The specifications on an electronic component in a target-acquisition system are that its life must be...

The specifications on an electronic component in a target-acquisition system are that its life must be greater than 5000 hrs. Assume the life is normally distributed with mean 7500 hrs. The manufacturer realizes a sale price of $10 per unit produced (i.e. profit is $10 minus manufacturing cost); however, defective units must be replaced at a cost of $5 to the manufacturer, thus the defective cost will be $5 plus manufacturing cost. Two different manufacturing processes can be used, both of which have the same mean life. However, the standard deviation of life for process 1 is 1000 hrs, whereas for process 2 it is only 500 hrs. Production costs for process 2 are twice those for process 1. What value of manufacturing costs will determine the selection between processes 1 and 2?

Solutions

Expert Solution

orchestra answered 1 year ago

Next > < Previous

Related Solutions

ABC Inc is looking to launch an acquisition of a target for $3 billion. The target...

ABC Inc is looking to launch an acquisition of a target for $3 billion. The target is expected to generate cash flows for five years. Table 1 below shows the expected cash flows of the target along with the acquisition cost. Table 2 shows the financial data required to generate a discount factor for the cash flows. Calculate the discount rate (WACC) for the acquisition. Evaluate the deal using NPV, IRR, and Payback. Consider the following: Table 1. Table 2....

Suppose that in manufacturing a very sensitive electronic component, a company and its customers have tolerated...

Suppose that in manufacturing a very sensitive electronic component, a company and its customers have tolerated a 2% defective rate. Recently, however, several customers have been complaining that there seem to be more defectives than in the past. Given that the company has made recent modifications to its manufacturing process, it is wondering if in fact the defective rate has increased from 2%. For quality assurance purposes, you decide to randomly select 1,000 of these electronic components before they are...

Corrigan Enterprises is studying the acquisition of two electrical component insertion systems for producing its sole...

Corrigan Enterprises is studying the acquisition of two electrical component insertion systems for producing its sole product, the universal gismo. Data relevant to the systems follow. Model no. 6754: Variable costs, $19.00 per unit Annual fixed costs, $986,500 Model no. 4399: Variable costs, $11.80 per unit Annual fixed costs, $1,114,300 Corrigan’s selling price is $63 per unit for the universal gismo, which is subject to a 10 percent sales commission. (In the following requirements, ignore income taxes.) Required: How many...

Corrigan Enterprises is studying the acquisition of two electrical component insertion systems for producing its sole...

Corrigan Enterprises is studying the acquisition of two electrical component insertion systems for producing its sole product, the universal gismo. Data relevant to the systems follow. Model no. 6754: Variable costs, $16.00 per unit Annual fixed costs, $986,300 Model no. 4399: Variable costs, $10.80 per unit Annual fixed costs, $1,114,400 Corrigan’s selling price is $64 per unit for the universal gismo, which is subject to a 5 percent sales commission. (In the following requirements, ignore income taxes.) 1. How many...

Corrigan Enterprises is studying the acquisition of two electrical component insertion systems for producing its sole...

Corrigan Enterprises is studying the acquisition of two electrical component insertion systems for producing its sole product, the universal gismo. Data relevant to the systems follow. Model no. 6754: Variable costs, $18.00 per unit Annual fixed costs, $986,400 Model no. 4399: Variable costs, $11.80 per unit Annual fixed costs, $1,114,000 Corrigan’s selling price is $65 per unit for the universal gismo, which is subject to a 15 percent sales commission. (In the following requirements, ignore income taxes.) Required: How many...

Problem#: Consider the data shown. Assume that the specifications on this component are 74.05 and 73.95...

Problem#: Consider the data shown. Assume that the specifications on this component are 74.05 and 73.95 mm. (a)Estimate process capability for the piston-ring process, for both Cp &Cpk and Estimate the percentage of piston rings produced that will be outside of the specifications? Sample Number Observation 1 Observation 2 Observation 3 Observation 4 Observation 5 1 74.03 74.002 74.019 73.992 74.008 2 73.995 73.992 74.001 74.011 74.004 3 73.988 74.024 74.021 74.005 74.002 4 74.002 73.996 73.993 74.015 74.009 5...

what was the situation that led to Mindtree becoming a target for acquisition?

- An Acquirer is considering the acquisition of a Target. The acquirer wishes to assess the...

- An Acquirer is considering the acquisition of a Target. The acquirer wishes to assess the impact of alternative forms of payment on post-merger earnings per share (EPS). Furthermore, the acquirer believes that any synergies in the first year following closing would be fully offset by costs incurred in combining the two businesses. The Acquirer’s marginal tax rate is 40%. Selected data are presented as follows: Pre-Merger Data Acquirer Target Net Earnings $281,500,000 $62,500,000 Shares Outstanding 112,000,000 18,750,000 EPS $2.51...

13. Able Corporation is considering the acquisition of Target Corporation. Target Corporation has 1,020,000 shares of...

13. Able Corporation is considering the acquisition of Target Corporation. Target Corporation has 1,020,000 shares of stock, with earnings per share of $4.50 and a market price per share of $80. Able Corporation has 1,565,000 shares outstanding with earnings per share of $6.00 and a market price of $55. The merger is expected to increase net income of the combined companies by $2,600,000 (in synergistic benefits). What is the maximum exchange ratio Able Corporation can offer and what is the...

Shari has an electronic entry system on her house. To enter, one must input a six...

Shari has an electronic entry system on her house. To enter, one must input a six character code where the first three entries are letters of the alphabet (A through Z) and the last three are single digit numbers (0 through 9). If repeated letters/numbers are not allowed, how many different codes are possible?

Subjects