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Victoria, a Quality Inspector for Hill Manufacturing, is concerned about the quality of a batch of several thousand items that her company will be receiving next week. Hill Manufacturing manufactures dash components for auto manufacturers and is expecting a shipment of wire harnesses, an important component of the dash component. Victoria decides to first conduct a break-even analysis to see which inspection approach might be most appropriate from a cost perspective—no inspection, sampling, or full inspection. If the cost of replacing a defective wire harness once it has been assembled is $26 and the cost of inspecting items in the incoming shipment is $3 each, beyond what estimated proportion of defectives in the batch would Victoria prefer to inspect 100% of the shipment instead of sampling?

Operation Management, Management Studies

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