Under Which of the Following Situations Will the Average Outgoing

question 171

Multiple Choice

Under which of the following situations will the average outgoing quality (AOQ) decrease?

• A) The true percentage defective of the lot increases.
• B) The number of items in the sample decreases.
• C) The number of items in the lot decreases.
• D) The probability of accepting the lot for a given sample size and quantity defective increases.
• E) The difference between the number of items in the lot and the number of items in the sample increases.

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Definitions:

Cost of Overstocking

The expenses associated with holding excessive inventory, such as storage costs, insurance, and potential obsolescence.

Cost of Understocking

The financial losses and opportunity costs incurred from not having sufficient inventory to meet demand, including lost sales and customer dissatisfaction.

Product Availability

The extent to which a product can be purchased by consumers, influenced by inventory levels and supply chain efficiency.

Forecast Error

The gap between real results and what was forecasted by predictive models.