The economically-based EWMA control chart

An economic model is provided and evaluated for the EWMA control scheme to determine the optimal design parameters (n,h,k,α). A computerized optimization technique is employed to determine the optimal design parameters. Comparisons are performed among the EWMA, CUSUM, and standard nX control charts. This paper shows that, from an economic viewpoint, the EWMA is almost as good as the CUSUM scheme; it is superior to the standard nX control chart. Also, economically determined EWMA charts are truly optimal, from both the economic and statistical viewpoints, under certain conditions.