The Quality Control Manager for NKA Inc

question 80

Essay

The quality control manager for NKA Inc.must decide whether to accept (alternative 1),further analyze (alternative 2),or reject (alternative 3)an incoming shipment (lot)of microchips.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. What alternative action should be selected according to the maximax criterion?

---

Definitions:

Nonconforming Goods

Goods that are delivered under a sales contract that fail to meet the specifications, quantity, or quality stipulated in the contract.

Damages

Monetary compensation awarded to a person who has suffered loss or harm due to the unlawful act or negligence of another.

Buyer

An individual or entity that purchases goods or services from another.

UCC

All commercial transactions across the United States are governed by a thorough set of legal guidelines known as the Uniform Commercial Code (UCC).