There is a 3 percent error rate at a specific point in a production process. If an inspector is placed at this point, all the errors can be detected and eliminated. However, the inspector is paid $ 8 per hour and can inspect units in the process at the rate of 30 per hour.
If no inspector is used and defects are allowed to pass this point, there is a cost of $ 10 per unit to correct the defect later on.
Should an inspector be hired?