A Machine Produces an Average of 500 Parts Per Day

question 60

Essay

A machine produces an average of 500 parts per day with a standard deviation of 10 parts.This is a normally distributed variable.The percent of defective parts ranges from 8-12%.Parts which need minor repair comprise 75% of the defective parts and cost $5 to repair.The rest of the defective parts cost $20 to repair.What formulas should go in cells B8:B15 to compute the daily cost of defective parts?
$\begin{array}{|c|c|c|c|c|c|c|}\hline & \text { A } & B & \mathrm{C} & \mathrm{D} & \text { E } & F \\\hline 1 & \text { Initial Conditions: } & & & & & \\\hline 2 & \text { Number of Parts: } & \text { Average } & 500 & \text { Stcd dev } & 10 & \text { Normal } \\\hline 3 & \% \text { Defective } & \text { Lo } & 8 \% & \mathrm{Hi} & 12 \% & \text { Cont. Uniform } \\\hline 4 & \% \text { Minor Defects } & & 75 \% & & & \text { Constant } \\\hline 5 & \text { Cost of Minor Defect } & & \$ 5 & & & \text { Constant } \\\hline 6 & \text { Cost of Major Defect } & & \$ 20 & & & \text { Constant } \\\hline 7 & & & & & & \\\hline 8 & \text { UnitsProduced } & 500 & & & & \\\hline 9 & \% \text { Defective } & 8.2 \% & & & & \\\hline 10 & \text { Total \# Defective } & 41 & & & & \\\hline 11 & \text { \#WthMinor Defects } & 31 & & & & \\\hline 12 & \text { Cost of Minor Defects } & \$ 155 & & & & \\\hline 13 & \text { \# With Major Defects } & 10 & & & & \\\hline 14 & \text { Cost of Major Defects } & \$ 200 & & & & \\\hline 15 & \text { Total Cost } & \$ 355 & & & & \\\hline\end{array}$

---

Definitions:

Increasing Annuity

A type of annuity payment that grows at a certain rate or percentage over time.

Compounded Monthly

A specific type of compounding where interest is calculated and added to the principal balance monthly.

Principal

The original amount of money borrowed or invested, before interest or profits.

Geometric Sequence

A sequence of numbers where each term after the first is found by multiplying the previous one by a fixed non-zero number called the ratio.