and/or RPN's
Insert the average number of minutes to perform a sampling event
Insert the number of sampling events performed during a regular work day

Insert the total hours spent by hourly and salaried personnel (each department) for associated travel time .
Insert the total travel expenses incurred by hourly and salaried personnel (each department) for associated
travel.
Insert the total cost of unplanned purchase due to deficiencies. These costs may include purchases of
additional material, services, excess overtime to meet customer timing, premium freight to assure timely
delivery, etc.
The total failure costs will be calculated and used for summary report.
21st Century Containers Ltd.

Insert the total hours spent by hourly and salaried personnel (each department) on design evaluation,
qualification, and validation testing.

Insert the total hours spent by hourly and salaried personnel (each department) on receiving inspection.
Insert the total hours spent by hourly and salaried personnel (each department) on gage calibration and
gage maintenance.
Insert the total cost of external calibration.

Insert the total hours spent by hourly and salaried personnel (each department) for associated travel time .
Insert the total travel expenses incurred by hourly and salaried personnel (each department) for associated
travel.
Insert the average number of minutes to perform a First piece Inspection
Insert the number of first piece inspections performed in a regular work day
Insert the average number of minutes to perform a In-process inspection
Insert the number of In-process inspections performed in a regular work day
Insert the average number of minutes to perform a product test
Insert the number of Product tests performed in a regular work day
Insert the average number of minutes to perform a Final inspection
Insert the number of Final inspections performed in a regular work day
Insert the average number of minutes to perform a Stockroom audit
Insert the number of Stockroom audits performed in a regular work day
The total appraisal/inspection costs will be calculated and used for summary report.

Insert the total hours spent by each department on APQP.

Insert the total hours spent by each department on quality policies and procedures.
Insert the total hours spent by each department conducting system audits.
Insert the total hours spent by each department evaluating new subcontractors.
Insert the total hours spent by each department for quality related training.
Insert the total hours spent by each department for preventive maintenance of machinery or equipment

Insert the total hours spent by each department for non-problem related visits to customers and/or
suppliers.
Insert the number of SPC charts maintained
Insert the average number of minutes to perform a sampling event. This includes measurement, chart
preparation, data analyses, CP, CPK calculations.
Insert the number of sampling events performed during a regular work day. If samples are taken hourly the
total number of daily sampling events is 8 for a one shift operaton
Insert the number of machine/process capability studies performed per day
Insert the average number of minutes to perform a machine/process capability study. This includes data
collection, and analysis.

Insert the total hours spent by hourly and salaried personnel (each department) for associated travel time .
Insert the total travel expenses incurred by hourly and salaried personnel (each department) for associated
travel.
The total prevention costs will be calculated and used for summary report
21st Century Containers Ltd.

Insert the average hourly rates, including fringes and overhead, for maintenance department technicians

Insert the number of preventive maintenance hours spent by Maintenance Department Technicians
Insert the number of corrective maintenance hours spent by Maintenance Department Technicians
The total maintenance technician costs will be calculated and used for summary report

Insert the average hourly rates, including fringes and overhead, for prototype technician

Insert the number of hours spent by Prototype Technicians on initial prototype build.

Insert the number of hours spent by Prototype Technicians on appraisal /inspection of initial prototype build.
Insert the number of hours spent by Prototype Technicians on rework or rebuild of prototype parts.
Insert the number of hours spent by Prototype Technicians on inspection of reworked or rebuilt prototype
parts.
The total Prototype technician costs will be calculated and used for summary report

Costs for replacing or making repairs to products warranted by customers that are still in the warranty
period and billed to 21st Century Containers Ltd. Recall and campaign costs incurred by 21st Century
Containers Ltd customers and billed to 21st Century Containers Ltd
Credits to customers for costs incurred by customers for correction of quality concerns attributable to 21st
Century Containers Ltd.
Credits issued to customer for product scrapped by customer
Credits issued to customer for reoperation performed by the customer on parts
The total credits issued to the customer are calculated and used for summary report.

