Economic design of a complete inspection plan with interactive quality improvement

Consider the monitoring of an ongoing production process subject to complete inspection. Inferior quality products are either reworked or scrapped to assure good outgoing quality. Whenever the quality characteristic of a product exceeds a predetermined action limit, remedial action is taken to restore the process to an in-control state. In addition, the decision maker has a learning opportunity to improve the process by investing in resources to identify and eliminate the causes of deviation from the target quality. Taking a learning action would improve the mean value of the quality characteristic of items produced in an out-of-control state. This paper proposes a cost model to determine the optimal number of learning actions to be taken and the optimal action limit. The model considers the trade-off between quality cost and process improvement cost.