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    Calculate the Expected Cost of Defects if Not Inspected

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    Your company currently using an inspection process in its materials receiving department is trying to initiate an overall cost reduction program. One possible reduction is the elimination of one of the inspection positions. This position tests materials that have a defective content on the average of 0.04. By inspecting all items the inspector is able to remove all defects. The inspector can inspect 50 units per hour. Hourly rate including fringe benefits for this position is $9. If the inspection position is eliminated, defects will go into product assembly and will have to be replaced later at a cost of $10 each when they are detected in final Product testing.

    Should this inspection be eliminated? Why or Why not?

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    Hi.....Find the attached file. Hope this will help...... As the nearest value in the table for LTPD /AQL was 2.62 I worked with that number if you have the complete table you should look for 2.33 or nearest value.

    5(a) Your company currently using an inspection process in its materials receiving department is trying to initiate an overall cost reduction program. One possible reduction is the elimination of one of the inspection positions. This position tests materials that have a defective content on the average of 0.04. By inspecting all items the inspector is able to remove all defects. The inspector can inspect 50 units per hour. Hourly rate including fringe benefits for this position is $9. If the inspection position is eliminated, defects will go into product assembly and will have to be replaced later at a cost of $10 each when they are detected in final Product testing.

    Should this inspection be eliminated? Why or Why not?

    First calculate the Expected ...

    Solution Summary

    Expected cost of Defects is determined. The inspection which should be eliminated is determined.

    $2.19