A bicycle component manufacturer produces hubs

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A bicycle component manufacturer produces hubs for bike wheels. Two processes are possible for manufacturing, and parameters of each process are as follows

Process 1: production rate is 35 parts/hour, daily production time is 4 hours/day, and percent of parts rejected based on visual inspection is 20%

Process 2: production rate is 15 parts/hour, daily production time is 7 hours/day, and percent of parts rejected based on visual inspection is 9%

Assume that the daily demand for hubs allows all defect-free hubs to be sold. Additionally, tested or rejected hubs cannot be sold. Find the process that maximizes profit per day if each part is made from $4 worth of material and can be sold for $30. Both processes are fully automated, and variable overhead cost is charged at the rate of $40 per hour

Reference no: EM13733337

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