The Hawkins Company Randomly Samples 10 Items from Every Large

question 31

True/False

The Hawkins Company randomly samples 10 items from every large batch before the batch is packaged and shipped. According to the contract specifications, 5 percent of the items shipped can be defective. If the inspectors find 1 or fewer defects in the sample of 10, they ship the batch without further inspection. If they find 2 or more, the entire batch is inspected. Based on this sampling plan, the probability that a batch that contains twice the amount of defects allowed by the contract requirements will be shipped without further inspection is approximately .3874.

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Definitions:

Diminution in Value

A reduction in the worth or market value of property.

Repairing

The act of fixing or restoring something that is broken or damaged to a good condition.

Direct Physical Loss

Damage or loss of property directly resulting from an identifiable event or cause, without intervening factors.

Property Damage

Physical damage to, or destruction of, tangible property, often resulting in financial loss.