Advise the company whether or not they should change their policy.
A company buys in sub-assemblies in order to manufacture a product. It is reviewing its
policy of putting each sub-assembly through a detailed inspection process on delivery, and
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Order Paper Nowis considering not inspecting at all. Experience has shown that the quality of the sub-assembly
is of acceptable standard 90 per cent of the time. It costs £10 to inspect a sub-assembly and
another £10 to put right any defect found at that stage. If the sub-assembly is not inspected
and is then found to be faulty at the finished goods stage the cost of rework is £40.
Requirement
Advise the company whether or not they should change their policy.
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