Three independent operations (1, 2, and 3) are performed sequentially in the manufacture of a product. The first-pass yields (proportion conforming) for each operation are given by p₁ = 0.90, p₂ = 0.95, and p₃ = 0.80, respectively, for operations 1, 2, and 3. The unit production costs for each operation are u₁ = $5, u₂ = $10, and u₃ = $15, respectively.

1. What is the unit cost per conforming (or good) product?
2. Suppose, through quality improvement effort, the first-pass yield for each operation is improved to the following levels: p₁ = 0.94, p₂ = 0.96, and p₃ = 0.88. Relative to part (a), determine how much improvement in percentage terms in (production) capacity has taken place.
3. Management is completing a 100% inspection process after either operation 1 or 2. Assume that the inspection process is completely reliable (i.e., all units are identified correctly – conforming or not). Unit inspection costs after operations 1 and 2 are $0.10 and $0.20, respectively. Nonconforming parts are not forwarded to subsequent operations. Find the unit cost per conforming product for each plan for the improved process.

The wording in part c is weird so I'm wondering what others' interpretation of it would be.

Answer rating: 100% (QA)

Solution Part a The firstpass yields proportion conforming for each operation are given by p 1 090 p ... View the full answer