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:

Compounded Annually

A method of calculating interest where the interest rate is applied once per year, adding to the principal sum for the next period.

Equal Annual Payments

Regular payments of the same amount made over a specified period of time.

First Payment

The initial amount paid at the start of a payment plan or schedule, such as for a loan or lease.

Compounded Monthly

Compounded monthly refers to the process of calculating interest on the principal and previously earned interest on a monthly basis.