Abstract
This paper proposes an economic model for the design of an SPRT (Sequential Probability Ratio Test) chart for monitoring the process mean in short-run production. The model expresses the short-run cost per unit of operating the SPRT chart as a function of the cost parameters associated with the operation. A simple algorithm capable of optimizing the charting parameters is also proposed. The model can be used to quantify cost reductions achievable by substituting a traditional control policy by SPRT control. Numerical examples illustrate the effectiveness of the proposed procedure. It is shown that the resulting cost reduction can range from modest to substantial as the out-of-control probability of the process increases.
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