In addition to the lower costs under the alternative inspection plan, Safe Travel should consider a...

 

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In addition to the lower costs under the alternative inspection plan, Safe Travel should consider a number of other factors: a. There could easily be serious reputation effects if the percentage of external failures increases by 250% (from 1% to 2.5%). This rise in external failures may lead to costs greater than $100 per failure due to lost profits. b. Higher external failure rates may increase the probability of lawsuits. c. Government intervention is a concern with the chances of government regulation increasing with the number of external failures. In addition to the lower costs under the alternative inspection plan, Safe Travel should consider a number of other factors: a. There could easily be serious reputation effects if the percentage of external failures increases by 250% (from 1% to 2.5%). This rise in external failures may lead to costs greater than $100 per failure due to lost profits. b. Higher external failure rates may increase the probability of lawsuits. c. Government intervention is a concern with the chances of government regulation increasing with the number of external failures.

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Answer There are other factors to be considered by Safe Travel before changing inspect... View the full answer