About the quality of batch of several thousand items

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Reference no: EM131652694

Richard, a Quality Inspector for Modern Cycles, is concerned about the quality of a batch of several thousand items that his company will be receiving next week. Modern Cycles manufactures bicycle frames for cycling enthusiasts and is expecting a shipment of front forks, an important component of the bicycle frame. Richard decides to first conduct a break-even analysis to see which inspection approach might be most appropriate from a cost perspective—no inspection, sampling, or full inspection. If the cost of replacing a defective front fork once it has been assembled is $120 and the cost of inspecting items in the incoming shipment is $10 each, beyond what estimated proportion of defectives in the batch would Richard prefer to inspect 100% of the shipment instead of sampling? 9.6% defective 8.5% defective 9.1% defective 8.3% defective.

Reference no: EM131652694

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