A production process consists of a three-step operation. The scrap rate is 12 pe

Question

A production process consists of a three-step operation. The scrap rate is 12 percent for the first step and 10 percent for the other two steps.

a. If the desired daily output is 457 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. If 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 ____________

c. If the scrap represents a cost of $10 per unit, how much is it costing the company per day for the original scrap rate (i.e. the Part a scrap rate)? (Round your final answer to the nearest whole number. Omit the "$" sign in your response.)

Cost $__________

Explanation / Answer

Ans. Below we are starting up with 1000 units.

In first step

1000X(100-12%)=880 units

In ssecond step

880X(100-10%)=792 units

In third step

792X(100-10%)=713 units.

(A) 457X(1000/713)=641 units to start with.

(B)Now start with other 1000 Units.

First step

1000X(100-6%)=940 units.

Second step

960X(100-5%)=893 units

Third step

893X(100-5%)=848 units

457X(1000/848)=539 units to start with under improved procedure.

102 units more efficient then previous procedure.

(C)(641-457)units X 10 =1840 daily cost.

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