A bicycle component manufacturer produces hubs for bike wheels. Two processes are possible for  manufacturing, and the parameters of each process are as follows:

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 $4 worth of material and can be sold for $30. Both processes are fully automated, and variable overhead cost is charged at the rate of $40 per hour.

Transcribed Image Text:

Process 1 Process 2 Production rate 35 parts/hour 4 hours/day 15 parts/hour 7 hours/day Daily production time Percent of parts rejected based on visual inspection 20% 9%