Concept explainers
Interpretation:
Risk which causes greater threat to operation.
Concept Introduction:Control charts are the graphical representation to check or monitor the variations of the process and length of deviations from average.
Explanation of Solution
In the given scenario, sample is
Apart from producer’s risk, there is also a possibility when sample value is lying under the control limits but it is a cause of interference in production process. The causes of interference may be assigned. It can be shown below:
Despite assignable causes, which would make the products coming out of the production process non-confirming to desired specifications, the sample mean is falling within the control limits. This type of error is called a Type 2 error. This is a consumer’s risk, as the defective products in that batch would reach the consumer, undetected by the producer.
A producers’ risk is a minor problem of loss of production, whereas consumers’ risk is a greater threat as the consumer may ask for warranty replacement, may take the company to court, there could be claims, loss of company’s image and so on.
Therefore, consumer’s risk is the greatest threat to the success of an operation.
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Chapter 13 Solutions
Practical Operations Management
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