Consider a simple manufacturing Process as illustrated in th

Consider a simple manufacturing Process as illustrated in the given figure. Assuming that demand is 2,000 units, what is the required input to meet demand? Assume that the scrap cost is $5 at process 1, $12 at process 2, and $15 at process 3, process 4, and process 5. The defective rates are shown in the figure. Compute the input (I_1) and total scrap cost for the given system.

Solution

Answer:

The total defective in percentage = 23

Total out put required = 2000

Let the input be x

Therefore

x - 23x/100 = 2000

77x/100 = 2000

Therefore x = input required = 2598 units