Sales/revenues for the reporting period

Total warranty costs for the reporting period (calculated)
Total credits, for the reporting period, not rebilled to the customer (calculated)
Total scrap costs for the reporting period (calculated)
Total reoperation costs for the reporting period (calculated)
Total Failure costs for the reporting period (calculated)
Total Prevention costs for the reporting period (calculated)
Total Appraisal costs for the reporting period (calculated)
Total Cost of Quality for the reporting period (calculated)

Total Prevention Costs as % of Sales (calculated)

Total Appraisal Costs as % of Sales (calculated)
Total Failure Costs as % of Sales (calculated)
Total Cost of Quality as % of Sales (calculated)
 21st Century Containers Ltd
Cost of Quality Worksheet

Manufacturing Location: Atlanta Date: 1/5/2001

Reporting Month: (MMM-YY) December 2000

Quality Department Production Department Engineering Department

Salaried Salaried Salaried
Hourly Personnel/ Hourly Personnel/ Hourly Personnel/
Personnel Actual Personnel actual Personnel Actual

WARRANTY/RECALL
1 Evaluation time-Hours
2 Travel time-Hours
3 Travel expenses
4 Total Warranty/Recall costs $0 $0 $0 $0

SCRAP
1 Monthly accumulation of scrap, including material, labor and
overhead at the scrap point. $3,027.00

Cost of review and investigation.

2 Number of scrap tickets 20
3 Time per ticket in minutes 10
4 MRB time-Hours 1.0 1.0
5 Travel time-Hours
6 Travel expenses
7 Total Scrap costs $140.00 $3,063.00 $0.00 $3,203

REOPERATION
1 Monthly accumulation of reoperation costs, including material,
labor and overhead
2 Outside services required for reoperation, (ex. plating)

Cost of review, investigation, set-up and inspection.

3 Number of rework tickets 25 25
4 Evaluation time per ticket in minutes 30 30
5 Rework process development time in Hours
6 Product redesign time in Hours
7 Cost of special fixtures, tooling, gages
8 Travel time-Hours
9 Travel expenses
10 Total Reoperation costs $450.00 $450.00 $0.00 $900

FAILURE ANALYSIS & CORRECTIVE ACTION

1 Added inspection and testing due to Unsatisfactory quality-Hours
2 Sorting time-Hours
3 8D Investigation, review, disposition, corrective action time-Hours 5.0 5.0 5.0
4 Machine repair time-Hours
5 Inspection/ testing time to improve unsatisfactory results and/or
RPNs-Hours

SPC time initiated to improve unsatisfactory results and/or RPNs

6 Statistical Process Control-Number of charts
7 Statistical Process Control-Minutes per sampling event
8 Number of sampling events for the day
9 Travel time-Hours FA&CA
10 Travel expenses $4,580
11 Unplanned purchases (Includes Premium Freight) $0
12 Total failure costs $180.00 $180.00 $180.00 $540

APPRAISAL/INSPECTION
1 Design Evaluation, qualification, and validation testing - Hours $0
2 Incoming inspection-Hours 80.0 $1,600
3 Internal gage calibration and maintenance-Hours
4 External gage calibration & maintenance
5 Travel time-Hours Calibration
6 Travel expenses $0
7 First piece inspection-Minutes per event 15 10
8 First piece inspection-Number of events per day 12 6 $1,600
9 In-Process inspection-Minutes per event 15 10
10 In-Process inspection-Number of events per day 60 60 $10,000
11 Product testing-Minutes per event 60 60
12 Product testing-Number of events per day 4 4 $3,200
13 Final inspection-Minutes per event 5 5
14 Final inspection- Number of events per day 650 650 $43,333
15 Stock/Dock audits-Minutes per event 15 15
16 Stock/Dock audits-Number of events per day 1 1 $200
 17 Total appraisal/inspection costs 32166.67 27766.67 0.00 $59,933

Quality Department Production Department Engineering Department

Salaried Salaried Salaried
Hourly Personnel/ Hourly Personnel/ Hourly Personnel/
Personnel Actual Personnel actual Personnel Actual

