Chapter 5: Questions 1, 3, 8, 9, 10

1. A number of years ago, ISO Standards 9000 series were developed to promote work quality by standardizing engineering design, testing, production, and other procedures. How many ISO standards are there, and how well have these stan-dards been accepted in the United States?

3. A key engineer in the department hands in her resignation notice; her reason for leaving is that she has been offered a much higher salary by a competitor. The manager recommends to the director that the company match the competitor’s offer, even though this would allow the engineer to earn above the maximum for her grade. “We can always give her smaller increases in subsequent years to bring her salary back into line,” says the manager. What should the director do?

8. Two junior members of the production department unexpectedly come in to see you, the production director, to complain that their manager, who reports to you, commits discrimination, practices favoritism, and misuses company facilities for possible personal gain. How would you handle this complaint?

9. At present, the company is running at full capacity in developing a new product for a major customer. The sales director has unexpectedly secured a small, but highly profitable, order, which requires some low-level development work and a minor change to the current production process. Should the company accept the small order? If so, how should the company satisfy the small order?

10. Some foreign countries, particularly those in the early stages of industrial development, are known to illegally copy product designs and technologies that originated from developed countries.

What are the best ways for small businesses to protect their technical know-how in foreign countries?

Chapter 6: Questions 1, 3, 4, 5, 10

1. The company is evaluating two specific proposals to market a new product. The current interest rate is 10%. Proposal A calls for setting up an in-house manufacturing shop to make the product, requiring an investment of $500,000. The expected profits for the first to fifth years are $150,000, $200,000, $250,000, $150,000, and $100,000, respectively. Proposal B suggests that the manufacturing operation be outsourced by contracting an outside shop, requiring a front-end payment of $300,000. The expected profits for the first to fifth years are $50,000, $150,000, $200,000, $300,000, and $200,000, respectively. The expected profits would be lower in earlier years due to third-party markup.

Which proposal should the company accept?

3. A dam is being considered on a river that periodically overflows. Each time the river overflows, it causes about $600,000 in damages. The project horizon is 40 years. A 10% interest rate is being used. Three different designs are available, each with different costs and storage capacities (see Table 6.14). The U.S. weather service has provided a statistical analysis of annual rainfall in the area draining into the river (see Table 6.15). Assume that the dam requires no annual maintenance, has zero salvage value at the end of its 40-year life, and is essentially empty at the start of each annual rainfall season. Which design alternative would you choose?