A Quality Inspector for Alpha-Beta Co

question 21

Multiple Choice

A Quality Inspector for Alpha-Beta Co.is concerned about the quality of the batch of several thousand Gizmos which his company produced this week and is preparing to ship.If the cost of replacing a defective Gizmo once it has been shipped is $2.00,while the cost of 100% inspection prior to shipment is $.40 each,at what point is he indifferent between 100% inspection or shipment without inspection?

• A)0% defectives
• B)2% defectives
• C)5% defectives
• D)20% defectives
• E)30% defectives

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