Problem 10-18 A production process consists of a three-step operation. The scrap

Question

Problem 10-18 A production process consists of a three-step operation. The scrap rate is 13 percent for the first step and 8 percent for the other two steps o.lf the desired daily output is 482 units, how many units must be started to allow for loss due to scrap? (Do not round intermediate calculations. Round up your final answer to the next whole number.) Number of units b.lf the scrap rate for each step could be cut in half at every operation, how many units would this save in terms of the scrap allowance? (Do not round intermediate calculations. Round up your final answer to the next whole number.) Number of units.azi clf the scrap represents a cost of $10 per unit, how much is it costing the company per day for the original scrap rate (ie. the Part a scrap rate)? (Round your final answer to the nearest whole number. Omit the "S" sign in your response.) Cost $ 280

Explanation / Answer

a. Desired daily output = 482 units

Since 13% is the scrap rate for first step, so non scrap rate is 87%

Similarly non scrap rate for other two steps is 92% each

Let number of input units per day = x

So x*(0.87*0.92*0.92) = 482

Therefore, x = 482 / (0.87*0.92*0.92) = 655 units

b. Desired daily output = 482 units

Number of input units per day = 655 units

Scrap units per day = 655 - 482 = 173 units

If the scrap rate for each step is cut in half at every operation, it will result in saving half of the total scrap units in terms of scrap allowance

So number of scrap units saved per day = 173/2 = 86 units

c. Scrap cost per unit = $10

Desired daily output = 482 units

Number of input units per day = 655 units

Scrap units per day = 655 - 482 = 173 units

Cost to the company per day for the original scrap rate = 173*10 = 1730 dollars

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