What is the annual cost of fixing plus scrapping

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Reference no: EM131034149

In Pullman, one of the largest engineering firms is Schweitzer Engineering Labs (SEL). One of the products they produce is 1000 μm diameter fiber optic cables. The tolerance for the diameter is ± 0.0015 μm. Assume the process is normally distributed with a mean of 1000 μm and variance, σ^2= 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?

Reference no: EM131034149

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