Evaluating sampling strategy under 2 criteria

This paper integrates elements of Information Economics, Quality Control, Portfolio Selection and Decision Theory into an approach to facilitate the selection of an attribute sampling plan for a lot subject to inspection. The optimal selection is based on two criteria: the expected payoff and its standard deviation. Quality sampling plans are introduced as information structures, and ranked by the two criteria. The paper shows that different organizations should prefer different plans according to their strategies and preferences. The paper provides methods to rank order different sampling plans by an economical criterion as opposed to the commonly accepted pure statistical criterion.