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Pix Paper Inc. produces photographic paper for printing digital images. One of the processes for this operation is a coating (solvent spreading) operation, where chemicals

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Pix Paper Inc. produces photographic paper for printing digital images. One of the processes for this operation is a coating (solvent spreading) operation, where chemicals are coated onto paper stock. There has been some concern about the cost performance of this operation. As a result, you have begun an investigation. You first discover that all materials and conversion prices have been stable for the last six months Thus, increases in prices for inputs are not an explanation for increasing costs. However, you have discovered three possible problems from some of the operating personnel whose quotes follow Operator : "Tve been keeping an eye on my operating room instruments. I feel as though our energy consumption is becoming less efficient Operator 2: Every time the coating machine goes down, we produce waste on shutdown and subsequent startup. It seems as though during the last half year, we have had more unsched heduled machine shutdowns than in the past. Thus, I think our ielon must be dropping Operator 3. My sense is that our coating costs are going up. It seems as though we are spreading a thicker coating than we should Pertraps the coating machine needs to be recalibrated. The Coating Department had no beginning of ending inventories for any month during the study period. The following data from the cost of production report are made available: January February March April May June Paper stock $67,200 $63,840 $60,480 $64,512 $57,120 $53,760 Coating $11,520 $11,856 $12.960 $15,667 $16,320 $18,432 $38,400 $36,480 $34,560 $36,864 $32,640 $30,720 Conversion cost (incl. energy) Pounds input to the process 100,000 95,000 90,000 96,000 85,000 80,000 Pounds transferred out 96,000 91,200 86,400 92,160 81,600 76,800

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