The Quality Control Manager for NKA Inc

question 58

Short Answer

The quality control manager for NKA Inc. must decide whether to accept (alternative 1), further analyze (alternative 2), or reject (alternative 3) an incoming shipment (lot) of microchips. The historical data indicate that there is a 30 percent chance that the lot is poor quality (S₁), 50 percent chance that the lot is fair quality (S₂), and 20 percent chance that the lot is good quality (S₃). Assume the following payoff table is available. The values in the payoff table are in thousands of dollars.
Based on historical data, if the lot is poor quality, 40 percent of the items are defective. If the lot is fair quality, 22 percent of the items are defective. If the lot is good quality, 10 percent of the items are defective. The quality control manager inspects one unit from a recent shipment. After inspecting it, he determines that the unit is not defective. Based on this additional information, determine the revised (posterior) probabilities for each of the three states of nature.

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Definitions:

Business Intelligence

The use of data analysis tools and techniques to gather and process business information to aid decision-making.

Strategic Decision Making

Strategic Decision Making is the process of selecting the best actions for an organization to achieve its long-term objectives, taking into account the complex and dynamic external environment.

Artificial Intelligence

Machines, particularly computer systems, imitating processes of human intelligence, which encompass learning, reasoning, and the ability to correct themselves.

Software

Programs and operations systems used by a computer to perform specific tasks.