A Firm Uses Acceptance Sampling to Evaluate Batches of Inputs

Short Answer

A firm uses acceptance sampling to evaluate batches of inputs. Ideally, the defect rate would be no more than 3.5 percent. The firm knows that on occasion, batches with higher defect rates will be accepted. However, if the defect rate reaches 7 percent, the firm would like there to be very little chance of that batch being accepted. This value, 7 percent, is the firm's: