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Acceptance sampling, imperfect production, and the optimality of zero defects

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  • S. Andrew Starbird

Abstract

Acceptance sampling is often used to monitor the quality of raw materials and components when product testing is destructive, time‐consuming, or expensive. In this paper we consider the effect of a buyer‐imposed acceptance sampling policy on the optimal batch size and optimal quality level delivered by an expected cost minimizing supplier. We define quality as the supplier's process capability, i.e., the probability that a unit conforms to all product specifications, and we assume that unit cost is an increasing function of the quality level. We also assume that the supplier faces a known and constant “pass‐through” cost, i.e., a fixed cost per defective unit passed on to the buyer. We show that the acceptance sampling plan has a significant impact on the supplier's optimal quality level, and we derive the conditions under which zero defects (100% conformance) is the policy that minimizes the supplier's expected annual cost. © 1997 John Wiley & Sons, Inc. Naval Research Logistics 44: 515–530, 1997

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  • S. Andrew Starbird, 1997. "Acceptance sampling, imperfect production, and the optimality of zero defects," Naval Research Logistics (NRL), John Wiley & Sons, vol. 44(6), pages 515-530, September.
    • Handle: RePEc:wly:navres:v:44:y:1997:i:6:p:515-530
    DOI: 10.1002/(SICI)1520-6750(199709)44:63.0.CO;2-6
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    References listed on IDEAS

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    1. Hong Wan & Xiaowei Xu & Tian Ni, 2013. "The incentive effect of acceptance sampling plans in a supply chain with endogenous product quality," Naval Research Logistics (NRL), John Wiley & Sons, vol. 60(2), pages 111-124, March.
    2. Hsieh, Chung-Chi & Lai, Hsing-Hua, 2020. "Pricing and ordering decisions in a supply chain with downward substitution and imperfect process yield," Omega, Elsevier, vol. 95(C).

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