Modern Inc.manufactures low-cost tables at a processing cost of $80 per table.The company produces 100 units per day and averages 90% good quality resulting in 10% defective items.Fifty percent of the defective units are reworked prior to shipment to Modern's distribution center.The rework cost is $10 per unit. If the percent good quality increases from 90% to 95%,the quality productivity ratio (QPR)is
A)approximately 1.20.
B)approximately 1.40.
C)approximately 1.60.
D)approximately 180.

Question

Quizplus · Accepted Answer

The QPR is the ratio of good units produced to the total cost of production. With a 90% good quality rate, the QPR is 90/90 = 1.00. With a 95% good quality rate, the QPR is 95/90 = 1.06. The QPR has increased by approximately 6%, which is approximately 1.06/1.00 = 1.20.