Problem $10-19($Algo$)$

Output from a process contains $0\mathrm{.}04$ 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, ifricluding fringe benefits. Should an inspection station be established to test all units?

Assume that the line will operate at the same rate $($i$.$e$.,$ the current production rate$)$ regardless of whether or not the inspection operation is added.

a$-1.$ Without the inspector, what is the current hourly cost of defects?

Note: Round your answer to $2$ decimal places.

Cost per hour

a$-2.$ Should an inspection station be established to test all units based on costs alone?

Yes

No