Decision-making – Supplier quality crisis (valves rejected for poor material/craftsmanship) Statement: Company X has rejected the first lot of valves supplied by Company A and cancelled its entire large order, citing inferior material and poor workmanship. Courses of Action: I. Company A should investigate its purchase, production, and quality-control functions. II. Company A should thoroughly inspect all the valves rejected by Company X. III. Company A should inform Company X of corrective steps taken and renegotiate the supply schedule.

Introduction / Context:
A major customer has rejected an initial lot and cancelled a large order, citing material and craftsmanship defects. We must select actions that address root cause, verify findings, and recover the relationship if possible.

Given Data / Assumptions:

• Faults alleged: inferior material and poor workmanship.
• Consequences: lot rejection and total order cancellation.
• Supplier (Company A) aims to correct and retain business.

Concept / Approach:
Quality crises require triad action: internal root-cause analysis, product verification, and customer communication/renegotiation after corrective measures.

Step-by-Step Solution:

Verification / Alternative check:
Standard quality frameworks (8D, CAPA, PDCA) reflect the same sequence: contain, analyze, correct, prevent, and restore customer confidence.

Why Other Options Are Wrong:

• Only subsets miss critical elements (e.g., CAPA communication).
• “Either I or III” misstates the need for both internal fixes and customer engagement.

Common Pitfalls:
Jumping to renegotiation without analysis; disputing rejection without data.

Final Answer:
All I, II and III follow