Selection of optimal precision levels and specifications considering measurement error

Measurement errors are unavoidable during any inspection process due to the inherent design of measurement systems and the fluctuation of environmental elements and human errors. The economic and statistical effects of two types of inspection errors should be considered when optimizing the inspection policy. This paper investigates two issues that are important in designing the inspection policy: the determination of specifications and the selection of precision levels for the inspection machine or sensor. For both the “target-the-best” and the “smaller-the- better” quality characteristics, penalty costs and probabilities of two types of inspection errors are incorporated in the optimization to reflect the economic and statistical effects. The total cost to the whole system including both the producer and the consumer is minimized in the decision-making process. The optimal specification limits and the precision level of the inspection machine are determined by solving the optimization model. Numerical examples and sensitivity analysis are given to illustrate the proposed optimization model for both types of quality characteristics.

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