Statistics and Probability Quiz
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EVALUATE OUTCOMES OF DECISIONS
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A manufacturer is choosing between two sampling plans to decide whether to hold a batch for rework. Historically, 10% of batches are truly defective.
Plan A:
- If a batch is defective, the sample triggers a hold 80% of the time.
- If a batch is not defective, the sample still triggers a hold 5% of the time.
Plan B:
- If a batch is defective, the sample triggers a hold 60% of the time.
- If a batch is not defective, the sample triggers a hold 1% of the time.
The manager's goal is to minimize the probability that a batch released (not held) is actually defective.
Which strategy is most reasonable given the probabilities?
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