Question 231964: I have this problem for Statitics that I really need to get done and I can't figure out the rest of the problem. Help if you can. Please.
Calculate the annual cost for reworked parts an calculate the annual cost for scrapped parts?
Specifications: 0.5530 (plus+ over minus-)0.0025
Process average is 0.5535
Standard Deviation .0015
Production Rate 100,000 per year
Rework all undersize parts at a cost of $5.25 each.
Scrap all oversize parts at a cost of $15.34 each.
Z=1.67
I figured out Z but I can't figure out how to:
1. Calculate the annual cost for reworked parts.
2. Calculate the annual cost for scrapped parts.
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! Calculate the annual cost for reworked parts and calculate the annual cost for scrapped parts?
Specifications: 0.5530 (plus+ over minus-)0.0025
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Required part measurement: 0.5530-0.0025 < m < 0.5530+0.0025
0.5505 < m < 0.5555
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Process average is 0.5535
Standard Deviation .0015
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Find the z-score of 0.5505 and of 0.5555
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z(0.5505) = (0.5505-0.5535)/0.0015 = -2
z(0.5555) = (0.5555-0.5535)/0.0015 = 1.33333..
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The percentage of the distribution that is undersize
is P(z < -2) = 0.0227501
So the number of parts that are undersize is
0.0227501*100,000 = 2,275 The cost of reworking these parts is 2,275*5.25 = $11,943.75
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The percentage of the distribution that is oversize
is P(z > 1.33333...) = 0.9121128128...
So the number of parts that are oversize is
0.09121128128...* 100,000 = 9,121
The cost of scrapping these parts is 9,121*15.34 = $139,916.14
Production Rate 100,000 per year
Rework all undersize parts at a cost of $5.25 each.
Scrap all oversize parts at a cost of $15.34 each.
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1. Calculate the annual cost for reworked parts.
2. Calculate the annual cost for scrapped parts.
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Cheers,
Stan H.
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