A Company Realizes That 5% of Its Pens Are Defective

question 75

Multiple Choice

A company realizes that 5% of its pens are defective.In a package of 30 pens,is it likely that more than 6 are defective? Assume that pens in a package are independent of each other.

• A)Yes
• B)No.6 is more than 10% of 30
• C)No.The pens in a package are dependent on each other.
• D)No,the chance of getting a defective pen changes depending on the pens that have already been selected.
• E)No.There are more than two possible outcomes.

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Definitions:

Setup Cost

The cost incurred to prepare equipment or processes for production.

Holding Cost

The expenses incurred by storing unsold goods, encompassing warehousing, insurance, and spoilage costs.

EOQ Model

Economic Order Quantity model determines the optimal order quantity that minimizes the total inventory costs, including ordering and holding costs.

Order Cost

Expenses associated with placing and processing orders in a supply chain, including costs related to purchasing, ordering, shipping, and receiving goods.