PREVENTION
1 Advanced Product Quality Planning-Hours 20.0 20.0 20.0 $2,160
2 Quality policies and procedures-Hours 20.0 20.0 $1,120
3 Quality system audits-Hours 10.0 20.0 $920
4 Evaluation of subcontractors-Hours $0
5 Quality related training-Hours $0
6 Preventive maintenance-Hours $2,424
7 Non-problem related visits-Hours 48.0 $1,728
8 Statistical Process Control-Number of charts 5
9 Statistical Process Control-Minutes per event 5 SPC Cost
10 Number of sampling events for the day 5 $833
11 Number of Machine/process capability studies 2 CpK Studies
12 Machine/process capability studies-Minutes per study 120 $80
13 Travel time-Hours 80.0 64.0 Travel
14 Travel expenses $4,000.00 $9,184
15 Total prevention costs $12,281 $720 $3,024 $16,025

MAINTENANCE DEPARTMENT
Maintenance Technician Hourly Rate $20.20

Percent of
Maintenance Technician hours spent on: Hours Hours Cost
1 Preventive Maintenance 120 37.50 2424 Prevention
2 Corrective Maintenance 200 62.50 4040 Failure
3 Total 6464

PROTOTYPE OPERATIONS
Prototype Technician Hourly Rate

Percent of
Prototype Technician hours spent on: Hours Hours Cost
1 Initial prototype build #DIV/0! 0 Prevention
2 Appraisal/inspection of initial build #DIV/0! 0 Appraisal
3 Rework or rebuild of prototypes #DIV/0! 0 Reoperation
4 Inspection of rework or rebuild of prototypes #DIV/0! 0 Reoperation
5 Total 0

FINANCE DEPARTMENT Cost

1 Warranty/Recall
2 Cost of other credits not rebilled
3 Scrap
4 Reoperation
5 Total $0.00

Production Sales ($ 000) 481

Warranty/Recall $700
Cost of other Credits not Rebilled $75
Scrap $3,203
Reoperation $900
Failure $4,580
Appraisal $59,933
Prevention $18,449
Total Cost of Quality $87,841

Prevention Cost (% of Sales) 3.84

Appraisal Cost (% of Sales) 12.46
Failure Cost (% of Sales) 1.97
Total Cost of Quality (% of Sales) 18.26

Cost of Quality Summary Data:

Appraisal
Design Evaluation, Qualification, and Validation $0
Incoming Inspection $1,600
First Piece Inspection $1,600
In-process Inspection $10,000
Final Inspection $43,333
Product Testing $3,200
 Stock/dock audits $200
Calibration $0
Prototype Appraisal $0
Total $59,933

Prevention
APQP $2,160
Quality Systems Development $1,120
Quality Systems Audits $920
Subcontractor Evaluations $0
Quality Related Training $0
Proactive Customer visits $1,728
Preventive Maintenance $2,424
SPC $833
Capability Studies $80
Prototype Build $0
Travel Cost $9,184
Total $18,449

Failure
Warranty/Recall $700
Scrap $3,203
Reoperation $900
Failure Analysis and Corrective Action $4,580
Unplanned Purchases $0
Cost of Other Credits not Billed $75
Total $9,458

Cost of Quality $87,841

Sales $481
 Breakdown of Cost of Quality Breakdown of Failure Cost

$3,203 $900 $700 $75

$4,580
$9,458
$18,449
$18,449

$59,933 $59,933

Appraisal Prevention Failure

Appraisal
Prevention
Failure Analysis and Corrective Action
Breakdown of Prevention Cost Scrap
Reoperation
Warranty/Recall
Cost of Other Credits not Billed
Unplanned Purchases
$2,160 $1,728 $1,120 $920 $833 $80
$2,424

$9,184
Breakdown of Appraisal Cost
$9,458 $59,933

$3,200 $1,600 $1,600 $200

$10,000 $18,449
$9,458

$43,333
Appraisal
Failure
Travel Cost
Prevention
Preventive Maintenance
Failure
APQP
Final Inspection
Proactive Customer visits
In-process Inspection
Quality Systems Development Product Testing
Quality Systems Audits Incoming Inspection
SPC First Piece Inspection
Capability Studies Stock/dock audits
Subcontractor Evaluations Design Evaluation, Qualification, and Validation
Quality Related Training Calibration
Prototype Build Prototype Appraisal