Producer's risk definition
/What is Producer’s Risk?
Producer's risk relates to incurring a loss despite creating a good batch. In this case, a good batch is rejected by inspection; this is known as a Type 1 error. This risk relates to the following situations:
The manufacturer incurs a loss because it rejects a batch that it could have accepted; or
The manufacturer incurs a loss because it accepts a batch that is then rejected by the customer.