The firm makes 10,000 auto part a year and it needs a onetime cost of $ 200,000 to reduce the variance from 0.49 to 0.16. Considering the production volume, is it worthwhile to pursue the improvement? Please make a common sense based decision by comparing the benefit and the cost of the improvement. Show the steps or rationales.

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Your Question:
The firm makes 10,000 auto part a year and it
needs a onetime cost of $ 200,000 to reduce
the variance from 0.49 to 0.16. Considering
the production volume, is it worthwhile to
pursue the improvement? Please make a
common sense based decision by comparing
the benefit and the cost of the improvement.
Show the steps or rationales.
Transcribed Image Text:The firm makes 10,000 auto part a year and it needs a onetime cost of $ 200,000 to reduce the variance from 0.49 to 0.16. Considering the production volume, is it worthwhile to pursue the improvement? Please make a common sense based decision by comparing the benefit and the cost of the improvement. Show the steps or rationales.
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