Abstract
In a complete inspection plan, every finished item is subject to repeated measurements for inspection of quality. The average of these measurements is used to determine its disposition. Items are acceptable and sold at the regular price to the primary market if the average value of repeated measurements meets a lower specification limit. Otherwise the items are sold as scrap at a reduced price. With a consideration of inspection error, this paper presents an economic model to determine the most profitable target value and optimal measuring precision level for a production process. As expected, the model without error consideration is a special case of our model when the inspection precision level approaches infinity. Moreover, the optimal number of repeated measurements is given, based on maximizing the net expected profit per item.
Published Version
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