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Designing an economic rectifying sampling plan in the presence of two markets

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  • Mohammad Saber Fallah Nezhad
  • Tahereh Jafari Nodoushan

Abstract

In this paper, an optimization model is developed for the economic design of a rectifying inspection sampling plan in the presence of two markets. A product with a normally distributed quality characteristic with unknown mean and variance is produced in the process. The quality characteristic has a lower specification limit. The aim of this paper is to maximize the profit, which consists the Taguchi loss function, under the constraints of satisfying the producer's and consumer's risk in two different markets simultaneously. Giveaway cost per unit of sold excess material is considered in the proposed model. A case study is presented to illustrate the application of proposed methodology. In addition, sensitivity analysis is performed to study the effect of model parameters on the expected profit and optimal solution. Optimal process adjustment problem and acceptance sampling plan is combined in the economical optimization model. Also, process mean and standard deviation are assumed to be unknown value, and their impact is analyzed. Finally, inspection error is considered, and its impact is investigated and analyzed.

Suggested Citation

  • Mohammad Saber Fallah Nezhad & Tahereh Jafari Nodoushan, 2018. "Designing an economic rectifying sampling plan in the presence of two markets," Communications in Statistics - Theory and Methods, Taylor & Francis Journals, vol. 47(5), pages 1256-1272, March.
    • Handle: RePEc:taf:lstaxx:v:47:y:2018:i:5:p:1256-1272
    DOI: 10.1080/03610926.2017.1317807
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