The Quality Manager for Microelectronics, Inc

question 12

Multiple Choice

The quality manager for Microelectronics, Inc., is concerned about the quality of the batch of several thousand Z-box games which his company is about to ship. If the cost of replacing a defective Z-box game once it has been shipped is $5.00, while the cost of complete (100 percent) inspection prior to shipment is $.20 each, at what point is he indifferent between complete inspection and shipment without inspection?

• A) 0 percent defectives
• B) 4 percent defectives
• C) 5 percent defectives
• D) 9 percent defectives
• E) 22 percent defectives

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Definitions:

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower marginal cost and opportunity cost than its competitors.

Produce More

The act of increasing the output of goods or services, typically in response to higher demand or improved efficiency.

U.S. Economy

The economic system of the United States, characterized by a mixed economy with a high level of output, innovation, and diversity of goods and services.

Mixed Economy

An economic system blending elements of market capitalism with some form of government intervention and public enterprise.