Quality Yield and Cost problems and solutions Fall 2011_1

# Quality Yield and Cost problems and solutions Fall 2011_1 -...

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Problems 1. Step 1 Step 2 Step 3 completed yield 95% 92% 97% value added \$35/unit \$15/unit \$20/unit There is an inspection cost of \$0.50/unit. When the units are inspected, the bad ones are thrown away and do not continue with processing. All units which exit Step 3 must be inspected so the bad ones can be discarded -- any money invested in them is lost. (a) What is the percentage yield of the three-step process? (b) If 3500 good units must be produced, how many units must begin the process? (c) If the only inspection is the one following Step 3, what is the cost of producing the 3500 good units? Assume the cost of the good units must absorb the cost of the bad. (d) If it was possible to inspect twice (one of which would be after Step 3), would you rather inspect immediately after Step 1 or immediately after Step 2? Why? (e) What would be the cost of 3500 good units, if inspection was performed after each of the three steps? Step 1 Step 2 Step 3 Total Yield 95% 92% 97% 84.8% Value added \$35/unit \$15/unit \$20/unit \$70/unit Units sent Inspection costs/unit Costs (value added + inspection costs) Units sent Inspection costs/unit Costs (value added + inspection costs) Inspection after each step Units sent Inspection costs/unit Costs (value added + inspection costs) (f) Calculate the cost of a good unit for (c), (d) (both scenarios) and (e). (g) Under what yield conditions would the cost of production be \$70/good unit? 2.

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Quality Yield and Cost problems and solutions Fall 2011_1 -...

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