Operations Management

An assembly operation for trigger mechanisms of a semiautomatic spray gun produces a small percentage of defective mechanisms.  Management must decide whether to continue the current practice of 100 percent inspection or to replace defective mechanisms after final assembly when all guns are inspected.  Replacement at final assembly costs $30 each.  Inspection during trigger assembly costs $12 per hour for labor and overhead.  The inspection rate is one trigger per minute.

A) Would 100 percent inspection during trigger assembly be justified if there are (1) 4 percent defective? (2) 1 percent defective?

B) At what point would management be indifferent between 100 percent inspection of triggers and only final inspection?