rice, however the materials were of a worse quality. The Purchasing Department is focused on cost reduction because purchasing managers are evaluated based on direct material price variances. This causes problems concerning quality, sufficient warehousing and obsolescence etc.
             1. The firm should put more prevention efforts on the purchasing of materials. If the firm evaluates its suppliers before placing orders, it would be able to reduce its inspection costs related to the incoming materials at its own site.
             2. Through a contract, quality should be specified and expressed in such a way that the purchasing department knows exactly what is required and the supplier is completely informed of the buyer's quality requirements and expectations.
             3. The purchasing department should be charged for the cost of holding inventories, thus reducing the incentive for the purchasing manager to bulk buy for the price discounts advantage.
             Purchasing managers would need to become familiar with quality requirements, supplier capabilities, and the effects of poor supplier quality. This could be difficult to do accurately and effectively especially since the supplier is new to the firm. Also by including storage charges as part of the purchasing departments cost, the firm may run into material shortages through to deferred orders etc.
             The effectiveness of evaluating suppliers relies on the volume and accuracy of the information gathered, which can create further analysis costs.
             By increasing pre-inspection and evaluation costs (increase prevention costs), this should reduce wastage and rework costs (decrease failure costs) by a greater amount and reduce the overall COQ. This shifts the COQ policy towards a contemporary view.
             One subassembly was rejected by Mike after welding and his own inspection due to a part drilled incorrectly in the previous operation. Because there was no appraisal put into the previous operation, there is wastage...