Deming's kp Rule

[rderoeck@alphaind.com]

As supervisor of our IQA department, I am trying to apply
some of Deming's methods to my job. In particular his
inspection procedure (kp rule) used for determining whether 
one should perform no inspection or 100% inspection. This
rule (as I understand it) calls for no inspection if p (the
fraction nonconforming) is less than the cost to inspect one part (k1) divided by the cost to rework a part (k2). If
p is greater than k1/k2 then perform 100% inspection.
 
My questions are these:

1. Does this rule apply to incoming material from a supplier
or internal manufacturing only?
2. How would I determine "p" from my supplier without
performing some sampling inspection?
3. Since we don't rework parts, what should I replace k2 with? (RTV disposition)
4. How are these costs estimated and don't these figures 
contradict Deming's statemant that the most important figures are unknown and unknowable (especially if defective
product goes out to your customer).

Is this rule a practical replacement for standard acceptance sampling?

Regards

Rich DeRoeck
IQA Supervisor
Alpha Industries