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:

Open-Door Policy

A management approach where executives encourage open communication and feedback from employees at all levels within the organization.

Consistent

Characterized by steadiness, reliability, and uniformity in decision-making, actions, or performance over time.

Progressive Discipline

A method of employee discipline that uses a graduated range of responses to employee misconduct or poor performance, from mild to severe.

Positive Discipline

A method of teaching and enforcing behavioral standards that focuses on encouragement and positive reinforcement rather than punishment.