Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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A bicycle component manufacturer produces hubs for bike wheels. Two processes are possible for

manufacturing, and the parameters of each process are as follows:

  Process 1 Process 2
Production Rate 35 parts per hour 15 parts per hour
Daily production time 4 hours per day 7 hours per day
Percent of Parts Rejected 20% 9%

Assume that the daily demand for hubs allows all defect-free items to be sold. Additionally, defective hubs cannot be sold and their material cannot be recovered anymore. Find the process that minimizes the total cost per piece if each part is made from $4 worth of material. Both processes are fully automated, and the variable overhead cost is charges at $40 per hour.

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