Number of items the inspector can inspect per hour 60 units Labor cost per hour
ID: 354975 • Letter: N
Question
Number of items the inspector can inspect per hour 60 units Labor cost per hour for $12 the inspection Probability of defect- Cost to fix defect 0.02 $4. 1. 2. 3. 4. 5. 6. 7. What is the cost per hour to inspect? What is the cost per hour to not inspect? What is the per unit cost to inspect? What is the per unit cost to not inspect? Is there a benefit or loss associated with inspection? How much is the per unit benefit or loss associated with inspection? Should the inspection process be eliminated?Explanation / Answer
A Cost per hour of inspection= $12
B Number of expected defective unites each hour= Items not inspected or inspected in a hour*probability of defect
=60*0.02
=1.2
Cost/Hour not to inspect = expected no of defective unit identified each hour*cost to fix those defects
=1.2*4
$4.8
C- Cos of inspection for per unit= 12/60=$0.2
d- Per unit cost in case of no inspection= 4.8/60 = $0.08
e- Per unit cost in case of inspection is higher hence there is a loss.
f-loss-= 0.2-0.08 =$0.12
g- Yes Because of the loss the inspection process should be eliminated.
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