Designing an Economic Repetitive Sampling Plan in the Presence of Two Markets

Abstract

In this paper, we develop an optimization model for the economic design of repetitive sampling plan in the presence of two markets. The process under consideration produces a product with a normally distributed quality characteristic with unknown mean and known variance. The quality characteristic has a lower specification limit. The quality of the product is controlled via lot-by-lot acceptance sampling plan. The objective function used in the model is maximizing profit and product conformity using the Taguchi loss function as a surrogate for product conformity. Risks of producer and consumer in two different markets are considered as constraints. We demonstrate the application of the model using a numerical example. Sensitivity analysis on model parameters shows that the result of the model is sensitive to changes in model parameters.