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Quantitative Techniques in Business

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Quantitative Techniques in Business
What is acceptance sampling? Discuss the concept of OC curve.

Statistical Quality Control (SQC) is the set of statistical tools used by quality professionals. Acceptance sampling is a part of SQC. It is the process of randomly inspecting a sample of goods and deciding whether to accept the entire lot based on the results. This determines whether a batch of goods should be accepted or rejected.
This is helpful in measuring and evaluating the quality of products or services. However, statistical process control (SPC) is much advisable that SQC, because SPC tools identify quality problems during the production process.
Acceptance sampling is a sampling procedure for estimating the quality level, in terms of fraction of defectives, of a produced lot of items for inspection. The statistical sampling procedure purports to answer questions such as:
i) Are the supplier’s goods to be accepted or rejected? ii) if accepted, what kind of risk do we incur in terms of bad quality?
We are talking about mass-scale procurement of raw materials and of mass scale shipment of finished goods, so the use of statistical sampling procedure is used in answering the accept/reject question. It refers to the process of randomly inspecting a certain number of items from a lot or batch in order to decide whether to accept or reject the entire batch.
Why it is not possible to check all items, instead of sampling? The answers are simple.
i) The cost of 100% inspection is not permitted in most cases. ii) Many of the acceptance tests require destructive testing of the item, and therefore the sampling procedure is a must in such type of cases. iii) Also 100% inspection does not necessarily ensure 100% quality. In fact, total inspection may lead, many a time, to less quality than if partial inspection were resorted to. iv) The acceptance sampling procedure either accepts or rejects the incoming lot in total. Such rejection of the lot by the consumer often results in remarkable

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