The assembler purchases 6000 units of each component and inspects the products after production. The total direct cost of final products is $600 per unit. After inspection, 30% of the defective items can be fixed and on average the rework cost is $50 per unit. Calculate the actual unit cost considering the reliability

Practical Management Science
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Author:WINSTON, Wayne L.
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Chapter2: Introduction To Spreadsheet Modeling
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An assembler uses seven key components in its final
product. These components are purchased from
different suppliers. Historical data shows that the
reliabilities of the purchased components are as
follows:
Component
Reliability
1
0.990
0.990
3
0.980
4
0.995
0.965
0.985
0.995
The assembler purchases 6000 units of each
component and inspects the products after
production. The total direct cost of final products is
$600 per unit. After inspection, 30% of the defective
items can be fixed and on average the rework cost is
$50 per unit. Calculate the actual unit cost
considering the reliability
Transcribed Image Text:An assembler uses seven key components in its final product. These components are purchased from different suppliers. Historical data shows that the reliabilities of the purchased components are as follows: Component Reliability 1 0.990 0.990 3 0.980 4 0.995 0.965 0.985 0.995 The assembler purchases 6000 units of each component and inspects the products after production. The total direct cost of final products is $600 per unit. After inspection, 30% of the defective items can be fixed and on average the rework cost is $50 per unit. Calculate the actual unit cost considering the reliability
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