Problems

1.

A software developer has identified the following costs of quality at three development centers:

Center	Development Center 1	Development Center 2	Development Center 3
Sales revenue	$15M	$7.9M	$2M
Total quality costs	$5.4M	$ 1.4M	$5.M
Prevention	3%	52%	15%
Appraisal	12%	22%	30%
Upstream internal failure	15%	12%	27%
Downstream internal failure	28%	9%	15%
External failure	42%	5%	13%

What conclusions can management draw from these figures? Explain with appropriate analysis.

2.

The following table shows estimates for development, marketing, and various quality costs with respect to the current practice and a proposed quality initiative in a software organization. What are the financial implications of the proposed initiative? What is your recommendation for the company?

	Current Development Practice (in Dollars)					With Proposed DFTS Initiative (in Dollars)
Cost	Year 1	Year 2	Year 3	Year 4	Year 5	Year 1	Year 2	Year 3	Year 4	Year 5
Development Cost	2M	1.5M	0	0	0	2M	1.3M	0	0	0
Marketing cost	75k	150k	300k	450k	250k	90k	200k	350k	500k	300k
Prevention cost	5k	10k	0	0	0	200k	90k	0	0	0
Appraisal cost	20k	10k	0	0	0	90k	50k	0	0	0
Upstream Internal Failure Cost	90k	60k	0	0	0	40k	20k	0	0	0
Downstream Internal Failure Cost	0	90k	0	0	0	0	20k	0	0	0
External Failure Cost	0	0	180k	90k	60k	0	0	40k	30k	10k
Sales Revenue	0	2M	5M	8M	4M	0	2M	7M	10M	7M