Kathleen McFadden, vice president of operations at Jackson Manufacturing Company, has just received a request for quote (RFQ) from DeKalb Electric Supply for 400 units per week of a motor armature, The components are standard and either easy to work into the existing production schedule or readily available from established suppliers on a SIT basis. But there is some difference in assembly. Ms. McFadden has identified eight tasks that Jackson must perform to assemble the armature. Seven of these tasks are very similar to ones performed by Jackson in the past; therefore, the average time and resulting labor standard of those tasks is known.

Discussion Questions

In your report to Ms. McFadden, you realize you will want to address several factors:

1. How big should the sample be for a statistically accurate standard (at, say, the 9.73% confidence level and accuracy of 5%)?

2. Is the sample size adequate?

3. How many units should be produced at this workstation per day?

4 What is the cost per unit for this cask in direct labor cost?