About the quality of batch of several thousand items

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David, a Quality Inspector for Hill & Clark, is concerned about the quality of a batch of several thousand items that his company will be receiving next week. Hill & Clark manufactures cash registers for restaurants and is expecting a shipment of drawers, an important component of the cash register. David 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. David assumes that the number of defective items in each batch is a random variable. Accordingly, if the cost of replacing a defective drawer once it has been assembled is $21 and the cost of inspecting items in the incoming shipment is $1 each, below what estimated proportion of defectives in the batch would David prefer to use a sampling methodology instead of 100% inspection?

Reference no: EM132149336

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