Question

There is a 1 percent error rate at a specific point in a manufacturing production process. If an inspector is placed at this point, all the defects can be detected and eliminated. The inspector would cost $10 per hour and could inspect units in the process at the current production rate of 49 per hour. If no inspector is hired and defects are allowed to pass this point, there is a cost of $11 per defective unit to correct the defects later on. Assume that the line will operate at the same rate (i.e., the current production rate) regardless of whether the inspector is hired or not. a. If an inspector is hired, what will be the inspection cost per unit

Answer 1

Answer:

a.  the inspection cost per unit is 0.204

Explanation:

The computation of the inspection cost per unit in the case when an inspector is hired is shown below:

a. The inspection cost per unit is

= Cost of Inspector ÷ Production rate

= $10 ÷ 49 per hour

= 0.204

Hence, the inspection cost per unit is 0.204

We simply applied the above formula so that the correct value could come

And, the same is to be considered