Question

A company used to produce 300 units every day, but 20% of the units were defective. After installing a new process, the defect rate has been reduced to 5%, while output has remained the same. What is the percent increase in productivity due to installing the new process?

Answer 1

18.75%

Explanation:

Given:

Total units produced = 300

defective units = 20%

Number of defective units = 0.20 × 300 = 60 units

Therefore,

The Productive units = 300 - 60 = 240

After installing a new process

Defective units = 5%

Number of defective units = 0.05 × 300 = 15 units

The Productive units = 300 - 15 = 285

Increase in productive units = 285 - 240 = 45 units

Hence,

The percent increase in productivity due to installing the new process

=
`\frac{\textup{Increase in productive units}}{\textup{Productive units before}}`

=
`\frac{\textup{45}}{\textup{240}}`

= 0.1875

or

18.75%