Question
VB Plastics, Inc. VB Plastics, Inc. (VBP) specializes in the manufacturing of plastic components. Recently, an opportunity arose to produce a new product - TC2001
VB Plastics, Inc. VB Plastics, Inc. (VBP) specializes in the manufacturing of plastic components. Recently, an opportunity arose to produce a new product - TC2001 - which appears to have relatively high, sustainable demand. However, two components of the production process - (1) the raw materials' molecular structure and (2) the production process itself - involve uncertainty. This uncertainty has implications for the quality of finished units of TC2001 (superior versus average), and, ultimately, VBP's profits. Raw Material Molecular Structure Raw materials vary in molecular structure. Specifically, raw materials can either be long-form or short-form. Only long-form molecularly-structured materials can yield superior quality units. If the materials are short-form, the resulting finished units of TC2001 are average quality. While suppliers can guarantee that an entire batch of raw materials is of uniform molecular structure (i.e., all of the raw materials in a batch are either long-form or short-form), they cannot guarantee which type a batch is, as molecular structure is difficult to observe accurately. On average, half of the materials available in the market eventually prove to be long-form structure. Production Process Choice VBP could use one of three manufacturing processes. Process A uses a simplified process, and yields average quality units. Process B uses a different set of machinery, which has better temperature controls, but fails to control pressure in the molding process. Thus, Process B can produce superior quality units, but only if molding pressure falls within acceptable levels (and the molecular structure is longform). The acceptable threshold is 150 PSI. That is, as long as the pressure is equal to or exceeds 150 PSI, then the process is capable of superior quality units.
Table 1 - Observed Pressure on 15 Production Runs (Machines Used for Process 2) Date PSI Date PSI 9/2/20 147 2/13/21 153 9/23/20 153 2/27/21 148 10/17/20 151 3/18/21 151 11/1/20 153 3/29/21 154 11/7/20 148 4/7/21 152 12/5/20 147 4/15/21 151 12/17/20 154 4/24/21 148 1/4/21 151 5/2/21 149 1/21/21 154 5/13/21 154 1/30/21 146 5/23/21 155 The above denotes pressure readings on the same machines that would be used for Process 2 manufacturing of TC2001 unitsStep by Step Solution
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