Consumer's Risk Notes: Definitions & Explanations PDF | Download eBooks

Study Consumer's Risk lecture notes PDF with project management definitions and explanation to study “What is Consumer's Risk?”. Study consumer's risk explanation with project management terms to review project management course for online MBA programs.

Consumer's Risk Notes:

Wherever 100% inspection of products is not possible, organization adopts the process of acceptance sampling. Acceptance sampling randomly draws a sample of products from a lot and inspects it. If the sample ensures good quality of produced products, the lot is accepted, otherwise it is rejected. Although the sample is drawn randomly, there still is a chance of errors. A sampling error called consumer's risk is associated with accepting a bad quality lot. This type of error is also called Type II error or beta risk. Sometimes a drawn sample contains all or many good products but the whole lot contains more bad products. Based on the sample, the lot is accepted and shipped to the customer. The customer will receive bad quality products, hence the name consumer's risk.

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