Management is trying to decide whether Part A$,$ which is produced with a consistent $3$ percent defective rate, should be inspected. If it is not inspected, the $3$ percent defectives will go through a product assembly phase and have to be replaced later. If all Part A$$s are inspected, one$-$third of the defectives will be found, thus raising the quality to $2$ percent defectives.

A$.$ Should the inspection be done if the cost of inspecting is $$0\mathrm{.}01$ per unit and the cost of replacing a defective in the final assembly is $$4\mathrm{.}00?$

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B$.$ Suppose the cost of inspecting is $$0\mathrm{.}05$$ per unit rather than $$0\mathrm{.}01.$ Would this change your answer in $($A$)?$