Using the following information, identify the single best answer. The Herman Ruth Candy Bar Company makes candy bars using a process designed to produce 10.0 ounce candy bars. The process design has with an upper specification limit (USL) of 10.5 ounces and a lower specification limit (LSL) of 9.5 ounces. The manufacturing process is currently producing candy bars with an average net weight (mean) of 10.2 ounces and a standard deviation of 0.12 ounces. Does the process have the capability of meeting design specifications as it is currently operating?

Select one:

a.

Yes because the process has the capability as Cp exceeds 1 and one of the Cpk values is greater than 1.

b.

Yes because the process has the capability as the Cp value exceeds 1.

c.

No because the process does not have the capability as the smaller Cpk value is 0.833.

d.

Yes because the process has the capability as Cp exceeds 1 and Cpk is less than 1.

e.

Yes because the process has the capability as both Cp and Cpk exceed 1.

You are the manager of a video arcade construction project. Your job is to decide upon the capacity of the video arcade. Based upon preliminary market research, you have narrowed your choices to two: build small or build large. Either choice has two possible outcomes: low demand or high demand. The estimated likelihood for low demand provided by the market research firm is 0.30. If you build a small arcade, and demand is low, there is no further decision. However, if demand is high, there will be a subsequent decision regarding how to meet higher than expected demand. Your choices will be: (1) do nothing and lose some possible business, (2) use overtime, or (3) further expand the facility capacity. If you build a large facility and demand is low, you will be faced with a subsequent decision for deciding how to absorb the extra capacity. You have two choices: (1) do nothing and leave a portion of the facility idle, or (2) reduce prices to stimulate demand. If you build a large facility and demand is high, there is no subsequent decision. Information has been collected on payoffs as shown in the decision tree below. If you'd like to maximize the expected value of your initial decision, what should you do?

$ 40,000 low demand (3) $ 35,000 do nothing high demand (7) overtime $ 50,000 Build small expand $ 60,000 -$70,000 high demand (7) Build large $-10,000 low demand (-3) do nothing reduce a. build small prices $5,000 b. build large c. build large, then if need be do nothing and leave a portion of the facility idle d. build large, then if need be reduce prices cannot determine given the uncertainty of outcomes e