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 ( and total scrap cost for the given system.

Solution

The total number of defects to produce 2000 output of demand is as follows :

0.99X +0.9702+0.9604+1.852+1.760 = 2000

X = 306.14

Therefore the input to the system = 2000+306.14

input = 2306 units

total scrap for the given system = $5 + $12 + $15 + $15 + $15

total scrap for the given system = $ 62 .