Question

A product on the market has a demand of 350,000 units. Each unit requires 5 steps...

A product on the market has a demand of 350,000 units. Each unit requires 5 steps to build. The scrap estimates for each of the required processes is as follows:

P1 = 0.01

P2 = 0.12

P3 = 0.03

P4 = 0.17

P5 = 0.04

Calculate the input required to meet the demand. For which process the largest input is required, what is that input?

Business   Accounting   
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Answer #1

In this question proces are step by step so output unites of each process will become input unites of next process.

Mrket demand 350,000 units is the output of process P5

Process Output(unit) Scrap rate Input(unit)

P5 350,000.00 (0.04) 364,583.33

P4 364,583.33 (0.17) 439,257.02

P3 439,257.02 (0.03) 452,842.29

P2 452,842.29 (0.12) 514,593.51

P1 514,593.51 (0.01) 519,791.43

Input required to meet the demand = 519,791.43 units

Largest input is required for process P1

Working

calculation of input units

P5 350,000.00/0.96 = 364,458.33

P4 364,458.83/0.83 = 439,257.02

P3 439,257.02/0.97 = 452,842.296

P2 452,842.26/0.88 = 514,593.518

P1 514,593.51/0.99 = 519,791.43

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