A manufacturing process consists of three processes. Step 1 requires 10 minutes per unit, step 2 requires 6 minutes per unit and step 3 requires 7 minutes per unit. 40% of units that complete the third step require rework, which means those units must start the process over at step 2 (processing times are the same for units being reworked) and rework is always successful. Demand at the shop is 0.4 units per minute. What is the capacity of the shop (in units per units per minute)?

0.1 units per minute

Explanation:

Step 1 time = 10 minutes per unit

Step 2 time = 6 minutes + (0.4 * 6 minutes for those units reworked)

= 8.4 minutes

Step 3 time = 7 minutes +  (0.4 * 7 minutes for those units reworked)

= 9.8 minutes

Step 1 will determine the process capacity because it is the one that takes the most time and therefore is the bottleneck process.

Capacity of process = 1 / Bottleneck minutes

= 1 / 10

= 0.1 units per minute

answer; /// the above statement is (true);

answer; ///(c) i believe its it ignores cash flows following the payback period;