A Firm That Makes Plastic Wrapping Material Takes Random Samples

question 5

Essay

A firm that makes plastic wrapping material takes random samples of 50 items from each lot before it is sent to a customer. Lots contain 2,000 items each. Any lot with more than one defective is subjected to 100 percent inspection, and any defectives are replaced with good ones.
(A) Construct the OC curve for this plan.
(B) Construct the AOQ curve for this plan. What is the approximate AOQ limit?

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Definitions:

Portfolio

A grouping of investment tools like equities, bonds, raw goods, actual cash, and assets similar to cash, which also comprises mutual funds and ETFs.

Joint Probability Distribution

A mathematical description of the likelihood of two events occurring together and at the same point in time.

Car Salespeople

Individuals specialized in selling automobiles, often working at car dealerships.

Joint Probability Distribution

The probability distribution of two or more random variables happening simultaneously and their possible combinations.