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In Pullman, one of the largest engineering firms is Schweitzer Engineering Labs (SEL). One of the products they produce is 1000 mu m diameter fiber optic cables. The tolerance for the diameter is plusminus 0.0015 mu m.

Assume the process is normally distributed with a mean of 1000 mu m and variance, sigma²= 0.00000075.

Any cable with a diameter smaller than the lower spec limit is scrapped at a cost of $1. Any cable with a diameter above the upper spec limit is fixed for a cost of $0.75 per cable.

Assuming that 100 cables are produced per day and that there are 250 working days per year, what is the annual cost of fixing plus scrapping?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92762183

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