Problem
A production process consists of a three-step operation. The scrap rate is 12 percent for the first step and 9 percent for the other two steps.
I. If the desired daily output is 498 units, how many units must be started to allow for loss due to scrap?
II. If the scrap rate for each step could be cut in half at every operation, how many units would this save in terms of the scrap allowance?
III. If the scrap represents a cost of $10 per unit, how much is it costing the company per day for the original scrap rate (i.e. the Part a scrap rate)?