A company currently using an inspection process in its material receiving department is trying to install an overall cost reduction program. One possible reduction is the elimination of one inspection position. This position tests material that has a defective content on the average of 0.04. By inspecting all items, the inspector is able to remove all defects. The inspector can inspect 50 units per hour. The hourly rate including fringe benefits for this position is $9. If the inspection position is eliminated, defects will go into productpage 387 assembly and will have to be replaced later at a cost of $10 each when they are detected in final product testing. (Answer in Appendix E)

Should this inspection position be eliminated?

What is the cost to inspect each unit?

Is there benefit (or loss) from the current inspection process? How much?

Output from a process contains 0.02 defective unit. Defective units that go undetected into final assemblies cost $25 each to replace. An inspection process, which would detect and remove all defectives, can be established to test these units. However, the inspector, who can test 20 units per hour, is paid $8 per hour, including fringe benefits. Should an inspection station be established to test all units?

What is the cost to inspect each unit?

What is the benefit (or loss) from the inspection process?

Ten samples of 15 parts each were taken from an ongoing process to establish a p-chart for control. The samples and the number of defectives in each are shown in the following table:

Sample n Number Of Defective Items In The Sample

1. 15. 3

2. 15. 1

3. 15. 0

4. 15. 0

5. 15. 0

6. 15. 2

7. 15. 0

8. 15. 3

9. 15. 1

10. 15. 0

Develop a p-chart for 95 percent confidence (1.96 standard deviation).

Based on the plotted data points, what comments can you make?