The Quality Control Manager for NKA Inc

question 35

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.
What alternative action should be selected according to the maximax criterion?

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Definitions:

Self-correcting Nature

The inherent ability of a system or process to adjust and correct itself without external intervention.

Social Psychology

A scientific field that studies how people's thoughts, feelings, and behaviors are influenced by the actual, imagined, or implied presence of others.

Prior Research

Previous studies, experiments, or scholarly work conducted on a subject that forms the basis for further inquiry or investigation.

Western European

Relating to or characteristic of Western Europe, including cultures, languages, and historical contexts of countries in that region.