The Quality Control Manager for the NKA Inc

question 14

Essay

The quality control manager for the NKA Inc.must decide whether to accept (alternative 1),further analyze (alternative 2),or reject (alternative 3)the shipment (lot)of incoming material.The historical data indicates that there is 30% chance that the lot is poor quality (S₁),50% chance that the lot is fair quality (S₂),and 20% 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. Based on historical data,if the lot is poor quality,40% of the items are defective.If the lot is fair quality 22% of the items are defective.If the lot is good quality,10% of the items are defective.The quality control manager inspects one unit from a recent shipment.
After inspecting it he determines that the unit is defective.Based on this additional information,determine the revised (posterior)probabilities for each of the three states of nature.

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Definitions:

Cortisol

A steroid hormone produced by the adrenal glands, often referred to as the "stress hormone" because its levels increase in response to stress.

Metabolism

The complex of life-sustaining chemical transformations within the cells of living organisms.

Lazarus

A psychologist who developed the theory of stress and coping, which examines how individuals respond to psychological stress.

Interpretation

The process of explaining the meaning of something, often in a particular context or perspective.