The H&S Motor Company produces small motors that are sold for $75 each at a processing cost of $30 per unit. Defective motors can be reworked at a cost of $12 each. The company produces 120 motors per day and average 95% good quality motors, resulting in 5% defects. All defective units are reworked, but only 50% of them can be made good prior to shipping to customers. The company examines the following three alternative options to improve the overall performance of the company. For each alternative, compute the productivity that incorporates quality factor. Your answer should show the second digit numbers under the decimal point.

(a) What is the current productivity ratio ($/$) per day?

(b) (Option 1) Reducing the processing cost to $25 and the rework cost to $10 by installing semi- automation system. The investment needed for the semi-automation process would cost the company $5 per unit.

(c) (Option 2) Increasing the yield rate of good-quality products, through quality improvement program, to 98%. The program will cost the company $3 per unit.

(d) (Option 3) The combination of Options 1 and 2. (e) Which option has the highest impact on the productivity increase?