A bicycle component manufacturer produces hubs for bike wheels. Two processes are possible for manufacturing. Assume that the daily demand for hubs allows all defect-free hubs to be sold. Additionally, tested or rejected hubs cannot be sold. Find the process that maximizes profit per day if each part is made from $4 worth of material and can be sold for $32. Both processes are fully automated, and variable overhead cost is charged at the rate of $39 per hour. Process 1 Process 2 Production rate 36 parts/hour 15 parts/hour Daily production time 4 hours/day 8 hours/day Percent of parts rejected based on visual inspection 22% 10%
A bicycle component manufacturer produces hubs for bike wheels. Two processes are possible for manufacturing. Assume that the daily demand for hubs allows all defect-free hubs to be sold. Additionally, tested or rejected hubs cannot be sold. Find the process that maximizes profit per day if each part is made from $4 worth of material and can be sold for $32. Both processes are fully automated, and variable overhead cost is charged at the rate of $39 per hour. Process 1 Process 2 Production rate 36 parts/hour 15 parts/hour Daily production time 4 hours/day 8 hours/day Percent of parts rejected based on visual inspection 22% 10%
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
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A bicycle component manufacturer produces hubs for bike wheels. Two processes are possible for manufacturing. Assume that the daily demand for hubs allows all defect-free hubs to be sold. Additionally, tested or rejected hubs cannot be sold. Find the process that maximizes profit per day if each part is made from $4 worth of material and can be sold for $32. Both processes are fully automated, and variable overhead cost is charged at the rate of $39
per hour.
Process 1 Process 2
|
Production rate
|
36
parts/hour |
15
parts/hour |
|---|---|---|
|
Daily production time
|
4
hours/day |
8
hours/day |
|
Percent of parts rejected based on visual inspection
|
22%
|
10%
|
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Part 1
The profit per day for Process 1 is
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