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Generalized lot sentencing rule for estimating the value of production lot for sale

Author

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  • Mohammed A Darwish

    (Kuwait University, Safat, Kuwait)

  • Fawaz Abdulmalek

    (Kuwait University, Safat, Kuwait)

Abstract

In the traditional lot sentencing rule, a buyer arrives to one of two decisions regarding lot disposition; either accept or reject a lot. However, it is more appropriate to consider choices between those two extreme decisions. A clear case where the traditional lot sentencing rule is not flexible is when a buyer purchases a lot from an English auction. In this paper, we propose a model that helps a buyer in estimating the value of a production lot. This model can be used by a bidder before the bidding process starts to estimate the value of an auctioned lot. The model provides an action plan that includes the estimated acquisition cost as a function of the number of defective items found in a random sample. Unlike the traditional lot sentencing rule, the proposed rule is more flexible and provides buyers with wider range of possible actions.

Suggested Citation

  • Mohammed A Darwish & Fawaz Abdulmalek, 2016. "Generalized lot sentencing rule for estimating the value of production lot for sale," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 67(7), pages 982-988, July.
    • Handle: RePEc:pal:jorsoc:v:67:y:2016:i:7:p:982-988
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