Economic selection of a process level under acceptance sampling by variables

Abstract The economic impact of the choice of process level for an industrial process depends on both internal and external conditions. We consider production costs and process variability as internal conditions and prices and control plan as external ones. In this paper we derive, when the control plan is given as a tolerance interval, e.g. MIL-STD-414 B, the exact and the approximate optimal process level and the exact and the approximate optimal expected net income per lot. We assume that the cost and price functions are linear, and that the quality characteristic is normally distributed. An industrial example is discussed.