Answer:
Machine A's output in a day = 100 × 7 = 700
Rejected output of machine A =0.03 × 700 = 21
Thus defect free output of machine A = 700 – 21 = 679
Revenue from Using Machine A = 679 × 12 = 8148
Cost of Using Machine A = 6 × (Defect free output) + 15 × 7 + 5 × 7 = 6 × 679 + 105 + 35 = 4214
Thus, profit from using machine A = 8148 – 4214 = 3934
Machine B's output in a day =130 × 6 = 780
Rejected output of machine B = 0.1 × 780 = 78
Thus, defect free output of machine B = 780 – 78 = 702
Revenue from Using Machine B = 702 × 12 = 8424
Cost of Using Machine B = 6 × 702 + 15 × 6 + 5 × 6 = + 105 + 35 = 4212 + 120 = 4332
Thus profit from using machine B = 8424 – 4332 = 4029
Since the profit from using machine B is higher, Machine B should be selected.
