Effect of Dynamic Process Quality Control on the Economics of Production

A study of the effect of the dynamic process quality control on the economics of production and the Total System Cost (TSC) is dealt with. A mathematical model is presented for estimating the Economic Investment in Quality (EIQ) and the Economic Production Quantity (EPQ) in a multi‐stage production‐inventory system. The basic criterion considered for the determination of EIQ and EPQ is the minimisation of TSC. The TSC consists of (1) set‐up cost, (2) in‐process inventory carrying cost; this cost is a function of the processing time and the reset‐up time, (3) finished product inventory carrying cost, (4) reset‐up cost, (5) investment in quality control, and (6) scrappage cost. The feature of this research is to consider the aspect of dynamic process quality control, namely, “quality at the source”, by monitoring the quality of the product as the process continues and stopping the process if it goes out of control. A numerical example is given to illustrate the model.