The Quality Control Manager for NKA Inc

question 15

Essay

The quality control manager for NKA Inc.must decide whether to accept (alternative 1),further analyze (alternative 2),or reject (alternative 3)a shipment (lot)of incoming material.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.

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Definitions:

Ex-Ship

A shipping term indicating the seller's responsibility ends when the goods are made available to the buyer on board the ship at the destination port.

Risk of Loss

The potential for losing ownership or value in an asset, often discussed in the context of goods during shipment or transactions.

Place of Shipment

The location agreed upon by the seller and buyer from where the seller will ship the goods.

Uniform Commercial Code

A comprehensive set of laws governing commercial transactions in the United States, intended to harmonize the law among the states.