The optimum level of inspection minimizes the sum of inspection costs and the cost of passing defectives.

Question

Quizplus · Accepted Answer

This statement is true. The optimum level of inspection strikes a balance between the cost of inspecting every unit (which can be expensive) and the cost of passing on defective units to the customer (which can damage the company's reputation and result in product returns or legal action). By finding the right level of inspection, a company can minimize these costs and maximize profits.

The Optimum Level of Inspection Minimizes the Sum of Inspection