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Let us consider
again the case study of Problem#1. Your
manufacturing team informs you that they have found a way to increase the size
of the manufacturing run from 10,000 to 18,000 units, in increments of 2,000
units. However, the set up cost will be
$150,000 and defects will cost the same $120 for removal and repair.
economic feasibility of make or buy.
probability of defects change if we produce 18,000 units as opposed to 10,000
answer to Question 1 change if Teloxy management believes that follow-on
contracts will be forthcoming? What
would happen if the probability of defects changes to 15 percent, 25 percent,
40 percent, 15 percent, and 5 percent due to learning-curve efficiencies?