STATISTICAL TECHNIQUES IN BUSINESS AND E
18th Edition
ISBN: 9781260570489
Author: Lind
Publisher: MCG
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Chapter 20, Problem 5E
To determine
Find the expected opportunity losses.
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A company makes parts that cost $35.00 in material and labor. 92% of the parts are produced defect
free and are sold for full price at $110 each. 2% of the parts made must be scrapped. Scrap parts are
sold for $8.00 each. The remaining 6% of the parts made must be reworked at a cost of $12.00 each.
After rework 1% still must be scrapped and the other 5% is sold at a discounted price of $90 each.
a. Draw the tree diagram showing the quality cost situation.
b. Determine the earnings per part.
c. Determine the cost of poor quality (COPQ).
d. Determine the earnings per part and COPQ if the rework operation was shut down and the parts
that required reworking were just sold for scrap instead.
Answers-
B-70.22
c-4.78
d-66.84, 8.16
Mf3.
The amount of income spent on housing is an important component of the cost of living. The total costs of housing for homeowners might include mortgage payments, property taxes, and utility costs (water, heat, electricity). An economist selected a sample of 20 homeowners in New England and then calculated these total housing costs as a percent of monthly income, 5 years ago and now. The information is reported below. Is it reasonable to conclude the percent is less now than 5 years ago?
Homeowner
Five Years Ago
Now
Homeowner
Five Years Ago
Now
1
17
%
10
%
11
35
%
32
%
2
20
39
12
16
32
3
29
37
13
23
21
4
43
27
14
33
12
5
36
12
15
44
40
6
43
41
16
44
42
7
45
24
17
28
22
8
19
26
18
29
19
9
49
28
19
39
35
10
49…
Chapter 20 Solutions
STATISTICAL TECHNIQUES IN BUSINESS AND E
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