Project #71410 - Operations Management

All work must be shown, lowest bid gets this assignment.

 

1.  A manager of Paris Manufacturing, which produces computer hard drives, is planning to lease a new automated inspection system.  The manager believes the new system will be more accurate than the current manual inspection process.  The firm has had problems with hard drives defects in the past and the automated system should help catch these defects before the drives are shipped to the final assembly manufacturer.  The relevent information follows:

Current Manual Inspection Sytem

Annual fixed cost = $35,000

Inspection variable cost per unit = $15 per unit

New Automated Inspection System

Annual fixed cost = $165,000

Inspection variable cost per until = $0.55 per unit


Supposed annual demand is 8,000 units.  Should the firm lease the new inspection system?

 

2.  In problem 1, assume the cost factors given have not changed.  A marketing representative of NEW-SPEC, a firm that specializes in providing manual inspection processes for other firms, approached Paris Manufacturing and offered to inspect parts for $19 each with no fixed cost.  It assured Paris Manufacturing that accuracy and quality of its manual inspection would equal that of the automated inspection system.  Demand for the upcoming year is forecast to be 8,000 units.  Should the manufacturer accept the offer?

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Due By (Pacific Time) 05/22/2015 12:00 am
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