1. (10 points) What is the material cost per unit of the widget described below?

Raw material costs $50/pound

2 pounds produces 25 widgets each weighing 1oz each

One in five are defective.

Waste or scrap are recycled at $3/lb

Yearly production is 133,000 per year

2. (10 points) For the material costs described in number 1, how much would the company be

willing to spend to improve the defective rate to one in 25?