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A production process consists of a three-step operation. The scrap rate is 16 percent for the first step and 10 percent for the other two steps.
a. If the desired daily output is 471 units, how many units must be started to allow for loss due to scrap? (Do not round intermediate calculations. Round up your final answer to the next whole number.) Number of units
b. If the scrap rate for each step could be cut in half at every operation, how many units would this save in terms of the scrap allowance? (Do not round intermediate calculations. Round up your final answer to the next whole number.) Number of units
c. If the scrap represents a cost of $10 per unit, how much is it costing the company per day for the original scrap rate (i.e. the Part a scrap rate)? (Round your final answer to the nearest whole number. Omit the "$" sign in your response.)
Calculate the economic order quantity and the total costs for both options. Which option is acceptable?
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