Problem 1 (20 points)

A local company has received an order to machine 1500 parts. For quality assurance, one sample for

every 25 samples has to be tested for tensile strength. The starting work part costs 8.25 SR, each. Part

handling time for each cycle = 3.45 min, and machining time per part = 6.25 min. It takes 150 min to set

up the machine for the whole production. Equipment cost rate=53.70 SR/hr, and labor cost rate = 37.50

SR/hr. The overhead cost is 41% of the labor and equipment cost rates. The cutting tool in the operation

costs = 152.00 SR, and it must be changed every 30 parts. Tool change time = 6.45 min. Availability of

the machine tool = 96.0%, in addition, the defect rate is 3%. Determine:

a) required time (hours) to complete the batch;

b) production rate of good parts;

c) total cost of the batch;

d) cost of good-finished part.