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Answer the Following Questions Using the Information Below

question 69

Multiple Choice

Answer the following questions using the information below:
Tri-State Manufacturing expects to spend $800,000 in 2012 in appraisal costs if it does not change its incoming materials inspection method. If it decides to implement a new receiving method, it will save $80,000 in fixed appraisal costs and variable costs of $0.40 per unit of finished product. The new method involves $120,000 in training costs and an additional $160,000 in annual equipment rental. It takes two units of material for each finished product.
Internal failure costs average $160 per failed unit of finished goods. During 2011, 5% of all completed items had to be reworked. External failure costs average $400 per failed unit. The company's average external failures are 1% of units sold. The company carries no ending inventories, because all jobs are on a per order basis and a just-in-time inventory ordering method is used.
-________ is an operation where the work to be performed approaches or exceeds the available capacity.

Definitions:

Construct Validity

The extent to which a test or instrument accurately measures the theoretical construct or concept it is intended to measure.

Split-half Reliability

A measure of consistency where a test is divided into two parts and the scores for each half are compared to assess the test's reliability.

Internal Consistency

A measure of the reliability of a test or scale, indicating how well the items on the test measure the same construct or concept.

Content Validity

The degree to which a test or measurement accurately represents the concept it intends to measure, based on the thoroughness of the content included.