Question

A quality inspector for Alpha-Beta Co. is concerned about the quality of the batch of several thousand blank DVD disks which his company produced this week and is preparing to ship. If the cost of replacing a defective DVD disk once it has been shipped is $2.50, while the cost for 80% inspection prior to shipment is $0.32 each, while the cost of 100% inspection prior to shipment is $0.40 each, at what point is she indifferent between 100% inspection and shipment without inspection?

Answer 1

at point of 25% she indifferent between 100% inspection and shipment without inspection.

Step-by-step explanation:

Let say x be the number of defects

N be units shipped

At no sampling the replacement cost is equal to inspection cost is:

2.50x = 0.4N

x/N = 0.4/2.50

= 0.16

The defect% is then given by:

= x/N*100

= 0.25*100

= 25%

Therefore, at point of 25% she indifferent between 100% inspection and shipment without inspection.