Suppose a quality manager is to make a decision between two manufacturing processes for the manufacture of a certain component. Process A costs 150 dollars per unit to manufacture a component. Process B costs 160 dollars per unit to manufacture a component. Components have an exponential time to failure distribution with mean time to failure of 300 hours for process A, while components from process B have a mean time to failure of 350 hours. Because of a warranty clause, if a component lasts less than 400 hours, the manufacturer must pay a penalty of 75 dollars. Based on the expected cost, would the quality manager select Process A? Explain why or why not? Show your work.
Suppose a quality manager is to make a decision between two manufacturing processes for the manufacture of a certain component. Process A costs 150 dollars per unit to manufacture a component. Process B costs 160 dollars per unit to manufacture a component. Components have an exponential time to failure distribution with mean time to failure of 300 hours for process A, while components from process B have a mean time to failure of 350 hours. Because of a warranty clause, if a component lasts less than 400 hours, the manufacturer must pay a penalty of 75 dollars. Based on the expected cost, would the quality manager select Process A? Explain why or why not? Show your work.
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Chapter5: Probability: An Introduction To Modeling Uncertainty
Section: Chapter Questions
Problem 33P: Suppose that Motorola uses the normal distribution to determine the probability of defects and the...
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Transcribed Image Text:Suppose a quality manager is to make a decision between two manufacturing
processes for the manufacture of a certain component. Process A costs 150 dollars per unit to
manufacture a component. Process B costs 160 dollars per unit to manufacture a component.
Components have an exponential time to failure distribution with mean time to failure of 300
hours for process A, while components from process B have a mean time to failure of 350 hours.
Because of a warranty clause, if a component lasts less than 400 hours, the manufacturer must
pay a penalty of 75 dollars. Based on the expected cost, would the quality manager select Process
A? Explain why or why not? Show your work.
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