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In: Statistics and Probability

Suppose that a control chart is used to monitor ? ̅ where the control limits are...

Suppose that a control chart is used to monitor ? ̅ where the control limits are set to 3?? ̅ and the warning limits are set to 2?? ̅. Answer the following: (a) If the false alarm cost per occurrence is $1000. What is the expected false alarm cost every 100 samples. (b) If the warning inspection cost is $100. What is the expected warning inspection cost every 100 samples. (c) Suppose the current sample size of 10 is quadrupled, where the cost of testing per unit is $1. Compare the additional cost of samples to the reduction in false alarm and warning inspection costs, assuming the control limits are fixed.

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