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Both the Dominion Bank Corp and the Mount Royal Bank automatically flip, or reinvest money invested in term deposits. DBC uses a manual system and MRP uses a computer based It costs DBC $10 in labor and material to flip. their system is normal. The company is at the 2 sigma level of quality (experiences 5 errors per 100 opportunities) Errors are found by the system auditor. It costs them $5.00 to correct each error. MRB is $.05 in labour and material to flip and their system is normal. They are at 4.5 sigma level of quality (6.8 errors per million opportunities) . Costs $15 to correct each error Each month both flip 10,000 term deposit. What cost advantage does MRB have over DBC. they give DBC = (10x 10000) + (10000x 5%x 5) MRB = (.5x10000) + (zero or 1 x 15) difference is (95000 + 2500 - 15) = 97485

Author: hancottgl
Posted: 02/24/2016
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