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A bicycle component manufacturer produces hubs for bike wheels. Two processes are possible for manufacturing, and the parameters of each process are as follows: Process 1 Process 2 35 parts/hour 4 hours/ day 20% 15 parts/ hour 7 hours/ day 9% Production rate Daily production time Percent of parts rejeted based on visual inspection Assume that the daily demand for hubs allows all defect-free hubs to sold. Additionally, tested or rejected hubs cannot be sold. Find the process that maximizes profit per day if each part is made from Php 200 worth of material and can be sold for Php 1,500. Both processes are fully automated, and variable overhead cost is charged at the rate of Php 2,000 per hour.

A bicycle component manufacturer produces hubs for bike wheels. Two processes are possible for manufacturing, and the parameters of each process are as follows: Process 1 Process 2 35 parts/hour 4 hours/ day 20% 15 parts/ hour 7 hours/ day 9% Production rate Daily production time Percent of parts rejeted based on visual inspection Assume that the daily demand for hubs allows all defect-free hubs to sold. Additionally, tested or rejected hubs cannot be sold. Find the process that maximizes profit per day if each part is made from Php 200 worth of material and can be sold for Php 1,500. Both processes are fully automated, and variable overhead cost is charged at the rate of Php 2,000 per hour.

Practical Management Science
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 bicycle component manufacturer produces hubs for bike wheels. Two processes are possible for manufacturing, and the parameters of each process are as follows: Process 1 Process 2 35 parts/ hour 4 hours/ day 15 parts/hour 7 hours/day 20% 9% Production rate Daily production time Percent of parts rejeted based on visual inspection Assume that the daily demand for hubs allows all defect-free hubs to be sold. Additionally, tested or rejected hubs cannot be sold. Find the process that maximizes profit per day if each part is made from Php 200 worth of material and can be sold for Php 1,500. Both processes are fully automated, and variable overhead cost is charged at the rate of Php 2,000 per hour.
Transcribed Image Text:A bicycle component manufacturer produces hubs for bike wheels. Two processes are possible for manufacturing, and the parameters of each process are as follows: Process 1 Process 2 35 parts/ hour 4 hours/ day 15 parts/hour 7 hours/day 20% 9% Production rate Daily production time Percent of parts rejeted based on visual inspection Assume that the daily demand for hubs allows all defect-free hubs to be sold. Additionally, tested or rejected hubs cannot be sold. Find the process that maximizes profit per day if each part is made from Php 200 worth of material and can be sold for Php 1,500. Both processes are fully automated, and variable overhead cost is charged at the rate of Php 2,000 per hour.
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