s position tests material that has a defective content on the averag ems, the inspector is able to remove all defects. The inspector can ur. The hourly rate including fringe benefits for this position is $9. If iminated, defects will go into product assembly and will have to be of $10 each when they are detected in final product testing. ll operate at the same rate (i.e., the inspection rate) if the inspectio ed. n is eliminated, what will the hourly cost of defects be? pect each unit? (Round your answer to 2 decimal places.) ) from the current inspection process? How much? (Input all amo nd your answers to 2 decimal places.)

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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A company currently using an inspection process in its material receiving department is trying
to install an overall cost reduction program. One possible reduction is the elimination of one
inspection position. This position tests material that has a defective content on the average of
0.04. By inspecting all items, the inspector is able to remove all defects. The inspector can
inspect 51 units per hour. The hourly rate including fringe benefits for this position is $9. If the
inspection position is eliminated, defects will go into product assembly and will have to be
replaced later at a cost of $10 each when they are detected in final product testing.
Assume that the line will operate at the same rate (i.e., the inspection rate) if the inspection
operation was eliminated.
If the inspector position is eliminated, what will the hourly cost of defects be?
What is the cost to inspect each unit? (Round your answer to 2 decimal places.)
Is there benefit (or loss) from the current inspection process? How much? (Input all amounts
as positive values. Round your answers to 2 decimal places.)
Transcribed Image Text:A company currently using an inspection process in its material receiving department is trying to install an overall cost reduction program. One possible reduction is the elimination of one inspection position. This position tests material that has a defective content on the average of 0.04. By inspecting all items, the inspector is able to remove all defects. The inspector can inspect 51 units per hour. The hourly rate including fringe benefits for this position is $9. If the inspection position is eliminated, defects will go into product assembly and will have to be replaced later at a cost of $10 each when they are detected in final product testing. Assume that the line will operate at the same rate (i.e., the inspection rate) if the inspection operation was eliminated. If the inspector position is eliminated, what will the hourly cost of defects be? What is the cost to inspect each unit? (Round your answer to 2 decimal places.) Is there benefit (or loss) from the current inspection process? How much? (Input all amounts as positive values. Round your answers to 2 decimal places.)
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