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A simple two-state cost investigation model calls for a decision to investigate if the following inequality holds:
L(1 - P) > I + C(1 - P)
If: L = excess operating cost if out of control P = probability that the process is in control I = cost of investigation C = cost of correction if out of control
The value (1 - P) must be
A. The transpose of the probability matrix. B. The inverse of the probability matrix. C. A measure of the seriousness of the consequences. D. The probability that the process is out of control. |