1. (4pts) Consider a Mike's Bikes firm. Assume you want to produce the following quantities of two products: 16,000 of Product A and 10,000 of Product B. Product A requires 0.75 SCU per unit and Product B requires 0.5 SCU per unit. Assume also that your production efficiency is 0.5. Estimate the overall factory capacity you would require to produce the desired quantities of these products.

A. 15,000 SCU

B. 17,000 SCU

C. 26,000 SCU

D. 31,000 SCU

E. 34,000 SCU

6. (4pts) Assume your theoretical production capacity is 40,000 SCU and you are producing 8 different bikes. Given a production efficiency of 0.75, roughly how much capacity is available for production?

A. 10,000 SCU

B. 20,000 SCU

C. 25,000 SCU

D. 30,000 SCU

E. 35,000 SCU

8. (4pts) Your factory is producing 100,000 kids' bikes. You currently inspect 5% of the bikes at a cost of $50 per bike inspected.(Assume this cost includes the cost of reworking defective bikes.) With this level of inspection you are receiving warranty claims on 1% of the bikes that you sell. Your cost of processing a warranty claim is $500. What is your external cost of quality in this situation?

A. $250,000

B. $500,000

C. $750,000

D. $1,000,000

E. $1,250,000