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sineoko [7]
4 years ago
8

The production department is proposing the purchase of an automatic insertion machine. It has identified 3 machines and has aske

d the accountant to analyze them to determine the best average rate of return.
Machine A Machine B Machine C
Estimated average income $40,000 $50,000 $75,000
Average investment $300,000 $250,000 $500,000

a. Machine B
b. Machine A
c. Machine B or C
d. Machine C
Business
1 answer:
cricket20 [7]4 years ago
4 0

Answer: the correct answer is a. Machine B

Explanation:

Machine A average rate return

40000 out of 300000. It means that 300000 is 100% and $ 40000 is X. We apply a simple three rule:

40000       X                     X= 4000000/300000

300000     100%               X= 13.33%

Machine B average rate return

50000 out of 250000. It means that 250000 is 100% and $ 50000 is X. We apply a simple three rule:

50000       X                     X= 5000000/250000

250000     100%               X= 20%

Machine C average rate return

$75,000 out of $500,000. It means that $500,000 is 1005 and $75,000 is X. We apply a simple three rule

$75,000     X                       X=7500000/500000

$500,000  100%                 X= 15%

The highest average is the one onf Machine B

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b) 3.4 out of million deliveries

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<u>Six Sigma:</u>

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<em>Please refer to the table shown in the attachment.</em> This bell curve represent six sigma concept. In this <em>3 sigma quality level means all deviations must lie in 6 standard deviations.</em>

So, here we have been given that mean = 20, so with mean we can calculate standard deviation in six sigma control limits.

Maximum Allowable Standard Deviation for 6 sigma = Mean/12

                                                                                        = 20/12

                                                                                       = 1.66

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<em>So, it 3.4 times in a million deliveries bus will deliver students either too early or too late. </em>

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