Economic Design of Product Specifications for a Complete Inspection Plan

Abstract

In a complete inspection plan, all outgoing items are subject to inspection, and the items failing to conform to the predetermined specifications are reworked so that their quality characteristics are exactly equal to the expected value (target value). This paper presents an economic model to determine the most profitable specifications for the complete inspection plan with the considerations of (a) economic loss caused by quality deviations, (b) rework cost, and (c) inspection cost. The solution to the cases in which the inspection cost is a constant provides important insights of the model. A detailed solution procedure is also given to a model in which the inspection cost is a linear function of the width of the specifications, the quality characteristic is normally distributed, and other loss and cost functions are assumed of a quadratic or linear form.