Maple Leaf Injection manufactures molds that are used to produce plastic parts used in many different industries. At a senior management meeting next week, you are to present an analysis of the manufacturing lead-time and the production cost for a medium-size mold. The process of manufacturing molds is very labor intensive. First, product designers initiate an idea for a product through making a prototype with wood or wax. This prototype is then given to potential customers and marketing agents for approval. Then a production mold is designed and manufactured using modern manufacturing technologies, such as Computer-Aided Design and Computer-Aided Manufacturing (CAD/CAM). The manufacturing lead time for a mold greatly affects the production schedule for the product, so the turnaround time for a production mold is a major concern for both mold maker and customer. A study was carried out to examine the operations lead-time required for the manufacturing of a medium-size mold at the mold maker. Several managerial questions were to be addressed. One of them was:

How well can the cost of a medium-size mold be predicted from the times that it takes to carry out the major operations?

Data were collected on 40 medium-size molds consecutively produced between March 1987 and April 1989. Seven variables were measured for each mold:

CAD/CAM programming hours,

DESIGN hours,

CNC machining hours,

Conventional machining hours,

HANDWORK hours,

Total HOURS, and

Mold manufacturing COSTs (in $1,000).

a) For the mold described in (g), can you find the probability that it's COST value will exceed $150,000? If yes, obtain this probability. If no, why not?

b) When you were asked to comment on the original question, "How well can the cost of a medium-size mold be predicted from the times that it takes to carry out the major operations?" how would you respond?