Reference no: EM132329902

The Spartan Furniture Company manufactures oak filing cabinets in six stages. In the first stage, the boards forming the walls of the cabinet are cut; in the second stage, the front drawer panels are woodworked; in the third stage, the boards are sanded and finished; in the fourth stage, the boards are cleaned, stained, and painted with a clear finish; in the fifth stage, the hardware for pulls, runners, and fittings is installed; and in the final stage, the cabinets are assembled. Inspection occurs at each stage of the process, and the average percentages of good-quality units are as follows.

Stages Good Quality

1 87%

2 91%

3 90%

4 95%

5 93%

6 95%

The cabinets are produced in weekly production runs with a product input for 500 units.

a) Determine the weekly product yield of good-quality cabinets.

b) What would weekly product input have to be in order to achieve a final weekly product yield of 500 cabinets?

c) The company has explored potential improvements and found that for a cost $10,000, level of good quality can be improved by 4% at any one of the six stages. If $20,000 is allocated as budget for quality improvement, which two stages do you recommend as candidates for quality improvement? Why?