Joint Design of Economic Manufacturing Quantity, Sampling Plan and Specification Limits

In this paper we propose an extension of the problem to determine the economic design of a Type I continuous sampling plan (CSP-1 plan) and the economic manufacturing quantity (EMQ) under imperfect quality investigated in Chen et al. (Economic Quality Control 15: 137-146, 2000), where the economic objective equals the total inventory cost including the set-up cost, the holding cost and the expected quality loss. The extension refers to the economic specification limits. The problem can be formulated as a non-linear mixed-integer minimization problem. By solving it, the required level of product quality is obtained at minimum total inventory cost. A numerical example is given to illustrate the solution procedure.