Capacity planning under different inspection strategies

This paper addresses the issue of location of inspection stations along a serial production line. As a function of inspection site, the capacity required to test and repair the parts would vary. The production-inspection model developed provides management with information on such capacity planning issues. It integrates the issues of inspection location, inspection capacity, and production capacity. We consider a two-stage production line and evaluate cases when there are inspection sites after each production stage and when inspection is carried out after the final stage. In the latter case, we find the conditions when the safety stock required to meet the demand is higher. This has managerial implications because the inventory level is not only higher, it is held after the final stage, i.e. has more value added onto it. However, if there are inspection stations after each stage, the capacity required to test and repair the parts is higher. The intent of this work is to provide insights into designing production-inventory systems for the serial model that we consider. We also discuss the generalization of the scope of the two-stage model to an N stage production line. In an extension to the problem, we consider the situation when not all the defectives can be repaired. We extend the basic model by considering the effect of partial scrapping of the defectives.