An Inspection Decision with Quality Costs

question 5

Essay

An Inspection Decision With Quality Costs
A company is considering additional final inspection costs of $1 per unit before delivery to customers.The additional inspection should reduce the defective rate from 3 percent to 1 percent.If a defective unit is found,it is scrapped at no additional cost.The manufacturing costs before the final inspection are $200 per unit.The management believes that the external failure costs are $40 per defective unit.
Should the management incur the additional inspection costs?

---

Definitions:

Field Diameter

The visible area observed through a microscope's eyepiece; commonly measured in micrometers or millimeters.

Magnification

The process of making an object appear larger than it is, typically using a microscope or lens.

Depth of Field

The range within a photo that appears acceptably sharp, influenced by aperture, focal length, and distance from the subject.