This exercise illustrates that poor quality can affect schedules and costs. A ma

Question

This exercise illustrates that poor quality can affect schedules and costs. A manufacturing process has 120 customer orders to fill. Each order requires one component part that is purchased from a supplier. However, typically, 2% of the components are identified as defective, and the components can be assumed to be independent. (a) If the manufacturer stocks 120 components, what is the probability that the 120 orders can be filled without reordering components? (b) If the manufacturer stocks 125 components, what is the probability that the 120 orders can be filled without reordering components? (c) If the manufacturer stocks 130 components, what is the probability that the 120 orders can be filled without reordering components?

Explanation / Answer

a)

P( 120 orders filled without reordering ) = (1-0.02)^120 = 0.08853

b)

P( 120 orders filled without reordering ) = 125C5*(0.98^120)*(0.02^5) = 0.06644

c)

P( 120 orders filled without reordering ) = 130C10*(0.98^120)*(0.02^10) = 0.000242

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