1). O'Neill Inc. is currently using an inspection process in its manufacturing plant and is trying to reduce overall Costs. One possible reduction is the elimination of an inspection position. This position tests material that has a defective content on the average of 0.2%. By inspecting all items, the inspector is able to remove all defects. The inspector can inspect 80 units per hour. The hourly rate including all benefits for this position is $25. If the inspection position is eliminated, defects will go into product assembly and will have to be replaced later at a cost of $200 each when they are detected in final product testing. a) Should this inspection position be eliminated or should they keep the inspector? Justify your answer and show all calculations. (3) b) What is the DPMO for this process? If the company is aiming for 'Six Sigma' how much lower does their defect rate need to be? (2)

2). Assume that after graduation that you and some classmates decide that you are going to start a new supply chain management consulting business. You are having a difficult time agreeing on where to locate your new business and decide to create a factor rating system to help determine the location. 1) Create a factor rating system for the problem described above. (3) 2) Pick two locations (these can be two cities in Canada or anywhere in the world really) and estimate their ratings based on the factors you created. (2)