A company makes parts that cost $35.00 in material and labor. 92% of the parts are produced defect free and are sold for full price at $110 each. 2% of the parts made must be scrapped. Scrap parts are sold for $8.00 each. The remaining 6% of the parts made must be reworked at a cost of $12.00 each. After rework 1% still must be scrapped and the other 5% is sold at a discounted price of $90 each. a.
A company makes parts that cost $35.00 in material and labor. 92% of the parts are produced defect free and are sold for full price at $110 each. 2% of the parts made must be scrapped. Scrap parts are sold for $8.00 each. The remaining 6% of the parts made must be reworked at a cost of $12.00 each. After rework 1% still must be scrapped and the other 5% is sold at a discounted price of $90 each. a.
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Question
A company makes parts that cost $35.00 in material and labor. 92% of the parts are produced defect
free and are sold for full price at $110 each. 2% of the parts made must be scrapped. Scrap parts are
sold for $8.00 each. The remaining 6% of the parts made must be reworked at a cost of $12.00 each.
After rework 1% still must be scrapped and the other 5% is sold at a discounted price of $90 each.
a. Draw the tree diagram showing the quality cost situation.
b. Determine the earnings per part.
c. Determine the cost of poor quality (COPQ).
d. Determine the earnings per part and COPQ if the rework operation was shut down and the parts
that required reworking were just sold for scrap instead.
Answers-
B-70.22
c-4.78
d-66.84, 8.16
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