Design of product specifications and control policies in a single-stage production system

Screening (100% inspection) is a common practice in quality engineering. Traditional screening procedures seek upper and lower specification limits for a quality characteristic associated with some product, such that the total quality cost per item is minimized. This practice ignores the effect of parts rejection on product lead times, inventory carrying costs, shortage costs, throughput, and, eventually, total profit rate of the system. In this paper, a single-stage production system is considered and two different control policies are jointly determined with the inspection plans. Numerical experiments indicate that such coordinated policies achieve a better performance than independently determined quality and production control policies.