Question: PROBLEM 1 (Total points - 10, each correct answer will get 0.5 points and each wrong answer will deduct +0.5 point) A process has three

PROBLEM 1 (Total points - 10, each correct answer will get 0.5 points and each wrong answer will deduct +0.5 point)

A process has three tasks performed in sequence with different yields and variable costs (labor and materials) at each task, as shown in Table 1 below. Assume that units are inspected after each step in the process and that defective units are scrapped.

Task Variable cost added at this step Yield

1. $15 96%

2. $10 92%

3. $7 94%

What is the yield for this process? Format percentages with ONE decimal place and WITH the percentage sign, e.g., for 54.37%, you would put 54.4%

Ans:

What would the variable cost of a good unit be if yields at each step were 100%? List the value with a dollar sign and with both decimal places, e.g., if the answer is $55.189, enter $55.19

Ans:

What is the variable cost of a good unit at the end of the process at the current yields? List the value with a dollar sign and with both decimal places, e.g., if the answer is $55.189, enter $55.19

Ans:

What is the difference in cost per unit between having quality at current yields rather than 100% yields? List the value with a dollar sign and with both decimal places, e.g., if the answer is $55.189, enter $55.19

Ans:

If you start out with sufficient materials to produce 1000 units and you sell good units for $40, what is the contribution at 100% yields? List the value with a dollar sign and with both decimal places, e.g., if the answer is $55.189, enter $55.19

Ans:

If you start out with sufficient materials to produce 1000 units and you sell good units for $40, what is the contribution at current yields? List the value with a dollar sign and with both decimal places, e.g., if the answer is $55.189, enter $55.19

Ans:

PROBLEM 2

This process has only two tasks. Units are inspected after each task and scrapped if defective. Table 2 below shows the variable cost at each task and each task's current yield, as well as how much the yield could be improved to and at what cost.

The product is sold for $100. If you start out with enough labor and material at Task 1 to produce 1000 units if the yield is 100%, how much would the contribution be after investing in the improvement, for each option? Assume you will invest in the improvement, then produce this product at 1000 units per year for two years.

Task Variable cost added at this step Current Yield Yield if Improved Cost to Improve

1. $30 93% 97% $2,000

2. $20 91% 96% $4,000

What is the process yield for the current process? Format percentages with ONE decimal place and WITH the percentage sign, e.g., for 54.37%, you would put 54.4%

Ans:

What is the variable cost at the end of Task 2? List the value with a dollar sign and with both decimal places, e.g., if the answer is $55.189, enter $55.19

Ans:

What is the process yield if you improve Task 1? Format percentages with ONE decimal place and WITH the percentage sign, e.g., for 54.37%, you would put 54.4%

Ans:

What is the variable cost if you improve Task 1? List the value with a dollar sign and with both decimal places, e.g., if the answer is $55.189, enter $55.19

Ans:

What is the process yield if you improve Task 2? Format percentages with ONE decimal place and WITH the percentage sign, e.g., for 54.37%, you would put 54.4%

Ans:

What is the variable cost if you improve Task 2? List the value with a dollar sign and with both decimal places, e.g., if the answer is $55.189, enter $55.19

Ans:

What is the contribution in the first year at current yields for the tasks?(Remember to factor in improvement cost)