The Quality Manager for Microelectronics, Inc

Multiple Choice

The quality manager for Microelectronics, Inc., is concerned about the quality of the batch of several thousand Z-box games which his company is about to ship. If the cost of replacing a defective Z-box game once it has been shipped is $5.00, while the cost of complete (100 percent) inspection prior to shipment is $.20 each, at what point is he indifferent between complete inspection and shipment without inspection?

A) 0 percent defectives
B) 4 percent defectives
C) 5 percent defectives
D) 9 percent defectives
E) 22 percent defectives