A. Construct a table showing the marginal failure reduction (in units) and the dollar value of these reductions for each inspector hired.
Answer:
|
Number of quality control inspectors
|
Thermostat Failure rate (%)
|
Marginal failure reduction (units)
|
Dollar value of reduction/hired insp
|
|
0
1
2
3
4
5
|
5.0
4.0
3.2
2.6
2.2
2.0
|
0
4
6.4
7.8
8.8
10
|
|
B. How many inspectors should the firm hire?
Answer:
C. How many inspectors should be hired if additional indirect cost (lost goodwill and so on) were to average 30 percent of direct replacement or repair costs?