ITPEC FE Subject A April 2026 Question 52
When trial production is performed for components to be loaded into electrical appliances, which of the following is the least expensive development method? Here, the construction time of each process is six (6) months during the creation process, three (3) months during the modification process, and two (2) months during the evaluation process. The cost per one (1) person-month is 6,000 dollars during the creation process and 10,000 dollars for each modification and evaluation process. Costs other than the purchasing, outsourcing, and person-month are not considered.
Explanation
Purchasing samples and modifying them in-house, at 340,000 dollars — cost each method as purchase plus outsourcing plus persons × months × rate for every process.
Durations and rates per person-month: creation 6 months at 6,000 dollars, modification 3 months at 10,000, evaluation 2 months at 10,000.
- •(a) 200,000 + 4 × 3 × 10,000 + 1 × 2 × 10,000 = 200,000 + 120,000 + 20,000 = 340,000
- •(b) 350,000 for outsourcing, with no in-house work
- •(c) 10 × 3 × 10,000 + 3 × 2 × 10,000 = 300,000 + 60,000 = 360,000
- •(d) 10 × 6 × 6,000 + 2 × 2 × 10,000 = 360,000 + 40,000 = 400,000
Answer (a)
Why not others:
- •(b) Outsourcing in batches — 350,000 dollars, 10,000 more than (a); having no in-house effort does not make it the cheapest
- •(c) Modifying in-house assets — 360,000 dollars; it avoids a purchase but needs 30 person-months of modification
- •(d) Creating new products in-house — 400,000 dollars; the lower 6,000 rate does not offset 60 person-months of creation
Key rule: Multiply head count by each process's own duration and rate, then compare totals including purchase and outsourcing; a lower rate can lose to a longer, larger effort.
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